Document:

EX-10.2 FORM OF TERM. OF EMP. DEATH BENEFIT AGREE.

 

Exhibit 10.2

TERMINATION OF

EMPLOYEE DEATH BENEFIT AGREEMENT 

     THIS TERMINATION OF EMPLOYEE DEATH BENEFIT AGREEMENT (the “Termination”) is made this         day
of                     , 2006, by and between                                                                  (the “Employee”), and THE TIMKEN
COMPANY (“Timken”), an Ohio corporation having its principal offices at Canton, Ohio.

RECITALS

     A. The Employee and Timken entered into an Employee Death Benefit Agreement dated
                                               , 2004 (the “Death Benefit Agreement”), pursuant to which Timken promised to
provide death benefits to the Employee’s beneficiary in certain circumstances.

     B. Timken has determined that it is preferable to provide death benefit protection to the
Employee’s beneficiary through the procurement of an individual term life insurance policy (the
“Policy”) to be owned by the Employee, the premiums for which will be paid by Timken.

     C. In consideration of Timken’s procurement of and agreement to pay the premiums on the
Policy, the Employee is willing to terminate the Death Benefit Agreement.

     NOW, THEREFORE, the parties covenant and agree as follows, effective as of                            ,
2006 (the “Effective Date”):

     1. Effective as of the Effective Date, Timken shall procure a term life insurance policy
providing life insurance coverage on the life of the Employee in the amount of twice the Employee’s
annual salary in effect as of December 31, 2003, determined by Timken to be $                               . The
Employee shall be the owner of the Policy and, except for Timken’s obligations in Section 2, the
Employee shall have all incidents of ownership of the Policy, except that the Employee shall not
have the right to transfer any rights under the Policy.

     2. Timken shall take all actions necessary to keep the Policy in force, including payment of
all premiums, until the Employee attains age 70, provided however, Timken’s

 

 

obligation under this Paragraph 2 shall earlier terminate upon the Employee’s voluntary or
involuntary termination of active employment as an officer of Timken other than if the termination
is as a result of (a) the Employee’s retirement under The 1984 Retirement Plan for Salaried
Employees of The Timken Company, or any successor plan, or (b) an involuntary termination of
employment subsequent to a Change of Control, as defined in the Severance Agreement entered into by
the Employee and Timken, or any successor thereto.

     3. In consideration of Timken’s commitments hereunder, the Employee, for himself and his
dependents, successors, assigns, heirs, executors and administrators (and his and their legal
representatives of every kind), and Timken hereby agree that, effective as of the Effective Date,
the Death Benefit Agreement shall terminate and have no further force and effect.

     4. This Termination shall be binding upon and shall inure to the benefit of Timken and the
Employee and their respective successors and assigns.

     5. The rights of the Employee and his or her beneficiary or beneficiaries under the Policy
shall be governed by the terms and conditions of the Policy, and Timken shall have no obligation
with respect to the Policy other than as set forth herein.

     6. This Termination may not be amended, altered or modified, except by a written instrument
signed by the parties hereto.

     7. This Termination shall be subject to and construed under the laws of the State of Ohio.

     IN WITNESS WHEREOF, the parties hereto have executed this Termination of Employee Death
Benefit Agreement on this                      day of                                             , 2006.

	 	 	 	 	 	 
	 	 	THE TIMKEN COMPANY

 	 
	 	 	By:  	 	 
	Employee 	 	 	William R. Burkhart 	 
	 	 	 	Its: Senior Vice President & General Counsel 	 

2Exhibit 10.1

    Exhibit
      10.1

    
 

    

    

    

    STOCK
      PURCHASE AGREEMENT

    

    AMONG

    

    WPCS
      INTERNATIONAL INCORPORATED

    

    NEW
      ENGLAND COMMUNICATIONS SYSTEMS, INC.

    

    AND

    

    MYRON
      POLULAK

    CAROLYN
      WINDESHEIM

    AND

    GARY
      TALLMON

    

    

    

    

    Dated
      on
      June 7, 2006, effective as of June 1, 2006

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    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
                  Working Capital Adjustment 

              	 2
	2.4 	
                Additional
                  Consideration

              	 2
	 	 	 
	ARTICLE
                III CLOSING AND TERMINATION	 
	3.1	
                Closing
                  Date

              	 3
	3.2	
                Termination
                  of Agreement

              	 3
	3.3	
                Procedure
                  Upon Termination

              	 4
	3.4	
                Effect
                  of Termination

              	 4
	 	 	 
	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

              	 6
	4.7	
                Consents

              	 6
	4.8	
                Financial
                  Statements

              	 6
	4.9	
                Records
                  and Books Account

              	 7
	4.10	
                Absence
                  of Undisclosed Liabilities

              	 7
	4.11	
                Taxes

              	 7
	4.12	
                Account
                  Receivable

              	 9
	4.13	
                Inventory

              	 9
	4.14	
                Machinery
                  and Equipment

              	 10
	4.15 	
                Title
                  to Properties; Certain Real Property Matters

