Document:

Form 8-K for WPCS International

    Exhibit
      10.1

     

    

    

    STOCK
      PURCHASE AGREEMENT

    

     AMONG

    

    WPCS
      INTERNATIONAL INCORPORATED

    

    MAJOR
      ELECTRIC, INC.

    

    AND

    

    FRANK
      MAUGER

    JAMES
      JORDAN

    

    AND

    

    TODD
      KAHL

    

    Dated
      August 1, 2007

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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

                	 

        

         

         

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

        
 

        
          	 	
                  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   

                	
                  Financial
                    Statements

                	26	 
	 	
                  6.12   

                	
                  Tax
                    Election

                	26	 
	 	
                  6.13   

                	
                  Tax
                    Matters

                	27	 
	 	
                  6.14

                	
                  Non-Competition

                	
                  28

                	 
	 	
                  6.15

                	
                  Registration
                    of Shares of Purchaser Common Stock

                	
                  29

                	 
	 	
                  6.16

                	
                  Employee
                    Matters.

                	
                  29

                	 

        

         

         

         

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

        
 

        
          	 	 	 	 	 
	 ARTICLE
                  VII CONDITIONS TO CLOSING 	 	 
	 	
                  7.1

                	
                  Conditions
                    Precedent to Obligations of Purchaser

                	
                  29

                	 
	 	
                  7.2

                	
                  Conditions
                    Precedent to Obligations of the Seller

                	
                  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	 

        

      
 

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    

    

    

    STOCK
      PURCHASE AGREEMENT

    

    

    THIS
      STOCK PURCHASE AGREEMENT is made as of August 1, 2007 (the “Agreement”), among
      WPCS International Incorporated, a corporation existing under the laws of
      Delaware (the “Purchaser”), Major Electric, Inc., a Washington 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 15,600 shares of common stock, no par value
      per
      share (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 Schedule 1.1 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 Six Million Seven
      Hundred Fifty Thousand dollars ($6,750,000) (the “Purchase Price”), subject to
      adjustment as set forth herein.

     

    2.2           Payment
      of Purchase Price.

     

    On
      the
      Closing Date, the Purchaser shall pay Four Million dollars ($4,000,000) of
      the Purchase Price to the Sellers (the “Closing Payment”), which shall be paid
      as follows:

     

    (i)                 $3,000,000
      (the “Cash Purchase Price”) which shall be paid by wire transfer of immediately
      available funds into an account designated by the Sellers, provided that
      $300,000 of the Cash Purchase Price shall be deposited into escrow pursuant
      to
      Section 2.3(b);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii)           issuance
      of such number of shares of Purchaser common stock (the “Common Stock”) as
      equals $1,000,000, 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 Closing Shares shall be delivered within three (3)
      business days of the Closing Date; and

     

