Document:

Unassociated Document

    Exhibit
      10.1

    

    

    

    

    

    

    

    

    

    

    STOCK
      PURCHASE AGREEMENT

    

    AMONG

    

    WPCS
      INTERNATIONAL INCORPORATED

    

    VOACOLO
      ELECTRIC INCORPORATED

    

    AND

    

    JEFFREY
      VOACOLO

    DAVID
      VOACOLO

    JOSEPH
      VOACOLO

    And

    TRACY
      HOSSLER

    

    

    

    

    Dated
      March 30, 2007

    

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    TABLE
      OF
      CONTENTS

    

     

    
      
        
          	Section	Page
	
                  ARTICLE
                    I SALE AND PURCHASE OF SHARES

                	 
	
                  1.1

                	
                  Sale
                    and Purchase of Shares

                	
                  1

                
	 	 	 
	
                  ARTICLE
                    II PURCHASE PRICE AND PAYMENT

                	 
	
                  2.1

                	
                  Amount
                    of Purchase Price

                	
                  1

                
	
                  2.2

                	
                  Payment
                    of Purchase Price

                	
                  1

                
	
                  2.3

                	
                  Net
                    Tangible Asset Value Adjustment

                	
                  2

                
	 	 	 
	
                  ARTICLE
                    III CLOSING AND TERMINATION

                	 
	
                  3.1

                	
                  Closing
                    Date

                	
                  3

                
	
                  3.2

                	
                  Termination
                    of Agreement

                	
                  3

                
	
                  3.3

                	
                  Procedure
                    Upon Termination

                	
                  3

                
	
                  3.4

                	
                  Effect
                    of Termination

                	
                  3

                
	 	 	 
	
                  ARTICLE
                    IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS

                	 
	
                  4.1

                	
                  Organization
                    and Good Standing

                	
                  4

                
	
                  4.2

                	
                  Authority

                	
                  4

                
	
                  4.3

                	
                  Shares

                	
                  .5

                
	
                  4.4

                	
                  Basic
                    Corporate Records

                	
                  5

                
	
                  4.5

                	
                  Minute
                    Books

                	
                  5

                
	
                  4.6

                	
                  Subsidiaries
                    and Affiliates

                	
                  5

                
	
                  4.7

                	
                  Consents

                	
                  6

                
	
                  4.8

                	
                  Financial
                    Statements

                	
                  6

                
	
                  4.9

                	
                  Records
                    and Books Account

                	
                  6

                
	
                  4.10

                	
                  Absence
                    of Undisclosed Liabilities

                	
                  6

                
	
                  4.11

                	
                  Taxes

                	
                  7

                
	
                  4.12

                	
                  Account
                    Receivable

                	
                  9

                
	
                  4.13

                	
                  Inventory

                	9
	
                  4.14

                	
                  Machinery
                    and Equipment

                	
                  9

                
	
                  4.15

                	
                  Real
                    Property Matters

                	
                  10

                
	
                  4.16

                	
                  Leases

                	
                  10

                
	
                  4.17

                	
                  Patents,
                    Software, Trademarks, Etc

                	
                  10

                
	
                  4.18

                	
                  Insurance
                    Policies

                	
                  11

                
	
                  4.19

                	
                  Banking
                    and Personnel Lists

                	
                  11

                
	
                  4.20

                	
                  Lists
                    of Contracts, Etc

                	12
	
                  4.21

                	
                  Compliance
                    With the Law

                	
                  13

                
	
                  4.22

                	
                  Litigation,
                    Pending Labor Disputes

                	
                  13

                
	
                  4.23

                	
                  Absence
                    of Certain Changes or Events

                	
                  14

                
	
                  4.24

                	
                  Employee
                    Benefit Plans

                	
                  15

                
	
                  4.25

                	
                  Product
                    Warranties and Product Liabilities

                	
                  16

                

        

         

         

         

        
          
             

          

          
            ii

            
              

            

          

          
             

          

        

         

        
          	
                  4.26

                	
                  Assets

                	
                  17

                
	
                  4.27
                    

                	Absence
                  of Certain
                  Commercial Practices	17
	
                  4.28
                    

                	
                  Licenses,
                    Permits, Consents and Approvals

                	
                  17

                
	
                  4.29

                	Environmental
                  Matters	17
	
                  4.30
                    

                	Broker	18
	
                  4.31

                	
                  Related
                    Party Transactions

                	
                  18

                
	
                  4.32
                    

                	Patriot
                  Act	18
	
                  4.33

                	
                  Investment
                    Intent

                	
                  19

                
	
                  4.34
                    

                	
                  Investment
                    Experience; Suitability

                	19
	
                  4.35

                	
                  Accreditation

                	
                  19

                
	
                  4.36
                    

                	
                  Disclosure

                	20
	 	 	 
	
                  ARTICLE
                    V REPRESENTATIONS AND WARRANTIES OF PURCHASER

                	 
	
                  5.1

                	
                  Organization
                    and Good Standing

                	
                  20

                
	
                  5.2

                	
                  Authority

                	
                  20

                
	
                  5.3

                	
                  Conflicts;
                    Consents of Third Parties

                	
                  20

                
	
                  5.4

                	
                  Litigation

                	
                  21

                
	
                  5.5

                	
                  Investment
                    Intention

                	
                  21

                
	
                  5.6

                	
                  Broker

                	
                  21

                
	
                  5.7

                	
                  Patriot
                    Act 

                	
                  21

                
	
                  5.8

                	
                  Due
                    Authorization of Purchaser Common Stock

                	
                  21

                
	 	 	 
	
                  ARTICLE
                    VI COVENANTS

                	 
	
                  6.1

                	
                  Access
                    to Information

                	22
	
                  6.2

                	
                  Conduct
                    of the Business Pending the Closing

                	
                  22

                
	
                  6.3

                	
                  Consents

                	
                  24

                
	
                  6.4

                	
                  Other
                    Actions

                	
                  24

                
	
                  6.5

                	
                  No
                    Solicitation

                	
                  25

                
	
                  6.6

                	
                  Preservation
                    of Records

                	
                  25

                
	
                  6.7

                	
                  Publicity

                	
                  25

                
	
                  6.8

                	
                  Use
                    of Name

                	
                  25

                
	
                  6.9

                	
                  Employment
                    Agreements

                	
                  26

                
	
                  6.10
                    

                	Board
                  of
                  Directors	26
	
                  6.11
                    

                	
                  Outstanding
                    Notes

                	26
	
                  6.12
                    

                	Financial
                  Statements	26
	
                  6.13
                    

                	Tax Election	26
	
                  6.14
                    

                	
                  Tax
                    Matters

                	27
	
                  6.15

                	
                  Non-Competition

                	
                  28

                
	
                  6.16

                	
                  Registration
                    of Shares of Purchaser Common Stock

                	
                  29

                
	
                  6.17

                	
                  Employee
                    Matters

                	
                  .29

                

        

         

         

        
          
             

          

          
            iii

            
              

            

          

          
             

          

        

         

        
          	 	 	 
	
                  ARTICLE
                    VII CONDITIONS TO CLOSING

                	 
	
                  7.1

                	
                  Conditions
                    Precedent to Obligations of Purchaser

                	
                  29

                
	
                  7.2

                	
                  Conditions
                    Precedent to Obligations of the Sellers

                	
                  30

                
	 	 	 
	
                  ARTICLE
                    VIII DOCUMENTS TO BE DELIVERED

                	 
	
                  8.1

                	
                  Documents
                    to be Delivered by the Sellers

                	
                  31

                
	
                  8.2

                	
                  Documents
                    to be Delivered by the Purchaser

                	32
	 	 	 
	
                  ARTICLE
                    IX INDEMNIFICATION

                	 
	
                  9.1

                	
                  Indemnification

                	
                  32

                
	
                  9.2

                	
                  Limitations
                    on Indemnification for Breaches of Representations and
                    Warranties

                	
                  33

                
	
                  9.3

                	
                  Indemnification
                    Procedures

                	
                  34

                
	
                  9.4

                	
                  Tax
                    Treatment of Indemnity Payments

                	
                  36

                
	 	 	 
	
                  ARTICLE
                    X MISCELLANEOUS

                	 
	
                  10.1

                	
                  Payment
                    of Sales, Use or Similar Taxes

                	
                  34

                
	
                  10.2

                	
                  Survival
                    of Representations and Warranties

                	
                  35

                
	
                  10.3

                	
                  Expenses

                	
                  35

                
	
                  10.4

                	
                  Specific
                    Performance

                	
                  35

                
	
                  10.5

                	
                  Further
                    Assurances

                	
                  35

                
	
                  10.6

                	
                  Submission
                    to Jurisdiction; Consent to Service of Process

                	
                  35

                
	
                  10.7

                	
                  Entire
                    Agreement; Amendments and Waivers

                	
                  36

                
	
                  10.8

                	
                  Governing
                    Law

                	
                  36

                
	
                  10.9

                	
                  Table
                    of Contents and Headings

                	
                  36

                
	
                  10.10

                	
                  Notices

                	
                  36

                
	
                  10.11
                    

                	
                  Severability

                	37
	
                  10.12
                    

                	
                  Binding
                    Effect; Assignment

                	37
	 	 	 

        

      

    

    

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    STOCK
      PURCHASE AGREEMENT

    

    

    THIS
      STOCK PURCHASE AGREEMENT is made as of March 30, 2007 (the “Agreement”), among
      WPCS International Incorporated, a corporation existing under the laws of
      Delaware (the “Purchaser”), Voacolo Electric Incorporated, a New Jersey
      corporation (the “Company”), and the shareholders of the Company listed on the
      signature pages hereof (collectively the “Sellers”).

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      the Sellers own an aggregate of 2,500 shares of common stock, no par value
      (the
“Shares”), of the Company, which Shares constitute all of the issued and
      outstanding shares of capital stock of the Company; and

     

    WHEREAS,
      the Sellers desire to sell to Purchaser, and the Purchaser desires to purchase
      from the Sellers, the Shares for the purchase price and upon the terms and
      conditions hereinafter set forth; 

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      agreements hereinafter contained, the parties hereby agree as
      follows:

     

    ARTICLE
      I  

    SALE
      AND
      PURCHASE OF SHARES

     

    1.1  Sale
      and
      Purchase of Shares.

     

    Upon
      the
      terms and subject to the conditions contained herein, on the Closing Date each
      Seller shall sell, assign, transfer, convey and deliver to the Purchaser, and
      the Purchaser shall purchase from each Seller, all Shares of the Company owned
      by such Seller set forth opposite such Seller's name on Annex
      A
      attached
      hereto. 

     

    

    ARTICLE
      II  

    PURCHASE
      PRICE AND PAYMENT

     

    2.1  Amount
      of Purchase Price. 

     

    The
      purchase price for the Shares shall be an amount equal to Five Million dollars
      ($5,000,000.00) (the “Purchase Price”), subject
      to adjustment as set forth herein.