              	 10
	4.16	
                Leases

              	 11
	4.17	
                Patents,
                  Software, Trademarks, Etc

              	 12
	4.18	
                Insurance
                  Policies

              	 12
	4.19	
                Banking
                  and Personnel Lists

              	 13
	4.20	
                Lists
                  of Contracts, Etc

              	 13
	4.21	
                Compliance
                  With the Law

              	 15
	4.22	
                Litigation,
                  Pending Labor Disputes

              	 15
	4.23	
                Absence
                  of Certain Changes or Events

              	 16
	4.24	
                Employee
                  Benefit Plans

              	 17

      

       

       

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	4.25	
                Product
                  Warranties and Product Liabilities

              	 18
	4.26 	
                Assets

              	 18
	4.27 	
                Absence
                  of Certain Commercial Practices

              	 19
	4.28	
                 Licenses,
                  Permits, Consents and Approvals

              	 19
	4.29	
                 Environmental
                  Matters

              	 19
	4.30	
                 Broker

              	 21
	4.31	
                Related
                  Party Transactions

              	 21
	4.32	
                 Patriot
                  Act

              	 21
	4.33	
                 Disclosure

              	 22
	 	 	 
	ARTICLE
                V REPRESENTATIONS AND WARRANTIES OF PURCHASER	 
	5.1	
                Organization
                  and Good Standing

              	 22
	5.2	
                Authority

              	 22
	5.3	
                Conflicts;
                  Consents of Third Parties

              	 22
	5.4	
                Litigation

              	 23
	5.5	
                Investment
                  Intention

              	 23
	5.6	
                Broker

              	 23
	 	 	 
	ARTICLE
                VI COVENANTS	 
	6.1	
                Access
                  to Information

              	 23
	6.2	
                Conduct
                  of the Business Pending the Closing

              	 24
	6.3	
                Consents

              	 26
	6.4	
                Other
                  Actions

              	 26
	6.5	
                No
                  Solicitation

              	 26
	6.6	
                Preservation
                  of Records

              	 27
	6.7	
                Publicity

              	 27
	6.8	
                Use
                  of Name

              	 27
	6.9	
                Employment
                  Agreements

              	 27
	6.10	
                Board
                  of Directors

              	 27
	6.11	
                Vehicle
                  Leases

              	 27
	6.12	
                Gary
                  Tallmon Consulting Agreement

              	 28
	6.13	
                Financial
                  Statements

              	 28
	6.14	
                Tax
                  Election

              	 28
	6.15 	
                Tax
                  Matters

              	 28
	 	 	 
	ARTICLE
                VII CONDITIONS TO CLOSING	 
	7.1	
                Conditions
                  Precedent to Obligations of Purchaser

              	 30
	7.2	
                Conditions
                  Precedent to Obligations of the Sellers

              	 32
	 	 	 
	ARTICLE
                VIII DOCUMENTS TO BE DELIVERED	 
	8.1	
                Documents
                  to be Delivered by the Sellers

              	 33
	8.2	
                Documents
                  to be Delivered by the Purchaser

              	 33

      

       

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 
	ARTICLE
                IX INDEMNIFICATION	 
	9.1	
                Indemnification

              	 33
	9.2	
                Limitations
                  on Indemnification for Breaches of Representations and
                  Warranties

              	 34
	9.3	
                Indemnification
                  Procedures

              	 35
	9.4	
                Tax
                  Treatment of Indemnity Payments

              	 36
	 	 	 
	ARTICLE
                X MISCELLANEOUS	 
	10.1	
                Payment
                  of Sales, Use or Similar Taxes

              	 36
	10.2	
                Survival
                  of Representations and Warranties

              	 36
	10.3	
                Expenses

              	 36
	10.4	
                Specific
                  Performance

              	 36
	10.5	
                Further
                  Assurances

              	 37
	10.6	
                Submission
                  to Jurisdiction; Consent to Service of Process

              	 37
	10.7	
                Table
                  of Contents and Headings

              	 37
	10.8	
                Governing
                  Law

              	 38
	10.9	
                Table
                  of Contents and Headings

              	 38
	10.10	
                Notices

              	 38
	10.11	
                 Severability

              	 39
	10.12	
                 Binding
                  Effect; Assignment

              	 39

      

    

    

     

    
 

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    

      STOCK
        PURCHASE AGREEMENT

      

      

      THIS
        STOCK PURCHASE AGREEMENT is made effective as of June 1, 2006 (the “Agreement”),
        among WPCS International Incorporated, a corporation existing under the laws
        of
        Delaware (the “Purchaser”), New England Communications Systems, Inc., a
        Connecticut 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 3,000 shares of common stock, $1.00 par value
        (the “Shares”), of the Company, which Shares constitute all of the issued and
        outstanding shares of capital stock of the Company; and

       

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

       

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

       

      ARTICLE
        I

      SALE
        AND
        PURCHASE OF SHARES

       

      1.1 Sale
        and
        Purchase of Shares.

       

      Upon
        the
        terms and subject to the conditions contained herein, on the Closing Date
        each
        Seller shall sell, assign, transfer, convey and deliver to the Purchaser,
        and
        the Purchaser shall purchase from each Seller, all Shares of the Company
        owned
        by such Seller set forth opposite such Seller's name on 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 (i)
        $3,216,540.85(Three Million Two Hundred Sixteen Thousand Five Hundred Forty
        dollars and Eighty Five cents) payable to the Sellers (the “Seller Purchase
        Price”), and (ii) $1,437,445.75 (One Million Four Hundred Thirty Seven Four
        Hundred Forty Five dollars and Seventy Five cents) (the “Bank Debt”), payable to
        the Company’s lender, TD Banknorth, N.A. (the “Bank”)(the Bank Debt and the
        Seller Purchase Price, the “Purchase Price”),
        subject to adjustment as set forth herein.