    (iii)           an
      additional $2,750,000 (the “Second  Payment”) will be payable to the
      Sellers in the event the Company’s earnings before interest and taxes (“EBIT”)
      for the year ending December 31, 2007, shall equal or exceed $1,500,000 (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 year
      ended December 31, 2007.  For the purposes of the calculation of the
      Target EBIT, non-recurring income and expenses shall be excluded, including
      expenses incurred or resulting from the sale and transfer of the Shares to
      Purchaser (including, without limitation, the Second Payment, any excess
      Purchase Price to be paid under Section 2.3 after the Closing, and any payments
      under Section 7.1(k)) 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 Sellers and the Purchaser shall submit such dispute for resolution
      to
      an independent accounting firm mutually appointed by the Sellers and the
      Purchaser (the “Independent Accounting Firm”), which shall determine and report
      to the parties and such report shall be final, binding and conclusive on the
      parties hereto.  If the Independent Accounting Firm determines that
      the EBIT is more than five percent (5%) above the EBIT determined by the
      Purchaser, then the party whose EBIT calculation is furthest from that of the
      Independent Accounting Firm shall pay the legal fees and expenses (including
      the
      fees of the Independent Accounting Firm) of the other party.  If the
      Independent Accounting Firm 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 (including the fees of the Independent
      Accounting Firm) of the Purchaser.  The parties shall cooperate with
      one another and provide reasonable access of all pertinent books and records
      to
      the other party.  To the extent the actual EBIT for the year ended
      December 31, 2007 shall be less than the Target EBIT, the Second Payment shall
      be reduced by the amount of the shortfall, on a dollar for dollar basis, 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 the 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 (10) 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 ninety (90) days after the Closing Date, the Sellers shall cause to
      be
      prepared and delivered to Purchaser a calculation of the Company’s net tangible
      asset value as of the
      Closing Date.  Net tangible asset value is defined as total assets
      minus total liabilities minus intangible assets (“NTAV”). The Purchaser shall
      have a period of twenty (20) days to review the NTAV calculation.  In
      the event the Sellers and the Purchaser are unable to agree upon the NTAV after
      good faith negotiations for a period of 20 days, the Sellers and the Purchaser
      shall submit such dispute for resolution to an Independent Accounting Firm,
      which shall determine and report to the parties and such report shall be final,
      binding and conclusive on the parties hereto.  If the Independent
      Accounting Firm determines that the NTAV is equal to or more than five percent
      (5%) below the NTAV determined by the Sellers, then the party whose NTAV
      calculation is furthest from that of the Independent Accounting Firm shall
      pay
      the legal fees and expenses (including the fees of the Independent Accounting
      Firm) of the other party.  If the Independent Accounting Firm
      determines that the NTAV is equal to or less than five percent (5%) above the
      NTAV determined by the Sellers, then the Sellers shall pay the legal fees and
      expenses (including the fees of the Independent Accounting Firm) 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 $1,900,000, 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 $1,900,000, the Closing Payment shall be increased by the amount
      of
      the excess and such excess amount shall be paid to the Sellers within ten (10)
      days after determination of the NTAV.  At the option of the Purchaser,
      any amounts due to be paid in excess of $1,900,000 may be paid in cash or shares
      of Common Stock valued at the closing price
      of
      the Common Stock on the date prior to the 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, $300,000 shall be
      deposited into an escrow account until the NTAV as of the Closing Date shall
      be
      determined and any deficiency in the NTAV shall have been paid from the escrow
      account to the Purchaser (the “Escrowed Funds”).  The Escrowed Funds
      shall be held for the benefit of the Sellers in accordance with their pro rata
      ownership of the Shares as set forth on Schedule 1.1.  The
      Escrowed Funds shall be held in accordance with the terms and conditions set
      forth in the escrow agreement attached hereto as Exhibit 2.3 (the “Escrow
      Agreement”).

     

    

    ARTICLE
      III

     

    CLOSING
      AND TERMINATION

     

    3.1           Closing
      Date.

     

    Subject
      to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof
      (or the waiver thereof by the party entitled to waive that condition), the
      closing of the sale and purchase of the Shares provided for in Section 1.1
      hereof (the "Closing") shall take place at the offices of Sichenzia Ross
      Friedman Ference LLP, 61 Broadway, New York, NY 10006 (or at such other place
      as
      the parties may designate in writing) on such date as the Sellers and the
      Purchaser may designate.  The Closing may also take place through the
      delivery of documents in electronic or telefaxed format or through courier
      delivery of actual signatures to counsel for the parties. 

     

    3.2           Termination
      of Agreement.

     

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

     

    (a)           At
      the election of the Sellers or the Purchaser on or after August 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

        
          

        

      

      
        
        

      

    

    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 and/or the
      confidentiality provisions of the Confidentiality/Standstill Agreement executed
      by the parties as of June 14, 2007 (the “Confidentiality/Standstill Agreement”),
      which confidentiality provisions shall remain in full force and
      effect.