     

    2.2  Payment
      of Purchase Price.
      

     

    On
      the
      Closing Date, the Purchaser shall pay Two Million Five Hundred Thousand dollars
      ($2,500,000) of the Purchase Price to the Sellers (the “Closing Payment”), which
      shall be paid as follows: 

     

    (i) $1,250,000
      (the “Cash Purchase Price”) which
      shall be paid by wire
      transfer of immediately available funds into an account designated by the
      Sellers; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii) issuance
      of such number of shares of Purchaser common stock (the “Common Stock”) as
      equals $1,250,000, divided by the closing price of the Common Stock on the
      date
      which is one day prior to the Closing Date (the “Closing Shares”). The Purchaser
      Shares shall be delivered within three (3) business days of the Closing
      Date.

     

    An
      additional $2,500,000 (the “Second Payment”) will be payable to the Sellers in
      the event the Company’s earnings before interest and taxes (“EBIT”) for the
      period ending twelve months from the Closing Date, shall equal or exceed
      $1,100,000 (the “Target EBIT”). Determination of the Company’s EBIT for the
      Target EBIT shall be made by the independent accounting firm regularly engaged
      by the Purchaser (the “Auditor”), and shall be completed within 90 days after
      the end of such twelve month period. For the purposes of the calculation of
      the
      Target EBIT, non-recurring income and expenses shall be excluded, including
      but
      not limited to expenses resulting from the sale and transfer of the Shares
      to
      the Purchaser and the preparation of financial statements required under this
      Agreement. The Sellers shall have a period of thirty (30) days to review the
      Company’s EBIT. In the event the Sellers and the Purchaser are unable to agree
      upon the EBIT after good faith negotiations for a period of 30 days, the matter
      shall be submitted to binding arbitration using an independent accounting firm
      mutually agreeable to all parties as the sole arbitrator. Such arbitration
      shall
      take place in Philadelphia, Pennsylvania. If the arbitrator determines that
      the
      EBIT is more than five percent (5%) above the EBIT determined by the Purchaser,
      then the party whose EBIT calculation is furthest from that of the arbitrator
      shall pay the legal fees and expenses of the other party. If the arbitrator
      determines that the EBIT is equal to or less than five percent (5%) above the
      EBIT determined by the Purchaser, then the Sellers shall pay the legal fees
      and
      expenses of the Purchaser. The parties shall cooperate with one another and
      provide reasonable access of all pertinent books and records to the other party.
      To the extent the actual EBIT for the twelve month period from the Closing
      Date
      shall be less than the Target EBIT, the Second Payment shall be reduced by
      the
      percent of shortfall from the Target EBIT. At the option of the Purchaser,
      any
      amounts due to be paid for the Second Payment may be paid in cash or shares
      of
      Common Stock valued at the closing price of the Common Stock on the date prior
      to date on which the amount of the payment is determined (“Payment Shares” and
      together with the Closing Shares, the “Purchaser Shares”). The Second Payment
      shall be paid within ten days after receipt, review and acceptance of the
      financial statements of the Company for such period.

     

     

    2.3  Net
      Tangible Asset Value Adjustment. 

     

    (a)
      Within 90 days after the Closing Date, the Sellers shall cause to be prepared
      and delivered to Purchaser a calculation of the Company’s net tangible asset
      value as of the Closing Date. Net tangible asset value is defined as total
      assets minus total liabilities minus intangible assets (“NTAV”). NTAV shall also
      include the fair value of inventory and tools with an original cost in excess
      of
      $1,000 (for purposes of meeting the $1,000 threshold, the Sellers may group
      tools and ancillary parts together (i.e., a tool and an ancillary part that
      together have an original cost of greater than $1,000). The Purchaser shall
      cause an independent appraisal to be completed on the inventory and tools within
      80 days after the Closing Date. The Purchaser shall have a period of 20 days
      to
      review the NTAV calculation. In the event the Sellers and the Purchaser are
      unable to agree upon the NTAV after good faith negotiations for a period of
      20
      days, the matter shall be submitted to binding arbitration using an independent
      accounting firm mutually agreeable to all parties as the sole arbitrator. Such
      arbitration shall take place in Philadelphia, Pennsylvania. If the arbitrator
      determines that the NTAV is more than five percent (5%) below the NTAV
      determined by the Sellers, then the party whose NTAV calculation is furthest
      from that of the arbitrator shall pay the legal fees and expenses of the other
      party. If the arbitrator determines that the NTAV is equal to or less than
      five
      percent (5%) above the NTAV determined by the Purchaser, then the Sellers shall
      pay the legal fees and expenses of the Purchaser. The parties shall cooperate
      with one another and provide reasonable access of all pertinent books and
      records to the other party. In the event the NTAV as of the Closing Date shall
      be less than $1,200,000, the Cash Purchase Price shall be reduced by the amount
      of the shortfall. In the event the NTAV as of the Closing Date shall be greater
      than $1,200,000, the Closing Payment shall be increased by the amount of the
      excess. At the option of the Purchaser, any amounts due to be paid in excess
      of
      $1,200,000 may be paid in cash or shares of Common Stock valued
      at
      the closing price of the common stock on the date prior to date on which the
      amount of the payment is determined.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (b)
      In
      order to satisfy any amounts which the Sellers may be required to deliver to
      the
      Purchaser as a result of a deficiency in the NTAV, $62,500 shall be deposited
      into an escrow account until the NTAV as of the Closing Date shall be determined
      and any deficiency in the NTAV shall have been paid from the escrow account
      to
      the Purchaser (the “Escrowed Funds”). The Escrowed Funds shall be held for the
      benefit of the Sellers in accordance with their pro rata ownership of the Shares
      as set forth on Schedule 1.1. The Escrowed Funds shall be held in accordance
      with the terms and conditions set forth in the escrow agreement attached hereto
      as Exhibit 2.3 (the “Escrow Agreement”). 

     

    

    ARTICLE
      III  

    CLOSING
      AND TERMINATION

     

    3.1  Closing
      Date. 

     

    Subject
      to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof
      (or the waiver thereof by the party entitled to waive that condition), the
      closing of the sale and purchase of the Shares provided for in Section 1.1
      hereof (the "Closing") shall take place at the offices of Sichenzia Ross
      Friedman Ference LLP, 1065 Avenue of the Americas, New York, NY 10018 (or at
      such other place as the parties may designate in writing) on such date as the
      Sellers and the Purchaser may designate. The Closing may also take place through
      the delivery of documents in electronic of telefaxed format or through courier
      delivery of actual signatures to counsel for the parties. Although the Closing
      documents will be executed and delivered and the Closing payments of cash and
      stock provided for hereunder will be made on March 30, 2007, the “Closing Date”
shall be March 30, 2007 and Closing shall be effective as of 12:01 a.m. on
      April
      1, 2007. 

     

    3.2  Termination
      of Agreement.

     

    This
      Agreement may be terminated prior to the Closing as follows:

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (a)  At
      the
      election of the Sellers or the Purchaser on or after March 31, 2007, if the
      Closing shall not have occurred by the close of business on such date, provided
      that the terminating party is not in default of any of its obligations
      hereunder;

     

    (b)  by
      mutual
      written consent of the Sellers' and the Purchaser; or

     

    (c)  by
      the
      Sellers or the Purchaser if there shall be in effect a final nonappealable
      order
      of a governmental body of competent jurisdiction restraining, enjoining or
      otherwise prohibiting the consummation of the transactions contemplated hereby;
      it being agreed that the parties hereto shall promptly appeal any adverse
      determination which is not nonappealable (and pursue such appeal with reasonable
      diligence).

     

    3.3  Procedure
      Upon Termination. 

     

    In
      the
      event of termination and abandonment by the Purchaser or the Sellers, or both,
      pursuant to Section 3.2 hereof, written notice thereof shall forthwith be given
      to the other party or parties, and this Agreement shall terminate, and the
      purchase of the Shares hereunder shall be abandoned, without further action
      by
      the Purchaser or the Sellers. If this Agreement is terminated as provided
      herein, each party shall redeliver all documents, work papers and other material
      of any other party relating to the transactions contemplated hereby, whether
      so
      obtained before or after the execution hereof, to the party furnishing the
      same.

     

    3.4  Effect
      of Termination.

     

    In
      the
      event that this Agreement is validly terminated as provided herein, then each
      of
      the parties shall be relieved of their duties and obligations arising under
      this
      Agreement after the date of such termination and such termination shall be
      without liability to the Purchaser, the Company or any Seller; provided,
      further, however, that nothing in this Section 3.4 shall relieve the Purchaser
      or any Seller of any liability for a breach of this Agreement.

     

    ARTICLE
      IV  

    REPRESENTATIONS
      AND WARRANTIES OF THE SELLERS

     

    

    For
      purposes of this Agreement, any statement made to the knowledge of the Company
      shall mean the knowledge of the Sellers. A Seller shall be deemed to have
“knowledge” of a particular fact or other matter if such Seller is actually
      aware of such fact or other matter, or should, by reason of his or her position
      an owner, director or executive officer of the Company, reasonably be expected
      to be aware of such fact or other matter.

     

    The
      Sellers hereby jointly and severally, except with respect to Tracy Hossler
      for
      whom it is several, represent and warrant to the Purchaser that:

     

    4.1. Organization
      and Good Standing of the Company.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation as set forth above.
      Except as otherwise provided herein, the Company is not required to be qualified
      to transact business in any other jurisdiction where the failure to so qualify
      would have an adverse effect on the business of the Company. 

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    4.2. Authority.

    

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

    

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

    

    (c) Subject
      to any consents required under Section 4.7 below, the Sellers and the Company
      have the full legal right, power and authority to execute, deliver and carry
      out
      the terms and provisions of this Agreement; and this Agreement has been duly
      and
      validly executed and delivered on behalf of Sellers and the Company and
      constitutes a valid and binding obligation of each Seller and the Company
      enforceable in accordance with its terms.

    

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

    

    4.3. Shares.

    

    (a) The
      Company’s authorized capital stock consists of 2,500 shares of Common Stock, no
      par value, of which 2,500 shares have been issued to Sellers and constitute
      the
      Shares as defined above. All of the Shares are duly authorized, validly issued,
      fully paid and non-assessable.

    

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

    

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

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

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

    

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

    

    4.6. Subsidiaries
      and Affiliates.
      Except
      as set forth in Schedule 4.6, the Company does not have any ownership, voting
      or
      profit and loss sharing percentage interest in any other corporations,
      partnerships, businesses, entities, enterprises or organizations. 

    

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

    

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

    

    
      
         

      

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

            

    

    

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

    

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

    

    For
      the
      purposes hereof, the balance sheet of the Company as of December 31, 2006 is
      referred to as the “Balance Sheet” and December 31, 2006 is referred to as the
“Balance Sheet Date”.