     

    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 as 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 represent and warrant to the Purchaser
      that:

     

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

     

    

    4.2.           Authority.

    

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

    

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

    

    (c)           Subject
      to any consents required under Section 4.7 below, the Sellers and the Company
      have the full legal right, power and authority to execute, deliver and carry
      out
      the terms and provisions of this Agreement; and this Agreement has been duly
      and
      validly executed and delivered on behalf of Sellers and the Company and
      constitutes a valid and binding obligation of each Seller and the Company
      enforceable in accordance with its terms, except as limited by bankruptcy,
      insolvency, reorganization, moratorium or similar laws relating to or affecting
      generally the enforcement of creditor’s rights.

    

    (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 100,000 shares of Common Stock,
      no par value per share, of which 15,600 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.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

    4.6.           Subsidiaries
      and Affiliates.  Any and all businesses, entities, enterprises and
      organizations in which the Company has any ownership, voting or profit and
      loss
      sharing percentage interest (the “Subsidiaries”) are identified in Schedule 4.6
      hereto, together with the Company’s interest therein.  Unless the
      context requires otherwise or specifically designated to the contrary on
      Schedule 4.6 hereto, “Company” as used in this Agreement shall include all such
      Subsidiaries.  Except as set forth in Schedule 4.6 or 4.31, (i) the
      Company has made no advances to, or investments in, nor owns beneficially or
      of
      record, any securities of or other interest in, any business, entity, enterprise
      or organization, (ii) there are no arrangements through which the Company
      has acquired from, or provided to, any of the Sellers or their affiliates any
      goods, properties or services, and (iii) there are no rights, privileges or
      advantages now enjoyed by the Company as a result of the ownership of the
      Company by the Sellers which, to the knowledge of the Sellers or the Company,
      will be lost as a result of the consummation of the transactions contemplated
      by
      this Agreement.  Each entity shown on Schedule 4.6 is duly organized,
      validly existing and in good standing under the laws of the jurisdiction of
      its
      incorporation, and has full corporate power to own all of its property and
      to
      carry on its business as it is now being conducted.  Also set forth on
      Schedule 4.6 is a list of jurisdictions in which each Subsidiary is qualified
      as
      a foreign corporation.  Such jurisdictions are the only jurisdictions
      in which the ownership or leasing

    of
      property by each Subsidiary or the conduct of its business requires it to be
      so
      qualified.  All of the outstanding shares of capital stock of each
      Subsidiary have been duly authorized and validly issued, are fully paid and
      nonassessable, and, except as set forth on Schedule 4.6, are owned, of record
      and beneficially, by the Company, and on the Closing Date will be owned by
      the
      Company, free and clear of all liens, encumbrances, equities, options or claims
      whatsoever.  No Subsidiary has outstanding any other equity securities
      or securities options, warrants or rights of any kind that are convertible
      into
      equity securities of such Subsidiary, except as set forth on Schedule
      4.6.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

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

    

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

    

    
      	
               

            	
              the
                reviewed balance sheet of the Company at December 31, 2006 and 2005,
                and
                the related statements of operations, and of cash flows of the Company
                for
                the period then ended and (ii) the unaudited balance sheet of the
                Company
                as of June 30, 2007 and the related compiled statement of operations
                of
                the Company for the six 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 material items of special or
      nonrecurring income or any other material income not earned in the ordinary
      course of business except as set forth in Schedule 4.8, and the financial
      statements for the interim periods indicated include all adjustments, which
      consist of only normal recurring accruals, necessary for such fair
      presentation.  There are no facts known to any of the Sellers or the
      Company that, under GAAP consistently applied, would alter the information
      contained in the foregoing Financial Statements in any material
      way.

    

    The
      final Balance Sheet will be
      complete and correct in all material respects determined in accordance with
      GAAP
      as of the Balance Sheet Date.  For the purposes hereof, the balance
      sheet of the Company as of June 30, 2007 is referred to as the “Balance Sheet”
and June 30, 2007 is referred to as the “Balance Sheet Date”.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    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 exceeding $1,000,  individually or in the aggregate,
      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.

    

    (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 (“Tax 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.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (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.

    

    (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.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

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

    

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

    

    (x)           The
      Company made a valid election under Section 1362 of the Code to be treated
      as an
      S corporation as defined in Code Section 1361, which election was acknowledged
      by the IRS and became effective on August 1, 1999.  The election has
      remained in effect since that date without revocation, cessation or termination,
      and the Company has qualified to be taxed under the provisions of Subchapter
      S
      of the Code and under applicable similar provisions of state income tax law
      for
      all periods beginning on or after August 1, 1999.

    

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

    

    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 GAAP consistently
      applied.  Inventory acquired since the Balance Sheet Date has been
      acquired in the ordinary course of business and valued as set forth
      above.  The Company will maintain the inventory in the normal and
      ordinary course of business from the date hereof through the Closing
      Date.

    

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

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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, to Sellers’ knowledge, 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
      by Company or the Sellers.  The Company has performed in all material
      respects the obligations required to be performed by it under all such leases
      to
      date and it is not in default in any material respect under any of said leases,
      except as set forth in Schedule 4.16, nor has it made any leasehold improvements
      required to be removed at the termination of any lease, except
      signs.  To Sellers’ knowledge, 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.

    

    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 to Sellers’
knowledge has it infringed or 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.  To Sellers’ knowledge, the Company has the sole and exclusive
      right to use its corporate and trade names in the jurisdictions where it
      transacts business.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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 expire prior to the
      Closing Date or where such cancellation would not have a Material Adverse
      Effect.  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, except where the foregoing
      would not have a Material Adverse Effect.  Upon the Closing Date, all
      life insurance policies maintained by the Company shall be assigned to each
      respective Seller.

    

    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.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    (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;

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (v)           All
      contracts that individually provide for aggregate future payments to or from
      the
      Company of $50,000 or more, to the extent not included in (i) through (iv)
      above;

     

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

    

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

     

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

     

    Except
      as
      set forth in Schedule 4.20, (i) all contracts, agreements and commitments
      of the Company set forth in Schedule 4.20 are valid, binding and in full force
      and effect, and (ii) neither the Company nor, to the best of Sellers’
knowledge, any other party to any such contract, agreement, or commitment has
      materially breached any provision thereof or is in default
      thereunder.  Except as set forth in Schedule 4.20, the sale of the
      Shares by the Sellers in accordance with this Agreement is not restricted by,
      nor will it create grounds for 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 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 one business day before the
      Closing Date.

    

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

     

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

    

    
      
        
        

      

      
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    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 would
      have
      a Material Adverse Affect on its method or manner of doing
      business.

    

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

    

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

    

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

    

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

    

    (i)           Incurred
      any material obligation or liability (absolute, accrued, contingent or
      otherwise), except in the ordinary course of its business consistent with past
      practice or in connection with the performance of this Agreement, and any
      such

    obligation
      or liability incurred in the ordinary course is not materially adverse, except
      for claims, if any, that are adequately covered by insurance;

    

    
      
        
        

      

      
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    (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 GAAP due to income earned or
      expenses 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;

    

    (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 having a Material Adverse Effect on 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 (a “Material Adverse Change”).

     

     

    
      
        
        

      

      
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    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, except as set
      forth
      on Schedule 4.24.

    

    (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
      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 Sellers,
      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;

    

    (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);

     

    
      
        
        

      

      
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    (iii)           An
      entity is an “affiliate” of the Company for purposes of this Section 4.24
      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 have no knowledge 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.

    

    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 material
      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.

    

    
      
        
        

      

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

     

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

     

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

     

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

     

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

    

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

    

    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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    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.  Notwithstanding the foregoing, this Section shall not
      restrict the Sellers’ rights to require Purchaser to register the Purchaser
      Shares for public sale pursuant to the Registration Rights Agreement (as
      hereinafter defined).

    

    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.

    

    Frank
      Mauger 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.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

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

    

    

    ARTICLE
      V

     

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    5.1           Organization
      and Good Standing.

     

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

     

    5.2           Authority.

     

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

    

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

    

    5.3           Conflicts;
      Consents of Third Parties.

     

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

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    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 acknowledges 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
      represents, warrants and agrees 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 request to ensure compliance with all applicable laws
      concerning money laundering and similar activities.

     

    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.

     

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    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 any other agreement referenced herein.  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.