    

    

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

    

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

    

    4.11 Taxes.
      

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

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

    

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

    

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

    

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

    

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

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

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

    

    (vi)  There
      is
      no contract, agreement, plan or arrangement to which the Company is a party
      as
      of the date of this Agreement, including but not limited to the provisions
      of
      this Agreement, covering any employee or former employee of the Company that,
      individually or collectively, would reasonably be expected to give rise to
      the
      payment of any amount that would not be deductible pursuant to
      Sections 280G, 404 or 162(m) of the Internal
      Revenue Code of 1986, as amended (the “Code”).
      There
      is no contract, agreement, plan or arrangement to which the Company is a party
      or by which it is bound to compensate any individual for excise taxes paid
      pursuant to Section 4999 of the Code.

    

    (vii)  The
      Company has not filed any consent agreement under Section 341(f) of the
      Code or agreed to have Section 341(f)(2) of the Code apply to any disposition
      of
      a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned
      by
      the Company.

    

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

    

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

    

    

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

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

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

    

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

    

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

     

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

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

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

    

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

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

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

    

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

    

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

    

    (v) All
      contracts that individually provide for aggregate future payments to or from
      the
      Company of $25,000 or more, to the extent not included in (i) through (iv)
      above;

    

    (vi) All
      contracts of the Company that have a term exceeding one year and that may not
      be
      cancelled without any liability, penalty or premium, to the extent not included
      in (i) through (v) above;

    

    (vii) A
      complete list of all outstanding powers of attorney granted by the Company;
      and

    

    (viii) All
      other
      contracts of the Company material to the business, assets, liabilities,
      financial condition, results of operations or prospects of the Business taken
      as
      a whole to the extent not included above.

    

    Except
      as
      set forth in Schedule 4.20, (i) all contracts, agreements and commitments
      of the Company set forth in Schedule 4.20 are valid, binding and in full force
      and effect, and (ii) neither the Company nor, to the best of Sellers’
knowledge, any other party to any such contract, agreement, or commitment has
      materially breached any provision thereof or is in default thereunder. Except
      as
      set forth in Schedule 4.20, the sale of the Shares by the Sellers in accordance
      with this Agreement will not result in the termination of any contract,
      agreement or commitment of the Company set forth in Schedule 4.20, and
      immediately after the Closing, each such contract, agreement or commitment
      will
      continue in full force and effect without the imposition or acceleration of
      any
      burdensome condition or other obligation on the Company resulting from the
      sale
      of the Shares by the Sellers. True and complete copies of the contracts, leases,
      licenses and other documents referred to in this Schedule 4.20 will be delivered
      to the Purchaser, certified by the Secretary or Assistant Secretary of the
      Company as true, correct and complete copies, not later than four weeks from
      the
      date hereof or ten business days before the Closing Date, whichever is
      sooner.

    

    There
      are
      no pending disputes with customers or vendors of the Company regarding quality
      or return of goods involving amounts in dispute with any one customer or vendor,
      whether for related or unrelated claims, in excess of $5,000 except as described
      on Schedule 4.20 hereto, all of which will be resolved to the reasonable
      satisfaction of Purchaser prior to the Closing Date. To the best knowledge
      of
      Sellers and the Company, there has not been any event, happening, threat or
      fact
      that would lead them to believe that any of said customers or vendors will
      terminate or materially alter their business relationship with the Company
      after
      completion of the transactions contemplated by this Agreement.

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    4.21. Compliance
      With the Law.
      The
      Company is not in violation of any applicable federal, state, local or foreign
      law, regulation or order or any other, decree or requirement of any
      governmental, regulatory or administrative agency or authority or court or
      other
      tribunal (including, but not limited to, any law, regulation order or
      requirement relating to securities, properties, business, products,
      manufacturing processes, advertising, sales or employment practices, terms
      and
      conditions of employment, occupational safety, health and welfare, conditions
      of
      occupied premises, product safety and liability, civil rights, or environmental
      protection, including, but not limited to, those related to waste management,
      air pollution control, waste water treatment or noise abatement), except where
      such would not have a Material Adverse Effect. Except as set forth in Schedule
      4.21, the Company has not been and is not now charged with, or to the best
      knowledge of the Sellers or the Company under investigation with respect to,
      any
      violation of any applicable law, regulation, order or requirement relating
      to
      any of the foregoing, nor, to the best knowledge of any Seller or the Company
      after due inquiry, are there any circumstances that would or might give rise
      to
      any such violation. The Company has filed all reports required to be filed
      with
      any governmental, regulatory or administrative agency or authority.

    

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

    

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

    

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

    

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

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    
      
         

      

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

    

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

    

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

    

    (xi) Experienced
      damage, destruction or loss (whether or not covered by insurance) individually
      or in the aggregate materially and adversely affecting any of its properties,
      assets or business, or experienced any other material adverse change or changes
      individually or in the aggregate affecting its financial condition, assets,
      liabilities or business.

    

    4.24. Employee
      Benefit Plans.

    

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

    

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

    

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

    

    (d) For
      purposes of this Section 4.24:

     

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

    

    
      
         

      

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

    

    (iii) An
      entity
      is an “affiliate” of the Company for purposes of this Section 3.24 if it
      would have ever been considered a single employer with the Company under ERISA
      Section 4001(b) or part of the same “controlled group” as the Company for
      purposes of ERISA Section 302(d)(8)(C); and

    

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

    

    4.25. Product
      Warranties and Product Liabilities.
      The
      product warranties and return policies of the Company in effect on the date
      hereof and the types of products to which they apply are described on Schedule
      4.25 hereto. Schedule 4.25 also sets forth all product liability claims
      involving amounts in controversy in excess of $5,000 that are currently either
      pending or, to the best of the Sellers’ and the Company’s knowledge, threatened
      against the Company. The Sellers are not aware of any reason why the future
      cost
      of performing all such obligations and paying all such product liability claims
      with respect to goods manufactured, assembled or furnished prior to the Closing
      Date will not exceed the average annual cost thereof for said past three year
      period.

    

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

    

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

    

    
      
         

      

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

    

    4.29. Environmental
      Matters.
      Except
      as
      set forth on Schedule 4.29 hereto:

     

    (a)  The
      operations of the Company, to the best knowledge of Sellers, are in compliance
      with all applicable Laws promulgated by any governmental entity which prohibit,
      regulate or control any hazardous material or any hazardous material activity
      (“Environmental Laws”) and all permits issued pursuant to Environmental Laws or
      otherwise except for where noncompliance or the absence of such permits would
      not, individually or in the aggregate, have a Material Adverse
      Effect;

     

    (b)  
      The
      Company has obtained all permits required under all applicable Environmental
      Laws necessary to operate its business, except for any failures of such which
      would not have a Material Adverse Effect;

     

    (c)  The
      Company is not the subject of any outstanding written order or Contract with
      any
      governmental authority or person respecting Environmental Laws or any violation
      or potential violations thereof; and,

     

    (d) The
      Company has not received any written communication alleging either or both
      that
      the Company may be in violation of any Environmental Law, or any permit issued
      pursuant to Environmental Law, or may have any liability under any Environmental
      Law.

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

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

    

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

    

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

    

    4.33 Investment
      Intent.

     

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

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    4.34 Investment
      Experience; Suitability.

    

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

     

    4.35 Accreditation.

    

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

     

    

    

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

    

    

    ARTICLE
      V  

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    5.1  Organization
      and Good Standing.

     

    The
      Purchaser is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware.

     

    5.2  Authority.

     

    (a) The
      execution and delivery of this Agreement and the consummation of the
      transactions contemplated herein have been, or will prior to Closing be, duly
      and validly approved and acknowledged by all necessary corporate action on
      the
      part of the Purchaser.

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

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

     

    5.3  Conflicts;
      Consents of Third Parties. 

     

    (a)  The
      execution and delivery of this Agreement, the acquisition of the Shares by
      Purchaser and the consummation of the transactions herein contemplated, and
      the
      compliance with the provisions and terms of this Agreement, are not prohibited
      by the Articles of Incorporation or Bylaws of the Purchaser and will not
      violate, conflict with or result in a breach of any of the terms or provisions
      of, or constitute a default under, any court order, indenture, mortgage, loan
      agreement, or other agreement or instrument to which the Purchaser is a party
      or
      by which it is bound.

     

    (b)  No
      consent, waiver, approval, order, permit or authorization of, or declaration
      or
      filing with, or notification to, any person or governmental body is required
      on
      the part of the Purchaser in connection with the execution and delivery of
      this
      Agreement or the Purchaser Documents or the compliance by Purchaser with any
      of
      the provisions hereof or thereof.

     

    5.4  Litigation.

     

    There
      are
      no legal proceedings pending or, to the best knowledge of the Purchaser,
      threatened that are reasonably likely to prohibit or restrain the ability of
      the
      Purchaser to enter into this Agreement or consummate the transactions
      contemplated hereby.

     

    5.5  Investment
      Intention.

     

    The
      Purchaser is acquiring the Shares for its own account, for investment purposes
      only and not with a view to the distribution (as such term is used in Section
      2(11) of the Securities Act of 1933, as amended (the "Securities Act") thereof.
      Purchaser understands that the Shares have not been registered under the
      Securities Act and cannot be sold unless subsequently registered under the
      Securities Act or an exemption from such registration is available.

     

    5.6  Broker.

     

    The
      Purchaser has not retained any broker in connection with any transaction
      contemplated by this Agreement. Sellers shall not be obligated to pay any fee
      or
      commission associated with the retention or engagement by the Purchaser of
      any
      broker in connection with any transaction contemplated by this
      Agreement.

     

    5.7  Patriot
      Act.
      The
      Purchaser certifies that neither the Purchaser nor any of its subsidiaries
      has
      been designated, and is not owned or controlled, by a “suspected terrorist” as
      defined in Executive Order 13224. The Purchaser hereby acknowledge that the
      Company and the Sellers seek to comply with all applicable laws concerning
      money
      laundering and related activities. In furtherance of those efforts, the
      Purchaser hereby represent, warrant and agree that: (i) none of the cash or
      property that the Purchaser has contributed or paid or will contribute and
      pay
      to the Sellers has been or shall be derived from, or related to, any activity
      that is deemed criminal under United States law; and (ii) no contribution or
      payment by the Purchaser or any of its subsidiaries to the Sellers, to the
      extent that they are within the Purchaser’s control shall cause the Sellers or
      the Company to be in violation of the United States Bank Secrecy Act, the United
      States International Money Laundering Control Act of 1986 or the United States
      International Money Laundering Abatement and Anti-Terrorist Financing Act of
      2001. The Purchaser shall promptly notify the Sellers if any of these
      representations ceases to be true and accurate regarding the Purchaser or any
      of
      its subsidiaries. The Purchaser agrees to provide the Sellers any additional
      information regarding the Purchaser or any of its subsidiaries that the Sellers
      reasonably requests to ensure compliance with all applicable laws concerning
      money laundering and similar activities.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

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

     

    ARTICLE
      VI

     COVENANTS

     

    6.1  Access
      to Information.

     

    The
      Sellers and the Company agree that, prior to the Closing Date, the Purchaser
      shall be entitled, through its officers, employees and representatives
      (including, without limitation, its legal advisors and accountants), to make
      such investigation of the properties, businesses and operations of the Company
      and its Subsidiaries and such examination of the books, records and financial
      condition of the Company and its Subsidiaries as it reasonably requests and
      to
      make extracts and copies of such books and records. Any such investigation
      and
      examination shall be conducted during regular business hours and under
      reasonable circumstances, and the Sellers shall cooperate, and shall cause
      the
      Company and its Subsidiaries to cooperate, fully therein. No investigation
      by
      the Purchaser prior to or after the date of this Agreement shall diminish or
      obviate any of the representations, warranties, covenants or agreements of
      the
      Sellers contained in this Agreement or the Seller Documents. In order that
      the
      Purchaser may have full opportunity to make such physical, business, accounting
      and legal review, examination or investigation as it may reasonably request
      of
      the affairs of the Company and its Subsidiaries, the Sellers shall cause the
      officers, employees, consultants, agents, accountants, attorneys and other
      representatives of the Company and its Subsidiaries to cooperate fully with
      such
      representatives in connection with such review and examination.
      It is
      agreed and understood that all information provided pursuant to this Section
      6.1
      is subject to the terms and conditions of the Confidentiality/Standstill
      Agreement executed by the parties as of February 2, 2007.