     

    6.2           Conduct
      of the Business Pending the Closing.

     

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

     

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

     

    (ii)          Use
      its best efforts to (A) preserve its present business operations, organization
      (including, without limitation, management and the sales force) and goodwill
      of
      the Company and (B) preserve its present relationship with parties 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 except for dispositions in the ordinary
      course of business and (B) insurance upon all of the properties and assets
      of
      the Company in such amounts and of such kinds comparable 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

     

    
      
        
        

      

      
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    (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 Articles of Incorporation or Bylaws 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 (except for bonuses to be paid by Frank Mauger
      to James Jordan and Todd Kahl in connection with the transactions contemplated
      hereby), (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;

     

    (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 party, 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;

     

    
      
        
        

      

      
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    (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 party;

     

    (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 any
      other agreement referenced herein untrue or incorrect in any material respect
      as
      of any time through and including the Closing.

     

    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.

     

    
      
        
        

      

      
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    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 party,
      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 party to do or seek any of the
      foregoing.  The Sellers will inform the Purchaser in writing
      immediately following the receipt by any Seller, the Company or any
      Representative of any proposal or inquiry in respect of any Acquisition
      Transaction.

     

    6.6           Preservation
      of Records.

     

    Subject
      to Section 6.14(d) hereof (relating to the preservation of Tax records), the
      Sellers and the Purchaser agree that each of them shall preserve and keep the
      records held by it relating to the Business of the Company (including but not
      limited to books, records and accounts, financial information, correspondence,
      production records, employment records and other similar information) for a
      period of six years from the Closing Date and shall make such records and
      personnel available to the other as may be reasonably requested by such party
      in
      connection with, among other things, any insurance claims by, legal proceedings
      against or governmental investigations of the Sellers or the Purchaser or any
      of
      their affiliates or in order to enable the Sellers or the Purchaser to comply
      with their respective obligations under this Agreement and each other agreement,
      document or instrument contemplated hereby or thereby.  

     

    6.7           Publicity.

     

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

     

    6.8           Use
      of Name.

     

    The
      Sellers hereby agree that upon the consummation of the transactions contemplated
      hereby, the Purchaser and the Company shall have the sole right to the use
      of
      the name "Major 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.

     

    
      
        
        

      

      
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    6.9           Employment
      Agreements.

     

    On
      or
      prior to the Closing Date, each of Frank Mauger and James Jordon 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           Fiscal
      Projection; Confirmation of Financial Information.

     

    On
      or
      prior to the Closing Date, the Company will provide (i) a fiscal projection
      for
      the twelve month period ending April 30, 2008, which projection shall be
      mutually acceptable to the Company and the Purchaser, and (ii) confirmation
      to
      the Purchaser of information related to backlog, add-backs, key client
      relationships and the tangibility of assets.

    

    6.12           Financial
      Statements.

     

    If
      required for Securities and Exchange Commission purposes, the Sellers shall
      cooperate with the Purchaser, to provide all information required for the
      completion of audited financial statements of the Company for the years ended
      December 31 , 2005 and 2006 and reviewed statements for the six month period
      ended June 30, 2006 and 2007, and delivered no later than 60 days from the
      Closing Date.  The costs of such financial statements shall be borne
      by the Purchaser.

    

    6.13           Tax
      Election.

     

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

    

    
      
        
        

      

      
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    6.14           Tax
      Matters.

     

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

    

    
      
        
        

      

      
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    (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 Tax 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 agrees (A) to retain all books and records
      with respect to Tax matters pertinent to the Company relating to any taxable
      period beginning before the Closing Date until the expiration of the statute
      of
      limitations (and, to the extent notified by the Purchaser or the Sellers, any
      extensions thereof) of the respective tax periods, and to abide by all record
      retention agreements entered into with any taxing authority, and (B) to give
      the
      other party reasonable written notice prior to transferring, destroying or
      discarding any such books and records and, if the other party so requests,
      the
      Company or the Sellers, as the case may be, shall allow the other party to
      take
      possession of such books and records.