     

    6.2  Conduct
      of the Business Pending the Closing.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    (a)  Except
      as
      otherwise expressly contemplated by this Agreement or with the prior written
      consent of the Purchaser, prior to the Closing the Sellers shall, and shall
      cause the Company to:

     

    (i)  Conduct
      the respective businesses of the Company only in the ordinary course consistent
      with past practice;

     

    (ii)  Use
      its
      best efforts to (A) preserve its present business operations, organization
      (including, without limitation, management and the sales force) and goodwill
      of
      the Company and (B) preserve its present relationship with Persons having
      business dealings with the Company;

     

    (iii)  Maintain
      (A) all of the assets and properties of the Company in their current condition,
      ordinary wear and tear excepted and (B) insurance upon all of the properties
      and
      assets of the Company in such amounts and of such kinds com-parable to that
      in
      effect on the date of this Agreement;

     

    (iv)  (A)
      maintain the books, accounts and records of the Company in the ordinary course
      of business consistent with past practices, (B) continue to collect accounts
      receivable and pay accounts payable utilizing normal procedures and without
      discounting or accelerating payment of such accounts, and (C) comply with all
      contractual and other obligations applicable to the operation of the Company;
      and

     

    (v)  Comply
      in
      all material respects with applicable laws.

     

    (b)  Except
      as
      otherwise expressly contemplated by this Agreement or with the prior written
      consent of the Purchaser, prior to the Closing the Sellers shall not, and shall
      cause the Company not to:

     

    (i)  Declare,
      set aside, make or pay any dividend or other distribution in respect of the
      capital stock of the Company or repurchase, redeem or otherwise acquire any
      outstanding shares of the capital stock or other securities of, or other
      ownership interests in, the Company;

     

    (ii)  Transfer,
      issue, sell or dispose of any shares of capital stock or other securities of
      the
      Company or grant options, warrants, calls or other rights to purchase or
      otherwise acquire shares of the capital stock or other securities of the
      Company;

     

    (iii)  Effect
      any recapitalization, reclassification, stock split or like change in the
      capitalization of the Company;

     

    (iv)  Amend
      the
      certificate of incorporation or by-laws of the Company;

     

    (v)  (A)
      materially increase the annual level of compensation of any employee of the
      Company, (B) increase the annual level of compensation payable or to become
      payable by the Company to any of its executive officers, (C) grant any unusual
      or extraordinary bonus, benefit or other direct or indirect compensation to
      any
      employee, director or consultant, (D) increase the coverage or benefits
      available under any (or create any new) severance pay, termination pay, vacation
      pay, company awards, salary continuation for disability, sick leave, deferred
      compensation, bonus or other incentive compensation, insurance, pension or
      other
      employee benefit plan or arrangement made to, for, or with any of the directors,
      officers, employees, agents or representatives of the Company or otherwise
      modify or amend or terminate any such plan or arrangement or (E) enter into
      any
      employment, deferred compensation, severance, consulting, non-competition or
      similar agreement (or amend any such agreement) to which the Company is a party
      or involving a director, officer or employee of the Company in his or her
      capacity as a director, officer or employee of the Company;

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    (vi)  Except
      for trade payables and for indebtedness for borrowed money incurred in the
      ordinary course of business and consistent with past practice, borrow monies
      for
      any reason or draw down on any line of credit or debt obligation, or become
      the
      guarantor, surety, endorser or otherwise liable for any debt, obligation or
      liability (contingent or otherwise) of any other Person, or change the terms
      of
      payables or receivables; 

     

    (vii)  Subject
      to any lien (except for leases that do not materially impair the use of the
      property subject thereto in their respective businesses as presently conducted),
      any of the properties or assets (whether tangible or intangible) of the
      Company;

     

    (viii)  Acquire
      any material properties or assets or sell, assign, transfer, convey, lease
      or
      otherwise dispose of any of the material properties or assets (except for fair
      consideration in the ordinary course of business consistent with past practice)
      of the Company except, with respect to the items listed on Schedule 6.2(b)(viii)
      hereto, as previously consented to by the Purchaser;

     

    (ix)  Cancel
      or
      compromise any debt or claim or waive or release any material right of the
      Company except in the ordinary course of business consistent with past
      practice;

     

    (x)  Enter
      into any commitment for capital expenditures out of the ordinary
      course;

     

    (xi)  Permit
      the Company to enter into any transaction or to make or enter into any Contract
      which by reason of its size or otherwise is not in the ordinary course of
      business consistent with past practice;

     

    (xii)  Permit
      the Company to enter into or agree to enter into any merger or consolidation
      with, any corporation or other entity, and not engage in any new business or
      invest in, make a loan, advance or capital contribution to, or otherwise acquire
      the securities of any other Person;

     

    (xiii)  Except
      for transfers of cash pursuant to normal cash management practices, permit
      the
      Company to make any investments in or loans to, or pay any fees or expenses
      to,
      or enter into or modify any Contract with, any Seller or any Affiliate of any
      Seller; or

     

    (xiv)  Agree
      to
      do anything prohibited by this Section 6.2 or anything which would make any
      of
      the representations and warranties of the Sellers in this Agreement or the
      Seller Documents untrue or incorrect in any material respect as of any time
      through and including the Effective Time.

     

    
      
         

      

      
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    6.3  Consents.

     

    The
      Sellers shall use their best efforts, and the Purchaser shall cooperate with
      the
      Sellers, to obtain at the earliest practicable date all consents and approvals
      required to consummate the transactions contemplated by this Agreement,
      including, without limitation, the consents and approvals referred to in Section
      4.7 hereof; provided, however, that neither the Sellers nor the Purchaser shall
      be obligated to pay any consideration therefor to any third party from whom
      consent or approval is requested.

     

    6.4  Other
      Actions.

     

    Each
      of
      the Sellers and the Purchaser shall use its best efforts to (i) take all actions
      necessary or appropriate to consummate the transactions contemplated by this
      Agreement and (ii) cause the fulfillment at the earliest practicable date of
      all
      of the conditions to their respective obligations to consummate the transactions
      contemplated by this Agreement.

     

    6.5  No
      Solicitation.

     

    The
      Sellers will not, and will not cause or permit the Company or any of the
      Company's directors, officers, employees, representatives or agents
      (collectively, the "Representatives") to, directly or indirectly, (i) discuss,
      negotiate, undertake, authorize, recommend, propose or enter into, either as
      the
      proposed surviving, merged, acquiring or acquired corporation, any transaction
      involving a merger, consolidation, business combination, purchase or disposition
      of any amount of the assets or capital stock or other equity interest in the
      Company other than the transactions contemplated by this Agreement (an
      "Acquisition Transaction"), (ii) facilitate, encourage, solicit or initiate
      discussions, negotiations or submissions of proposals or offers in respect
      of an
      Acquisition Transaction, (iii) furnish or cause to be furnished, to any Person,
      any information concerning the business, operations, properties or assets of
      the
      Company in connection with an Acquisition Transaction, or (iv) otherwise
      cooperate in any way with, or assist or participate in, facilitate or encourage,
      any effort or attempt by any other Person to do or seek any of the foregoing.
      The Sellers will inform the Purchaser in writing immediately following the
      receipt by any Seller, the Company or any Representative of any proposal or
      inquiry in respect of any Acquisition Transaction.

     

    6.6  Preservation
      of Records.

     

    Subject
      to Section 9.4(e) hereof (relating to the preservation of Tax records), the
      Sellers and the Purchaser agree that each of them shall preserve and keep the
      records held by it relating to the business of the Company (including but not
      limited to books, records and accounts, financial information, correspondence,
      production records, employment records and other similar information) for a
      period of six years from the Closing Date and shall make such records and
      personnel available to the other as may be reasonably requested by such party
      in
      connection with, among other things, any insurance claims by, legal proceedings
      against or governmental investigations of the Sellers or the Purchaser or any
      of
      their Affiliates or in order to enable the Sellers or the Purchaser to comply
      with their respective obligations under this Agreement and each other agreement,
      document or instrument contemplated hereby or thereby. 

     

    
      
         

      

      
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    6.7  Publicity.

     

    None
      of
      the Sellers nor the Purchaser shall issue any press release or public
      announcement concerning this Agreement or the transactions contemplated hereby
      without obtaining the prior written approval of the other party hereto, which
      approval will not be unreasonably withheld or delayed, unless, in the sole
      judgment of the Purchaser or the Sellers, disclosure is otherwise required
      by
      applicable Law or by the applicable rules of any stock exchange on which the
      Purchaser lists securities, provided that, to the extent required by applicable
      law, the party intending to make such release shall use its best efforts
      consistent with such applicable law to consult with the other party with respect
      to the text thereof. 

     

    6.8  Use
      of
      Name. 

     

    The
      Sellers hereby agrees that upon the consummation of the transactions
      contemplated hereby, the Purchaser and the Company shall have the sole right
      to
      the use of the name "Voacolo Electric Incorporated" and the Sellers shall not,
      and shall not cause or permit any Affiliate to, use such name or any variation
      or simulation thereof.

     

    6.9  Employment
      Agreements. 

     

    On
      or
      prior to the Closing Date, each of Jeffrey, David and Joseph Voacolo shall
      enter
      into an employment agreement with the Company, substantially in the form of
      agreement attached hereto as Exhibit 6.9 (the “Employment Agreements”).

     

    6.10  Board
      of Directors. 

     

    The
      Board
      of Directors of the Company as of the Closing Date shall consist of two members
      appointed by the Sellers and three members appointed by the
      Purchaser.

     

    6.11  Outstanding
      Notes.

     

    All
      outstanding notes receivable due from shareholders, employees or other
      affiliates of the Company shall be settled to the satisfaction of the Purchaser
      on or prior to the Closing Date.