    

    (ii)           The
      Purchaser and the Sellers further agree, upon request, to use their commercially
      reasonable best efforts to obtain any certificate or other document from any
      governmental authority or any other party 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 with respect to Frank Mauger and six months with
      respect to James Jordan after the later of the Closing Date or the termination
      of such individual’s employment by the Company, Frank Mauger and James Jordan
      each agrees 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 Frank Mauger or James Jordan
      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 individual 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.

     

    
      
        
        

      

      
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    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 (the “Registration Rights Agreement”).

     

    6.17           Employee
      Matters.  The Company and the Purchaser agree that following the
      Closing Date:

     

    (i)           the
      Company shall convert its current 401(k) benefit plan into the plan maintained
      by the Purchaser;

    

    (ii)           the
      Company shall make a good faith effort to maintain the existing health and
      life
      insurance policies;

    

    (iii)           the
      Company’s employees shall be eligible for grants pursuant to the Purchaser’s
      stock option plan, which shall be allocated as determined in good faith by
      Frank
      Mauger.

    

    6.18           Elimination
      of Non-Business Financial Obligations.

     

    On
      or
      prior to the Closing Date, the Company shall eliminate all financial
      obligations, if any, which are not directly related to the Business and
      operations of the Company.

     

    Article
      VII

     

    CONDITIONS
      TO CLOSING

     

    7.1           Conditions
      Precedent to Obligations of Purchaser.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (i)           the
      Purchaser shall have received the written resignations of each director of
      the
      Company, other than Frank Mauger and James Jordan;

     

    (j)           
      the Employment Agreements shall have been executed by Frank Mauger and James
      Jordon and the Company;

     

    (k)           the
      Purchaser shall have received information satisfactory in its sole discretion
      to
      verify the accuracy of the backlog, add-backs, key client relationships and
      the
      tangibility of assets; and

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

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

     

    

    7.2           Conditions
      Precedent to Obligations of the Sellers.

     

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

     

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

     

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

     

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

     

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

     

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

     

    (f)           the
      Employment Agreements shall have been executed by Frank Mauger and James Jordan
      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:

     

    
      
        
        

      

      
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    (a)           stock
      certificates representing the Shares referred to in Section 7.1(e) hereof,
      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) 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
      Frank Mauger and James Jordan;

     

    (e)           written
      resignations of each of the directors of the Company, other than Frank Mauger
      and James Jordan;

     

    (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, if any, in which the Company
      is
      qualified to do business as a foreign corporation;

     

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

     

    (h)           the
      Registration Rights Agreement, substantially in the form of Exhibit 6.16 hereto,
      duly executed by the Sellers; and

     

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

     

    8.2           Documents
      to be Delivered by the Purchaser.

     

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

     

    (a)           The
      Closing Payment (provided that the Closing Shares may be delivered within three
      (3) business days of the Closing Date pursuant to Section 2.2(ii));

     

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

     

    (c)           the
      Employment Agreements of Frank Mauger and James Jordan, substantially in the
      form of Exhibit 6.9 hereto, duly executed by the Purchaser;

     

    (d)           the
      Escrow Agreement, substantially in the form of Exhibit 2.3 hereto, duly executed
      by the Purchaser;

     

    (e)           the
      Registration Rights Agreement, substantially in the form of Exhibit 6.16 hereto,
      duly executed by the Purchaser; and

     

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

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    

     

    ARTICLE
      IX

     

    INDEMNIFICATION

     

    9.1           Indemnification.

     

    (a)           Subject
      to Sections 9.2 and 10.2 hereof, Frank Mauger (“Mauger”) hereby agrees to
      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 Sections 9.2 and 10.2 hereof, Purchaser hereby agrees to indemnify and hold
      the Sellers and their respective affiliates, agents, successors and assigns
      (collectively, the "Seller Indemnified Parties") harmless from and
      against:

     

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

     

    (ii)           any
      and all Losses based upon, attributable to or resulting from the breach of
      any
      covenant or other agreement on the part of the Purchaser under this Agreement
      or
arising
      from the ownership or operation of the Company from and after the Closing Date,
      unless such claim is for a pre-Closing matter; and