    

    6.12  Financial
      Statements.

     

    If
      required for Securities and Exchange Commission purposes, the Sellers shall
      cooperate with the Purchaser, to provide all information required for the
      completion of audited financial statements of the Company for the years ended
      September 30 , 2005 and 2006 and delivered no later than 60 days from the
      Closing Date.

    

    6.13  Tax
      Election.
      

     

    
      
         

      

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

    

     

    6.14  Tax
      Matters.
      

     

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

    

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

    

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

    

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

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

    

    (d) Cooperation
      on Tax Matters.

    

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

    

    
      
         

      

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

    

    (iii) The
      Purchaser and the Sellers further agree, upon request, to provide the other
      party with all information that either party may be required to report pursuant
      to §6043 of the Code and all Treasury Department Regulations promulgated
      thereunder.

    

    

    6.15  Non-Competition.
      For a
      period of two 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 or the Purchaser in
      any
      areas where the Company or the Purchaser engage in business; (b) engaging
      directly or indirectly in any business or activity competitive with any business
      or activity engaged in (or scheduled to be engaged) by the Company or the
      Purchaser in any areas where the Company or the Purchaser engage in business;
      (c) soliciting or taking away any employee, agent, representative, contractor,
      supplier, vendor, customer, franchisee, lender or investor of the Company or
      the
      Purchaser, or attempting to so solicit or take away; (d) interfering with any
      contractual or other relationship between the Company or the Purchaser and
      any
      employee, agent, representative, contractor, supplier, vendor, customer,
      franchisee, lender or investor; or (e) using, for the benefit of any person
      or
      entity other than the Company, any confidential information of the Company
      or
      the Purchaser. Nothing in this Section 6.15 shall be deemed, however, to prevent
      a Seller from owning securities of any publicly-owned corporation engaged in
      any
      such business, provided that the total amount of securities of each class owned
      by such Seller in such publicly-owned corporation (other than Purchaser) does
      not exceed two percent (2%) of the outstanding securities of such class. In
      addition, no Seller shall make any negative statement of any kind concerning
      the
      Company, the Purchaser or their affiliates, or their directors, officers or
      agents, except as such may be compelled by legal proceeding or governmental
      action or authority.

     

    6.16  Registration
      of Shares of Purchaser Common Stock.
      Sellers
      and the Purchaser shall enter into the registration rights agreement
      substantially in the form of Exhibit 6.16 hereto. 

     

    6.17  Employee
      Matters.
      The
      Company and the Purchaser agree that following the Closing Date, the Company’s
      employees shall be eligible for grants pursuant to the Purchaser’s stock option
      plan, subject to the discretion of the Company’s Board of
      Directors.

     

    6.18 Lease. On
      or
      prior to the Closing Date, the Company shall enter in the real property lease
      substantially in the form attached hereto as exhibit 6.18.

    

    
      
         

      

      
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    6.18  Conduct
      of the Business of the Company After Closing.
      From
      and after the Closing Date through the last date in period covered by the EBIT
      calculation, the Purchaser agrees:

     

    (a)  not
      to
      institute any substantive change in the operations of the Company which is
      likely to have an adverse impact on the business of the Company, without the
      prior consent of the Sellers which consent shall not be unreasonably
      withheld;

     

    (b)  to
      maintain staffing levels at the Company equal to the current levels, assuming
      the business of the Company is substantially equal to current
      levels;

     

    (c)
      to
      authorize expenditures by the Company for marketing and capital needs
      substantially similar to the amounts expended by the Company during the year
      prior to the Closing.

    

    (d)
      to
      have the Company’s Board of Directors be composed of five members, with the
      Purchaser selecting three members and Jeffrey Voacolo and David Voacolo
      (provided they are employed by the Company) as the other two
      members.

    

    
      
         

      

      
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    ARTICLE
      VII  

    CONDITIONS
      TO CLOSING

     

    7.1  Conditions
      Precedent to Obligations of Purchaser. 

     

    The
      obligation of the Purchaser to consummate the transactions contemplated by
      this
      Agreement is subject to the fulfillment, on or prior to the Closing Date, of
      each of the following conditions (any or all of which may be waived by the
      Purchaser in whole or in part to the extent permitted by applicable
      law):

     

    (a)  all
      representations and warranties of the Sellers contained herein shall be true
      and
      correct as of the date hereof;

     

    (b)  all
      representations and warranties of the Sellers contained herein qualified as
      to
      materiality shall be true and correct, and the representations and warranties
      of
      the Sellers contained herein not qualified as to materiality shall be true
      and
      correct in all material respects, at and as of the Closing Date with the same
      effect as though those representations and warranties had been made again at
      and
      as of that time;

     

    (c)  the
      Sellers shall have performed and complied in all material respects with all
      obligations and covenants required by this Agreement to be performed or complied
      with by them on or prior to the Closing Date;

     

    (d)  the
      Purchaser shall have been furnished with certificates (dated the Closing Date
      and in form and substance reasonably satisfactory to the Purchaser) executed
      by
      each Seller certifying as to the fulfillment of the conditions specified in
      Sections 7.1(a), 7.1(b) and 7.1(c) hereof;

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    (e)  Certificates
      representing 100% of the Shares shall have been, or shall at the Closing be,
      validly delivered and transferred to the Purchaser, free and clear of any and
      all Liens;

     

    (f)  there
      shall not have been or occurred any Material Adverse Change;

     

    (g)  the
      Sellers shall have obtained all consents and waivers referred to in Section
      4.7
      hereof, in a form reasonably satisfactory to the Purchaser, with respect to
      the
      transactions contemplated by this Agreement;

     

    (h)  no
      Legal
      Proceedings shall have been instituted or threatened or claim or demand made
      against the Sellers, the Company, or the Purchaser seeking to restrain or
      prohibit or to obtain substantial damages with respect to the consummation
      of
      the transactions contemplated hereby, and there shall not be in effect any
      order
      by a governmental body of competent jurisdiction restraining, enjoining or
      otherwise prohibiting the consummation of the transactions contemplated
      hereby;

     

    (i)  the
      Purchaser shall have received the written resignations of each director of
      the
      Company, other than Jeffrey Voacolo and David Voacolo;

     

    (j)  
      the
      Employment Agreements shall have been executed by Jeffrey, David and Joseph
      Voacolo and the Company; 

     

    (k)  the
      Purchaser shall have received information satisfactory in its sole discretion
      to
      verify the accuracy of the backlog and the Company’s relationships with
      customers and customer concentration; and 

     

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

     

    

    7.2  Conditions
      Precedent to Obligations of the Sellers. 

     

    The
      obligations of the Sellers to consummate the transactions contemplated by this
      Agreement are subject to the fulfillment, prior to or on the Closing Date,
      of
      each of the following conditions (any or all of which may be waived by the
      Sellers in whole or in part to the extent permitted by applicable
      law):

     

    (a)  all
      representations and warranties of the Purchaser contained herein shall be true
      and correct as of the date hereof;

     

    (b)  all
      representations and warranties of the Purchaser contained herein qualified
      as to
      materiality shall be true and correct, and all representations and warranties
      of
      the Purchaser contained herein not qualified as to materiality shall be true
      and
      correct in all material respects, at and as of the Closing Date with the same
      effect as though those representations and warranties had been made again at
      and
      as of that date;

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    (c)  the
      Purchaser shall have performed and complied in all material respects with all
      obligations and covenants required by this Agreement to be performed or complied
      with by Purchaser on or prior to the Closing Date;

     

    (d)  the
      Sellers shall have been furnished with certificates (dated the Closing Date
      and
      in form and substance reasonably satisfactory to the Sellers) executed by the
      Chief Executive Officer and Chief Financial Officer of the Purchaser certifying
      as to the fulfillment of the conditions specified in Sections 7.2(a), 7.2(b)
      and
      7.2(c);

     

    (e)  no
      Legal
      Proceedings shall have been instituted or threatened or claim or demand made
      against the Sellers, the Company, or the Purchaser seeking to restrain or
      prohibit or to obtain substantial damages with respect to the consummation
      of
      the transactions contemplated hereby, and there shall not be in effect any
      Order
      by a Governmental Body of competent jurisdiction restraining, enjoining or
      otherwise prohibiting the consummation of the transactions contemplated hereby;
      and

     

    (f)  the
      Employment Agreements shall have been executed by Jeffrey, David and Joseph
      Voacolo and the Company.

     

    

    ARTICLE
      VIII

    DOCUMENTS
      TO BE DELIVERED

     

    8.1  Documents
      to be Delivered by the Sellers. 

     

    At
      the
      Closing, the Sellers shall deliver, or cause to be delivered, to the Purchaser
      the following:

     

    (a)  stock
      certificates representing the Shares, duly endorsed in blank or accompanied
      by
      stock transfer powers and with all requisite stock transfer tax stamps attached;
      

     

    (b)  the
      certificates referred to in Section 7.1(d) and 7.1(e) hereof;

     

    (c)  copies
      of
      all consents and waivers referred to in Section 7.1(g) hereof;

     

    (d)  Employment
      Agreements, substantially in the form of Exhibit 6.9 hereto, duly executed
      by
      Jeffrey, David and Joseph Voacolo;

     

    (e)  written
      resignations of each of the directors of the Company, other than Jeffrey Voacolo
      and David Voacolo;

     

    (f)  certificate
      of good standing with respect to the Company issued by the Secretary of State
      of
      the State of incorporation, and for each state in which the Company is qualified
      to do business as a foreign corporation; and

     

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

     

    8.2  Documents
      to be Delivered by the Purchaser. 

     

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    At
      the
      Closing, the Purchaser shall deliver to the Sellers the following:

     

    (a)  The
      Purchase Price;

     

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

     

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

     

    

    ARTICLE
      IX  

    INDEMNIFICATION

     

    9.1  Indemnification.

     

    (a)  Subject
      to Section 9.2 hereof, the Sellers hereby agrees to jointly and severally
      indemnify and hold the Purchaser, the Company, and their respective directors,
      officers, employees, Affiliates, agents, successors and assigns (collectively,
      the "Purchaser Indemnified Parties") harmless from and against:

     

    (i)  any
      and
      all liabilities of the Company of every kind, nature and description, absolute
      or contingent, existing as against the Company prior to and including the
      Closing Date or thereafter coming into being or arising by reason of any state
      of facts existing, or any transaction entered into, on or prior to the Closing
      Date, except to the extent that the same have been fully provided for in the
      Balance Sheet, or disclosed in the notes thereto or were incurred in the
      ordinary course of business between the Balance Sheet date and the Closing
      Date;

     

    (ii)  subject
      to Section 10.3, any and all losses, liabilities, obligations, damages, costs
      and expenses based upon, attributable to or resulting from the failure of any
      representation or warranty of the Sellers set forth in Section 4 hereof, or
      any
      representation or warranty contained in any certificate delivered by or on
      behalf of the Sellers pursuant to this Agreement, to be true and correct in
      all
      respects as of the date made; 

     

    (iii)  any
      and
      all losses, liabilities, obligations, damages, costs and expenses based upon,
      attributable to or resulting from the breach of any covenant or other agreement
      on the part of the Sellers under this Agreement; 

     

    (iv)  any
      and
      all notices, actions, suits, proceedings, claims, demands, assessments,
      judgments, costs, penalties and expenses, including reasonable attorneys' and
      other professionals' fees and disbursements (collectively, "Expenses") incident
      to any and all losses, liabilities, obligations, damages, costs and expenses
      with respect to which indemnification is provided hereunder (collectively,
      "Losses").