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (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 exceeds $50,000 (the “Basket”) (except for Losses and
      Expenses based upon, attributable to or resulting from the failure of any
      representation or warranty to be true and correct under Section 4.3, for which
      the Basket shall not apply) and, in such event, the indemnifying party shall
      be
      required to pay the entire amount of such Losses and Expenses in excess of
      the
      Basket.  Notwithstanding anything else contained herein, the maximum
      liability Mauger shall be required to pay hereunder, in the aggregate, shall
      be
      the aggregate amount of cash and shares of the Purchaser (valued as of their
      date of issuance) paid or delivered to the Sellers (the “Cap”).  In
      addition, if any Loss or Expense of Purchaser is covered by insurance, Mauger
      shall not be required to indemnify Purchaser for the amount of such Losses
      or
      Expenses to the extent of such insurance proceeds and Mauger shall only pay
      Purchaser the excess of the Losses and Expenses, if any, over such insurance
      proceeds, subject to the Cap.  Following the Closing, other than in
      cases of fraud, this Article 9 shall be the sole and exclusive remedy of the
      parties hereto and their successors and assigns with respect to any and all
      claims for Losses and Expenses sustained or incurred arising out of this
      Agreement.

     

    9.3           Indemnification
      Procedures.

     

    (a)           In
      the event that any legal proceedings shall be instituted or that any claim
      or
      demand ("Claim") shall be asserted by any person or entity in respect of which
      payment may be sought under Section 9.1 hereof (regardless of the Basket
      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.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    (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.

     

    (d)           With
      respect to amounts payable by Mauger hereunder to the Purchaser hereunder,
      it is
      agreed that Mauger shall first be obligated to pay all amounts in cash, up
      to
      the amount of cash actually received by the Sellers pursuant to Article II
      of
      this Agreement.  Mauger may then deliver shares of Purchaser common
      stock to the Purchaser to pay any additional amounts due
      hereunder.  Any shares of Purchaser common stock so used to make
      payments hereunder shall be valued at the closing price of such shares on the
      day prior to the date of delivery to the Purchaser, endorsed for
      transfer.  Any additional amounts which Mauger shall be required to
      pay after the delivery of any shares of Purchaser common stock shall be made
      in
      cash.

     

    

    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.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

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

     

    10.5           Further
      Assurances.

     

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

    

    10.6           Submission
      to Jurisdiction; Consent to Service of Process.

     

    (a)           The
      parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
      of
      any federal or state court located within the Commonwealth of Pennsylvania
      or
      the State of Washington over any dispute arising out of or relating to this
      Agreement or any of the transactions contemplated hereby and each party hereby
      irrevocably agrees that all claims in respect of such dispute or any suit,
      action proceeding related thereto may be heard and determined in such
      courts.  The parties hereby irrevocably waive, to the fullest extent
      permitted by applicable law, any objection which they may now or hereafter
      have
      to the laying of venue of any such dispute brought in such court or any defense
      of inconvenient forum for the maintenance of such dispute.  Each of
      the parties hereto agrees that a judgment in any such dispute may be enforced
      in
      other jurisdictions by suit on the judgment or in any other manner provided
      by
      law.

     

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

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    (c)
      If
      any legal action or any arbitration or other proceeding is brought for the
      enforcement or interpretation of this Agreement, or because of an alleged
      dispute, breach, default or misrepresentation in connection with or related
      to
      this Agreement, the successful or prevailing party shall be entitled to recover
      reasonable attorneys' fees and other costs in connection with that action or
      proceeding, in addition to any other relief to which it or they may be
      entitled.

    

    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 June 14, 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 Washington without giving effect to
      principles regarding conflict of laws.

     

    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 parties 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):

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    

    
      	
               

            	
              (a)

            	
              Purchaser:

            

    

    

    WPCS
      International Incorporated

    One
      East
      Uwchlan Avenue, Suite 301

    Exton,
      Pennsylvania 19341

    Attn:  Andrew
      Hidalgo, Chief Executive Officer

    Phone:  (610)
      903-0400

    Facsimile:
      (610) 903-0401

    

    Copy
      to:

    

    Thomas
      A.
      Rose, Esq.