     

    (b)  Subject
      to Section 9.2, Purchaser hereby agrees to indemnify and hold the Sellers and
      their respective Affiliates, agents, successors and assigns (collectively,
      the
      "Seller Indemnified Parties") harmless from and against:

     

    (i)  any
      and
      all Losses based upon, attributable to or resulting from the failure of any
      representation or warranty of the Purchaser set forth in Section 5 hereof,
      or
      any representation or warranty contained in any certificate delivered by or
      on
      behalf of the Purchaser pursuant to this Agreement, to be true and correct
      as of
      the date made;

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    (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, including without limitation as a result of any claims made
      against a Seller or a Seller’s spouse by Colonial Surety Company pursuant to the
      General Indemnity Agreement, unless such claim is for a pre-Closing matter;
      and

     

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

     

    

    9.2  Limitations
      on Indemnification for Breaches of Representations and
      Warranties.

     

    An
      indemnifying party shall not have any liability under Section 9.1(a)(ii) or
      Section 9.1(b)(i) hereof unless the aggregate amount of Losses and Expenses
      to
      the indemnified parties finally determined to arise thereunder based upon,
      attributable to or resulting from the failure of any representation or warranty
      to be true and correct, other than the representations and warranties set forth
      in Sections 4.3, 4.11, 4.24 and 4.29 hereof, exceeds $35,000 (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 $5,000 (the “Deductible”).
      Notwithstanding else contained herein, the maximum liability the Sellers in
      the
      aggregate shall be required to pay hereunder shall be the amount of the Purchase
      Price.

     

    9.3  Indemnification
      Procedures.

     

    (a)  In
      the
      event that any Legal Proceedings shall be instituted or that any claim or demand
      ("Claim") shall be asserted by any Person in respect of which payment may be
      sought under Section 9.1 hereof (regardless of the Basket or the Deductible
      referred to above), the indemnified party shall reasonably and promptly cause
      written notice of the assertion of any Claim of which it has knowledge which
      is
      covered by this indemnity to be forwarded to the indemnifying party. The
      indemnifying party shall have the right, at its sole option and expense, to
      be
      represented by counsel of its choice, which must be reasonably satisfactory
      to
      the indemnified party, and to defend against, negotiate, settle or otherwise
      deal with any Claim which relates to any Losses indemnified against hereunder.
      If the indemnifying party elects to defend against, negotiate, settle or
      otherwise deal with any Claim which relates to any Losses indemnified against
      hereunder, it shall within five (5) days (or sooner, if the nature of the Claim
      so requires) notify the indemnified party of its intent to do so. If the
      indemnifying party elects not to defend against, negotiate, settle or otherwise
      deal with any Claim which relates to any Losses indemnified against hereunder,
      fails to notify the indemnified party of its election as herein provided or
      contests its obligation to indemnify the indemnified party for such Losses
      under
      this Agreement, the indemnified party may defend against, negotiate, settle
      or
      otherwise deal with such Claim. If the indemnified party defends any Claim,
      then
      the indemnifying party shall reimburse the indemnified party for the Expenses
      of
      defending such Claim upon submission of periodic bills. If the indemnifying
      party shall assume the defense of any Claim, the indemnified party may
      participate, at his or its own expense, in the defense of such Claim; provided,
      however, that such indemnified party shall be entitled to participate in any
      such defense with separate counsel at the expense of the indemnifying party
      if,
      (i) so requested by the indemnifying party to participate or (ii) in the
      reasonable opinion of counsel to the indemnified party, a conflict or potential
      conflict exists between the indemnified party and the indemnifying party that
      would make such separate representation advisable; and provided, further, that
      the indemnifying party shall not be required to pay for more than one such
      counsel for all indemnified parties in connection with any Claim. The parties
      hereto agree to cooperate fully with each other in connection with the defense,
      negotiation or settlement of any such Claim.

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    (b)  After
      any
      final judgment or award shall have been rendered by a court, arbitration board
      or administrative agency of competent jurisdiction and the expiration of the
      time in which to appeal therefrom, or a settlement shall have been consummated,
      or the indemnified party and the indemnifying party shall have arrived at a
      mutually binding agreement with respect to a Claim hereunder, the indemnified
      party shall forward to the indemnifying party notice of any sums due and owing
      by the indemnifying party pursuant to this Agreement with respect to such matter
      and the indemnifying party shall be required to pay all of the sums so due
      and
      owing to the indemnified party by wire transfer of immediately available funds
      within 10 business days after the date of such notice.

     

    (c)  The
      failure of the indemnified party to give reasonably prompt notice of any Claim
      shall not release, waive or otherwise affect the indemnifying party's
      obligations with respect thereto except to the extent that the indemnifying
      party can demonstrate actual loss and prejudice as a result of such
      failure.

     

    9.4  Tax
      Treatment of Indemnity Payments. 

     

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

     

    

    

    ARTICLE
      X

     MISCELLANEOUS

     

    10.1  Payment
      of Sales, Use or Similar Taxes. 

     

    All
      sales, use, transfer, intangible, recordation, documentary stamp or similar
      Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
      the transactions contemplated by this Agreement shall be borne by the
      Sellers.

     

    10.2  Survival
      of Representations and Warranties. 

     

    The
      parties hereto hereby agree that the representations and warranties contained
      in
      this Agreement or in any certificate, document or instrument delivered in
      connection herewith, shall survive the execution and delivery of this Agreement,
      and the Closing hereunder, regardless of any investigation made by the parties
      hereto; provided, however, that any claims or actions with respect thereto
      (other than claims for indemnifications with respect to the representation
      and
      warranties contained in Sections 4.3, 4.11, 4.24, 4.29 and 5.8 which shall
      survive for periods coterminous with any applicable statutes of limitation)
      shall terminate unless within twenty four (24) months after the Closing Date
      written notice of such claims is given to the Sellers or such actions are
      commenced.

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    10.3  Expenses. 

     

    Except
      as
      otherwise provided in this Agreement, the Sellers and the Purchaser shall each
      bear its own expenses incurred in connection with the negotiation and execution
      of this Agreement and each other agreement, document and instrument contemplated
      by this Agreement and the consummation of the transactions contemplated hereby
      and thereby, it being understood that in no event shall the Company bear any
      of
      such costs and expenses.

     

    10.4  Specific
      Performance. 

     

    The
      Sellers acknowledge and agree that the breach of this Agreement would cause
      irreparable damage to the Purchaser and that the Purchaser will not have an
      adequate remedy at law. Therefore, the obligations of the Sellers under this
      Agreement, including, without limitation, the Sellers' obligation to sell the
      Shares to the Purchaser, shall be enforceable by a decree of specific
      performance issued by any court of competent jurisdiction, and appropriate
      injunctive relief may be applied for and granted in connection therewith. Such
      remedies shall, however, be cumulative and not exclusive and shall be in
      addition to any other remedies which any party may have under this Agreement
      or
      otherwise.

     

    10.5  Further
      Assurances. 

     

    The
      Sellers and the Purchaser each agrees to execute and deliver such other
      documents or agreements and to take such other action as may be reasonably
      necessary or desirable for the implementation of this Agreement and the
      consummation of the transactions contemplated hereby.

     

    10.6  Submission
      to Jurisdiction; Consent to Service of Process.

     

    (a)
      The
      parties hereto shall attempt to resolve any dispute, controversy, difference
      or
      claim arising out of or relating to this Agreement by negotiation in good faith.
      If such good negotiation fails to resolve such dispute, controversy, difference
      or claim within thirty (30) days after any party delivers to any other party
      a
      notice of its intent to submit such matter to arbitration, then any party to
      such dispute, controversy, difference or claim may submit such matter to
      arbitration.

     

    Any
      action or proceeding seeking to enforce any provision of, or based upon any
      right arising out of, this Agreement (other than the determination of EBIT
      or
      NTAV) shall be settled by binding arbitration by a panel of three
      (3) arbitrators in accordance with the Commercial Arbitration Rules of the
      American Arbitration Association and governed by the laws of the Commonwealth
      of
      Pennsylvania (without regard to the choice-of-law rules or principles of that
      jurisdiction). After the conclusion of the arbitration hearing, the arbitrator
      shall prepare written findings of fact and conclusion of law. It is mutually
      agreed that the written decision of the arbitrator shall be valid, binding,
      final and non-appealable and shall be a condition precedent to any legal or
      equitable action that any party hereunder may contemplate against another party
      hereunder except to compel arbitration pursuant hereto. Judgment upon the award
      may be entered in any court located in the Commonwealth of Pennsylvania, and
      all
      the parties hereto hereby consent to submit to the jurisdiction of such courts
      and expressly waive any objections or defense based upon lack of personal
      jurisdiction or venue. 

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    (b)
      Each
      of the plaintiff and defendant party to the arbitration shall select one
      (1) arbitrator (or where multiple plaintiffs and/or defendants exist, one
      (1) arbitrator shall be chosen collectively by such parties comprising the
      plaintiffs and one (1) arbitrator shall be chosen collectively by those
      parties comprising the defendants) and then the two (2) arbitrators shall
      mutually agree upon the third arbitrator. All arbitrators shall be duly licensed
      attorneys. Where no agreement can be reached on the selection of either a third
      arbitrator or an arbitrator to be named by either a group of plaintiffs or
      a
      group of defendants, any implicated party may apply to a judge of the courts
      of
      the Commonwealth of Pennsylvania, to name an arbitrator. The location of any
      arbitration shall be in Philadelphia, Pennsylvania. Each party shall have
      discovery rights as provided by the Federal Rules of Civil Procedure within
      the
      limits imposed by the arbitrators; provided, however, that all such discovery
      shall be commenced and concluded within ninety (90) days of the selection or
      appointment of the arbitrators, unless such period is extended by the
      arbitrators.

     

    (b)
      Each
      of the parties hereto hereby consents to process being served by any party
      to
      this Agreement in any suit, action or proceeding by the mailing of a copy
      thereof in accordance with the provisions of Section 10.10.

     

    (c)
      The
      non-prevailing party in any such action shall pay the reasonable legal fees
      and
      costs of the prevailing party in the action, together with the costs of the
      arbitration.

    

    10.7  Entire
      Agreement; Amendments and Waivers.
      

     

    This
      Agreement (including the schedules and exhibits hereto, together with the
      Confidentiality/Standstill Agreement executed by the parties as of February
      ,
      2007) represents the entire understanding and agreement between the parties
      hereto with respect to the subject matter hereof and can be amended,
      supplemented or changed, and any provision hereof can be waived, only by written
      instrument making specific reference to this Agreement signed by the party
      against whom enforcement of any such amendment, supplement, modification or
      waiver is sought. No action taken pursuant to this Agreement, including without
      limitation, any investigation by or on behalf of any party, shall be deemed
      to
      constitute a waiver by the party taking such action of compliance with any
      representation, warranty, covenant or agreement contained herein. The waiver
      by
      any party hereto of a breach of any provision of this Agreement shall not
      operate or be construed as a further or continuing waiver of such breach or
      as a
      waiver of any other or subsequent breach. No failure on the part of any party
      to
      exercise, and no delay in exercising, any right, power or remedy hereunder
      shall
      operate as a waiver thereof, nor shall any single or partial exercise of such
      right, power or remedy by such party preclude any other or further exercise
      thereof or the exercise of any other right, power or remedy. All remedies
      hereunder are cumulative and are not exclusive of any other remedies provided
      by
      law.

     

    10.8  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New Jersey.

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    10.9  Table
      of Contents and Headings. 

     

    The
      table
      of contents and section headings of this Agreement are for reference purposes
      only and are to be given no effect in the construction or interpretation of
      this
      Agreement.

     

    10.10  Notices. 

     

    All
      notices and other communications under this Agreement shall be in writing and
      shall be deemed given when delivered personally, mailed by certified mail,
      return receipt requested, or via recognized overnight courier service with
      all
      charges prepaid or billed to the account of the sender to the parties (and
      shall
      also be transmitted by facsimile to the Persons receiving copies
      thereof) at the following addresses (or to such other address as a party may
      have specified by notice given to the other party pursuant to this
      provision):

     

    

    
      	(a)  	
              Purchaser:

            

    

    

    WPCS
      International Incorporated

    One
      East
      Uwchlan Avenue, Suite 301

    Exton,
      Pennsylvania 19341

    Attn:
      Andrew Hidalgo, President

    Phone:
      (610) 903-0400

    Facsimile:
      (610) 903-0401

    

    Copy
      to:

    

    Thomas
      A.
      Rose, Esq.

    Sichenzia
      Ross Friedman Ference LLP

    1065
      Avenue of the Americas

    New
      York,
      New York 10018

    Phone:
      (212) 930-9700

    Facsimile:
      (212) 930-9725

    

    
      	(b)  	
              Sellers
                and Company:

            

    

    

    Voacolo
      Electric Incorporated

    65
      Patterson Avenue

    Trenton,
      NJ 08610

    Attn:
      Jeffrey Voacolo

    

    Phone:
      (609) 586-4166

    Facsimile:
      (609) 586-4279

    

    Copy
      to:

    

    Plon
      & Associates, P.C.

    1835
      Market Street, Suite 1215

    Philadelphia,
      PA 19103

    Attn:
      Steven M. Plon, Esquire

    Phone:
      (215) 979-7603

    Fax:
      (267) 775-3292

    

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

     

    10.11  Severability. 

     

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

     

    10.12  Binding
      Effect; Assignment.

     

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

     

    [intentionally
      blank]

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    

     

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

    

    

    WPCS
      INTERNATIONAL INCORPORATED

    

    

    By: /s/
      ANDREW HIDALGO

    Andrew
      Hidalgo,

    Chief
      Executive Officer

    

    VOACOLO
      ELECTRIC INCORPORATED

    
 

    

    By:
      /s/
      JEFFREY VOACOLO

    Jeffrey
      Voacolo,

    President

    

    SELLERS:

    

    

    /s/
      JEFFREY VOACOLO

    Jeffrey
      Voacolo

    

    

    

    /s/
      DAVID VOACOLO

    David
      Voacolo

    

    

    

    /s/
      JOSEPH VOACOLO

    Joseph
      Voacolo

    

    

    

    /s/
      TRACY HOSSLER

    Tracy
      Hossler

    

    

    
40Unassociated Document

    Exhibit
      10.2

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    

    THIS
      REGISTRATION RIGHTS AGREEMENT, is by and between WPCS International
      Incorporated, a Delaware corporation (the "Company"), and Jeffrey Voacolo,
      David
      Voacolo, Joseph Voacolo and Tracy Hossler (individually a "Holder" and
      collectively the "Holders").

    

    WHEREAS,
      pursuant to a Stock Purchase Agreement between the Company, Voacolo Electric
      Incorporated, a New Jersey corporation, and the Holders, dated as of the date
      hereof (the “Acquisition Agreement”), (i) the Company issued to the Holders an
      aggregate of 113,534 shares of common stock, $.0001 par value of the Company
      and
      (ii) after the first anniversary of the Closing thereunder the Company may
      issue
      to the Holders additional shares of common stock, $.0001 par value of the
      Company (the shares of stock issued under (i) and (ii) are collectively, the
      “Common Stock”); and

    

    WHEREAS,
      pursuant to the terms of and in order to induce the Holders to enter into the
      Acquisition Agreement, the Company and the Holders have agreed to enter into
      this Agreement;

    

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants contained
      herein, the Company and the Holders hereby agree as follows:

    

    1. Mandatory
      Registration.
      The
      Company shall file a registration statement with the Securities and Exchange
      Commission (the “SEC”) which seeks to register the shares of Common Stock
      issuable to the Holders upon consummation of the Acquisition Agreement (the
      "Registerable Securities") under the Securities Act of 1933 (the “1933 Act”), no
      later than forty-five (45) days after the date of receipt of written demand
      of
      the Holders. The Company will use its best efforts to cause such registration
      statement to be declared effective by the SEC within one hundred twenty (120)
      days after the initial filing with the SEC. In the event the Company intends
      to
      file a registration statement under the 1933 Act (other than on Form S-4, S-8
      or
      other inapplicable form), the Company shall provide written notice to the
      Holders of such intent. The Holders shall have a period of five (5) business
      days to notify the Company in writing if the Holders wish to have their
      Registrable Securities included in such registration statement, in which case
      the Registrable Securities shall be included.

    

    2. Cooperation
      with Company.
      The
      Holders will cooperate with the Company in all respects in connection with
      this
      Agreement, including, timely supplying all information reasonably requested
      by
      the Company and executing and returning all documents reasonably requested
      in
      connection with the registration and sale of the Registerable Securities, at
      no
      expense to the Holders.

    

    3. Registration
      Procedures.
      If and
      whenever the Company is required by any of the provisions of this Agreement
      to
      use its best efforts to effect the registration of any of the Registerable
      Securities under the 1933 Act, the Company shall (except as otherwise provided
      in this Agreement), as expeditiously as possible:

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    a. prepare
      and file with the SEC a registration statement and shall use its best efforts
      to
      cause such registration statement to become effective and remain effective
      until
      all the Registerable Securities are sold or become capable of being publicly
      sold without registration under the 1933 Act.

    

    b. prepare
      and file with the SEC such amendments and supplements to such registration
      statement and the prospectus used in connection therewith as may be necessary
      to
      keep such registration statement effective and to comply with the provisions
      of
      the 1933 Act with respect to the sale or other disposition of all securities
      covered by such registration statement whenever the Holder or Holders of such
      securities shall desire to sell or otherwise dispose of the same (including
      prospectus supplements with respect to the sales of securities from time to
      time
      in connection with a registration statement pursuant to Rule 415 of the SEC);
      

    

    c. furnish
      to each Holder such numbers of copies of a summary prospectus or other
      prospectus, including a preliminary prospectus or any amendment or supplement
      to
      any prospectus, in conformity with the requirements of the 1933 Act, and such
      other documents, as such Holder may reasonably request in order to facilitate
      the public sale or other disposition of the securities owned by such
      Holder;

    

    d. use
      its
      best efforts to register and qualify the securities covered by such registration
      statement under such other securities or blue sky laws of such jurisdictions
      as
      each Holder shall reasonably request, and do any and all other acts and things
      which may be necessary or advisable to enable such Holder to consummate the
      public sale or other disposition in such jurisdiction of the securities owned
      by
      such Holder, except that the Company shall not for any such purpose be required
      to qualify to do business as a foreign corporation in any jurisdiction wherein
      it is not so qualified or to file therein any general consent to service of
      process;

    

    e. use
      its
      best efforts to list such securities on any securities exchange on which any
      securities of the Company is then listed, if the listing of such securities
      is
      then permitted under the rules of such exchange;

    

    f. enter
      into and perform its obligations under an underwriting agreement, if the
      offering is an underwritten offering, in usual and customary form, with the
      managing underwriter or underwriters of such underwritten offering;

    

    g. notify
      each Holder of Registerable Securities covered by such registration statement,
      at any time when a prospectus relating thereto covered by such registration
      statement is required to be delivered under the 1933 Act, of the happening
      of
      any event of which it has knowledge as a result of which the prospectus included
      in such registration statement, as then in effect, includes an untrue statement
      of a material fact or omits to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading in the light
      of the circumstances then existing; and

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    h. furnish,
      at the request of any Holder on the date such Registerable Securities are
      delivered to the underwriters for sale pursuant to such registration or, if
      such
      Registerable Securities are not being sold through underwriters, on the date
      the
      registration statement with respect to such Registerable Securities becomes
      effective, (i) an opinion, dated such date, of the counsel representing the
      Company for the purpose of such registration, addressed to the underwriters,
      if
      any, and to the Holder making such request, covering such legal matters with
      respect to the registration in respect of which such opinion is being given
      as
      the Holder of such Registerable Securities may reasonably request and are
      customarily included in such an opinion and (ii) letters, dated, respectively,
      (1) the effective date of the registration statement and (2) the date such
      Registerable Securities are delivered to the underwriters, if any, for sale
      pursuant to such registration from a firm of independent certified public
      accountants of recognized standing reasonably selected by the Company, addressed
      to the underwriters, if any, and to the Holder making such request, covering
      such financial, statistical and accounting matters with respect to the
      registration in respect of which such letters are being given as the Holder
      of
      such Registerable Securities may reasonably request and are customarily included
      in such letters.

    

    4. Expenses.
      All
      expenses incurred in any registration of the Holders' Registerable Securities
      under this Agreement shall be paid by the Company, including, without
      limitation, printing expenses, fees and disbursements of counsel for the
      Company, expenses of any audits to which the Company shall agree or which shall
      be necessary to comply with governmental requirements in connection with any
      such registration, all registration and filing fees for the Holders'
      Registerable Securities under federal and State securities laws, and expenses
      of
      complying with the securities or blue sky laws of any jurisdictions pursuant
      to
      Section 3(h)(i); provided, however, the Company shall not be liable for (a)
      any
      discounts or commissions to any underwriter; (b) any stock transfer taxes
      incurred with respect to Registerable Securities sold in the Offering or (c)
      the
      fees and expenses of counsel for any Holder, provided that the Company will
      pay
      the costs and expenses of Company counsel when the Company's counsel is
      representing any or all selling security holders.