    Sichenzia
      Ross Friedman Ference LLP

    61
      Broadway

    New
      York,
      New York 10006

    Phone:  (212)
      930-9700

    Facsimile:
      (212) 930-9725

    

    
      	
               

            	
              (b)

            	
              Sellers
                and Company:

            

    

    

    Major
      Electric, Inc.

    18538
      142nd Avenue
      NE

    Woodinville,
      WA 98072

    Attn:  Frank
      Mauger

    Phone:  (425)
      483-2677

    Facsimile:  (425)
      402-9708

    

       
      Copy to:

    

    Ryan,
      Swanson & Cleveland, PLLC

    Attn:  Paul
      Meier, Esq.

    1201
      Third Avenue, Suite 3400

    Seattle,
      WA 98101

    Phone:  (206)
      654-2214

    Fax:  (206)
      652-2914

    

    

    10.11                      Severability.

     

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

     

    

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    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]

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    

     

    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

            	 
	 	 	 	 
	 	 	 	 

      	 	MAJOR
              ELECTRIC, INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ FRANK
              MAUGER	 
	 	 	
              Frank
                Mauger,

              President

            	 
	 	 	 	 
	 	 	 	 

    

    
      	 	SELLERS:	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ FRANK
              MAUGER	 
	 	 	Frank
              Mauger	 
	 	 	 	 
	 	 	 	 

    

          
      
      	 	 	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ JAMES
              JORDAN	 
	 	 	James
              Jordan	 
	 	 	 	 
	 	 	 	 

      	 	
            	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ TODD
              KAHL	 
	 	 	Todd
              Kahl	 
	 	 	 	 
	 	 	 	 

     

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    

    

    SCHEDULE
      1.1

     

     

    
      	 Seller 	
               Shares

            
	 	 
	 Frank
              Mauger	
               15,000

            
	 	  
	 James
              Jordan   	
               300

            
	 	 
	 Todd
              Kahl       	
               300Unassociated Document

    Exhibit
      10.2

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    

    THIS
      REGISTRATION RIGHTS AGREEMENT, is
      by and between WPCS International Incorporated, a Delaware corporation (the
      "Company"), Frank Mauger, James Jordan and Todd Kahl (individually a "Holder"
      and collectively the "Holders").

    

    WHEREAS,
      pursuant to a Stock Purchase
      Agreement between the Company, Major Electric, Inc., a Washington corporation,
      and the Holders, dated as of the date hereof (the “Acquisition Agreement”), (i)
      the Company issued to the Holders an aggregate of 80,000 shares of common stock,
      $.0001 par value of the Company and (ii) after 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 Registerable
      Securities included in such registration statement, in which case the
      Registerable 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:

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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(d); 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 beneficiaries, heirs, successors and assigns 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, beneficiary, heir, successor, or
      assign, 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 (severally and not jointly) 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,
      CEO

    

    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 18538 142nd Avenue
      NE,
      Woodinville, WA 98072, 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
      have executed or caused to be duly executed this Registration Rights Agreement
      as of the 1st
      day of August, 2007.

    

    WPCS INTERNATIONAL INCORPORATED

     

    
      	 	 	 	 	 
	
              /s/
                ANDREW HIDALGO    

            	 	 	
              /s/
                FRANK MAUGER

            	 
	Andrew
              Hidalgo,                               	 	 	
              Frank
                Mauger

            	 
	
              Chief
                Executive Officer

            	 	 	
               

            	 

    

     

    
      	 	 	 
	 	 	 	 
	
               

            	
               

            	/s/ JAMES
              JORDAN	 
	 	 	James
              Jordan	 
	 	 	 	 
	 	 	 	 

    

    
      
        	 	 	 
	 	 	 	 
	 	 	
                /s/
                  TODD KAHL

              	 
	 	 	
                Todd
                  Kahl

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