    

    5. Indemnification.
      In the
      event any Registerable Securities are included in a registration statement
      pursuant to this Agreement:

    

    a. Company
      Indemnity.
      Without
      limitation of any other indemnity provided to any Holder, to the extent
      permitted by law, the Company shall indemnify and hold harmless each Holder,
      the
      affiliates, officers, directors and partners of each Holder, any underwriter
      (as
      defined in the 1933 Act) for such Holder, and each person, if any, who controls
      such Holder or underwriter (within the meaning of the 1933 Act or the Securities
      Exchange Act of 1934 (the "Exchange Act")), against any losses, claims, damages
      or liabilities (joint or several) to which they may become subject under the
      1933 Act, the Exchange Act or other federal or state law, insofar as such
      losses, claims, damages or liabilities (or actions in respect thereof) arise
      out
      of or are based upon any of the following statements, omissions or violations
      (collectively a "Violation"): (i) any alleged untrue statement of a material
      fact contained in such registration statement including any preliminary
      prospectus or final prospectus contained therein or any amendments or
      supplements thereto, (ii) the alleged omission to state therein a material
      fact
      required to be stated therein, or necessary to make the statements therein
      not
      misleading, or (iii) any violation or alleged violation by the Company of the
      1933 Act, the Exchange Act, or any state securities law or any rule or
      regulation promulgated under the 1933 Act, the Exchange Act or any state
      securities law, and the Company shall reimburse each such Holder, affiliate,
      officer or director or partner, underwriter or controlling person for any legal
      or other expenses incurred by them in connection with investigating or defending
      any such loss, claim, damage, liability or action; provided, however, that
      the
      Company shall not be liable to any Holder in any such case for any such loss,
      claim, damage, liability or action to the extent that it arises out of or is
      based upon a Violation which occurs in reliance upon and in conformity with
      written information furnished expressly for use in connection with such
      registration by any such Holder or any other officer, director or controlling
      person thereof.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    b. Holder
      Indemnity.
      Each
      Holder shall indemnify and hold harmless the Company, its affiliates, its
      counsel, officers, directors and representatives, any underwriter (as defined
      in
      the 1933 Act) and each person, if any, who controls the Company or the
      underwriter (within the meaning of the 1933 Act or the Exchange Act), against
      any losses, claims, damages or liabilities (joint or several) to which they
      may
      become subject under the 1933 Act, the Exchange Act or any state securities
      law,
      and the Company shall reimburse each such Holder, affiliate, officer or director
      or partner, underwriter or controlling person for any legal or other expenses
      incurred by them in connection with investigating or defending any loss, claim,
      damage, liability or action; insofar as such losses, claims, damages or
      liabilities (or actions and respect thereof) arise out of or are based upon
      any
      statements or information provided by such Holder to the Company expressly
      for
      use in connection with the offer or sale of Registerable
      Securities.

    

    c. Notice;
      Right to Defend.
      Promptly after receipt by an indemnified party under this Section 5 of notice
      of
      the commencement of any action (including any governmental action), such
      indemnified party shall, if a claim in respect thereof is to be made against
      any
      indemnifying party under this Section 5 deliver to the indemnifying party a
      written notice of the commencement thereof and the indemnifying party shall
      have
      the right to participate in and if the indemnifying party agrees in writing
      that
      it will be responsible for any costs, expenses, judgments, damages and losses
      incurred by the indemnified party with respect to such claim, jointly with
      any
      other indemnifying party similarly noticed, to assume the defense thereof with
      counsel mutually satisfactory to the parties; provided, however, that an
      indemnified party shall have the right to retain its own counsel, with the
      fees
      and expenses to be paid by the indemnifying party, if the indemnified party
      reasonably believes that representation of such indemnified party by the counsel
      retained by the indemnifying party would be inappropriate due to actual or
      potential differing interests between such indemnified party and any other
      party
      represented by such counsel in such proceeding. The failure to deliver written
      notice to the indemnifying party within a reasonable time of the commencement
      of
      any such action shall relieve such indemnifying party of any liability to the
      indemnified party under this Agreement only if and to the extent that such
      failure is prejudicial to its ability to defend such action, and the omission
      so
      to deliver written notice to the indemnifying party will not relieve it of
      any
      liability that it may have to any indemnified party otherwise than under this
      Agreement.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    d. Contribution.
      If the
      indemnification provided for in this Agreement is held by a court of competent
      jurisdiction to be unavailable to an indemnified party with respect to any
      loss,
      liability, claim, damage or expense referred to therein, then the indemnifying
      party, in lieu of indemnifying such indemnified party thereunder, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such loss, liability, claim, damage or expense in such proportion as is
      appropriate to reflect the responsibility of the indemnifying party on the
      one
      hand and the indemnified party on the other hand in connection with the
      statements or omissions which resulted in such loss, liability, claim, damage
      or
      expense as well as any other relevant equitable considerations. The relevant
      fault of the indemnifying party and the indemnified party shall be determined
      by
      reference to, among other things, whether the untrue or alleged untrue statement
      of a material fact or the omission to state a material fact relates to
      information supplied by the indemnifying party or by the indemnified party
      and
      the parties' relative intent, knowledge, access to information and opportunity
      to correct or prevent such statement or omission. Notwithstanding the foregoing,
      the amount any Holder shall be obligated to contribute pursuant to this
      Agreement shall be limited to an amount equal to the proceeds to such Holder
      of
      the Registerable Securities sold pursuant to the registration statement which
      gives rise to such obligation to contribute (less the aggregate amount of any
      damages which the Holder has otherwise been required to pay in respect of such
      loss, claim, damage, liability or action or any substantially similar loss,
      claim, damage, liability or action arising from the sale of such Registerable
      Securities).

    

    e. Survival
      of Indemnity.
      The
      indemnification provided by this Agreement shall be a continuing right to
      indemnification and shall survive the registration and sale of any Registerable
      Securities by any person entitled to indemnification hereunder and the
      expiration or termination of this Agreement.

    

    6. Remedies.

    

    a. Time
      is of Essence.
      The
      Company agrees that time is of the essence of each of the covenants contained
      herein and that, in the event of a dispute hereunder, this Agreement is to
      be
      interpreted and construed in a manner that will enable the Holders to sell
      their
      Registerable Securities as quickly as possible after such Holders have indicated
      to the Company that they desire their Registerable Securities to be registered.
      Any delay on the part of the Company not expressly permitted under this
      Agreement, whether material or not, shall be deemed a material breach of this
      Agreement.

    

    b. Remedies
      Upon Default or Delay.
      The
      Company acknowledges the breach of any part of this Agreement may cause
      irreparable harm to a Holder and that monetary damages alone may be inadequate.
      The Company therefore agrees that the Holder shall be entitled to injunctive
      relief or such other applicable remedy as a court of competent jurisdiction
      may
      provide. Nothing contained herein will be construed to limit a Holder's right
      to
      any remedies at law, including recovery of damages for breach of any part of
      this Agreement.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    7. Notices.

    

    a. All
      communications under this Agreement shall be in writing and shall be mailed
      by
      first class mail, postage prepaid, or telegraphed or telexed with confirmation
      of receipt or delivered by hand or by overnight delivery service,

    

    b. If
      to the
      Company, at:

     

    
      	
            	WPCS
              	
               International
                Incorporated

            

    

    One
      East
      Uwchlan Avenue, Suite 301

             Exton,
      Pennsylvania 19341 

    Attn:
      Andrew Hidalgo, President

     

    or
      at
      such other address as it may have furnished in writing to the Holders of
      Registerable Securities at the time outstanding, or

    

    c. if
      to any
      Holder of any Registerable Securities, to 65 Patterson Avenue, Trenton, New
      Jersey 08610 or at such other address as he or she may have furnished in writing
      to the Company at the time outstanding.

    

    d. Any
      notice so addressed, when mailed by registered or certified mail shall be deemed
      to be given three (3) days after so mailed, when telegraphed or telexed shall
      be
      deemed to be given when transmitted, or when delivered by hand or overnight
      shall be deemed to be given when delivered.

    

    8. Successors
      and Assigns.
      Except
      as otherwise expressly provided herein, this Agreement shall inure to the
      benefit of and be binding upon the successors and permitted assigns of the
      Company and each of the Holders.

    

    9. Amendment
      and Waiver.
      This
      Agreement may be amended, and the observance of any term of this Agreement
      may
      be waived, but only with the written consent of the Company and the Holders
      of
      securities representing a majority of the Registerable Securities; provided,
      however, that no such amendment or waiver shall take away any registration
      right
      of any Holder of Registerable Securities or reduce the amount of reimbursable
      costs to any Holder of Registerable Securities in connection with any
      registration hereunder without the consent of such Holder; further provided,
      however, that without the consent of any other Holder of Registerable
      Securities, any Holder may from time to time enter into one or more agreements
      amending, modifying or waiving the provisions of this Agreement if such action
      does not adversely affect the rights or interest of any other Holder of
      Registerable Securities. No delay on the part of any party in the exercise
      of
      any right, power or remedy shall operate as a waiver thereof, nor shall any
      single or partial exercise by any party of any right, power or remedy preclude
      any other or further exercise thereof, or the exercise of any other right,
      power
      or remedy.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    10. Counterparts;
      Attorney’s Fees.
      One or
      more counterparts of this Agreement may be signed by the parties, each of which
      shall be an original but all of which together shall constitute one and the
      same
      instrument. The prevailing party in any action or proceeding relating to or
      arising out of this Agreement shall recover its reasonable attorney’s fees and
      other costs from the non-prevailing party, in addition to any other relief
      to
      which such prevailing party is entitled.

    

    11. Governing
      Law.
      This
      Agreement shall be construed in accordance with and governed by the internal
      laws of the State of New York, without giving effect to conflicts of law
      principles.

    

    12. Invalidity
      of Provisions.
      If any
      provision of this Agreement is or becomes invalid, illegal or unenforceable
      in
      any respect, the validity, legality and enforceability of the remaining
      provisions contained herein shall not be affected thereby.

    

    13. Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      be deemed to alter or affect the meaning or interpretation of any provisions
      hereof.

    

    IN
      WITNESS WHEREOF, the undersigned has executed or caused to be duly executed
      this
      Registration Rights Agreement as of the 30th
      day of
      March, 2007.

    

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

      	 	 	 
	 	 
	 
 	 
 	 
 
	 	  	/s/ JEFFREY
              VOACOLO
	 	
              
Jeffrey
              Voacolo
	 	 

    

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	  	/s/ DAVID
              VOACOLO
	 	
              
David
              Voacolo
	 	 

      	 	 	 
	 	 
	 
 	 
 	 
 
	 	 	/s/ JOSEPH
              VOACOLO
	 	
              
Joseph
              Voacolo
	 	 

      	 	 	 
	 	 
	 
 	 
 	 
 
	 	
            	/s/ TRACY
              HOSSLER
	 	
              
Tracy
              Hossler

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