       

      2.2 Payment
        of Purchase Price On
        the
        Closing Date, the Purchaser shall pay the Seller Purchase Price to the Sellers
        and the Bank Debt to the Bank, which shall be paid by wire
        transfer of immediately available funds into accounts designated by the Sellers
        and the Bank and the Seller Purchase Price shall be allocated among the Sellers
        in accordance with their pro rata ownership of the Shares as set forth on
        Schedule 1.1.
        Notwithstanding the foregoing, up to $50,000 of the Seller Purchase Price
        shall
        be paid by the Purchaser for the settlement of vehicle leases currently charged
        to the Company, pursuant to the directions of the Sellers.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.3 Net
        Working Capital Adjustment. 

       

      (a) Within
        15
        business days after the effective date of the Closing (the “Effective Date”),
        Sellers shall cause to be prepared and delivered to Purchaser a draft final
        balance sheet of the Company as of the Effective Date, which shall include
        a
        final calculation of the Net Working Capital of the Company (“Final Net Working
        Capital”), as of the Effective Date, determined in accordance with GAAP
        consistent with the Company’s historical procedures. “Net Working Capital” shall
        mean the total of the Company’s Current Assets less its Current Liabilities.
“Current Assets” shall mean (i) cash and cash equivalents, (ii) accounts
        receivable, (iii) inventory, (iv) prepaid expenses, (v) unbilled revenues,
        and
        (vi) the aggregate dollar value of rental radios included in inventory (“Radio
        Inventory”). “Current Liabilities” shall mean (a) accounts payable, (b) advances
        and accrued expenses (including, without limitation, compensation expenses
        including, without limitation, salary, hourly wages, bonuses, sales commissions,
        benefits and vacation/sick days accruals), (c) accrued Taxes, as hereinafter
        defined, and (d) unearned revenues. Unless within thirty-five (35) business
        days
        of delivery of such draft final balance sheet by Sellers to Purchaser, Sellers
        have received a written objection from Purchaser to such draft final balance
        then such draft final balance sheet shall be considered the final balance
        sheet
        of the Company as of the Effective Date (the “Final Closing Balance Sheet”). If
        within thirty-five (35) business days of delivery of the draft final balance
        sheet by Sellers to Purchaser, Seller receives a written objection from
        Purchaser to such draft final balance sheet, then the Sellers and Purchaser
        shall attempt to reconcile their differences diligently and in good faith
        and
        any resolution by them shall be final, binding and conclusive. If the Sellers
        and the Purchaser are unable to reach a resolution with such effect within
        ten
        (10) business days of the Sellers’ receipt of the Purchaser’s written notice,
        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. The fees and disbursements of the Independent Accounting Firm shall
        be
        shared equally by the Sellers and the Purchaser.

       

      (b) If
        the
        Final Net Working Capital of the Company as of the Effective Date is greater
        than $972,000 (the “Target Net Working Capital”), then Purchaser shall pay to
        Sellers the amount by which the Final Net Working Capital, less the Radio
        Inventory, is greater than the Target Net Working Capital. If the Final Net
        Working Capital of the Company as of the Effective Date is less than the
        Target
        Net Working Capital, then Sellers shall pay to Purchaser the difference between
        the Final Net Working Capital and the Target Net Working Capital. To the
        extent
        any payment is required pursuant to this section 2.3(b), such payment shall
        be
        made by wire transfer of immediately available funds within thirty (30) days
        of
        the date on which the determination of the Final Closing Balance Sheet becomes
        final and shall be deemed to be an adjustment to the Seller Purchase Price.
        

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      (c)
        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 Target Net Working Capital,
        $320,000 shall be deposited into an escrow account until the Final Working
        Capital shall be determined and accepted by all parties and any deficiency
        in
        the Target Net Working Capital 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”). 

       

      2.4 Additional
        Consideration.
        Within
        105 days after December 31, 2006, Purchaser, at Purchaser’s sole cost and
        expense, shall cause to be prepared and delivered to Sellers financial
        statements of the Company for the fiscal year ended December 31, 2006 (the
“2006
        Fiscal Year”), in accordance with GAAP consistent with the Company’s historical
        procedures. For each $2.00 of the Company’s earnings before interest and taxes
        for the 2006 Fiscal Year, the Sellers shall be paid an aggregate additional
        amount of $1.00, up to a maximum payment of $468,000 (the “Earn-out Payment”).
        Sellers shall have thirty (30) days after receipt of said financial statements
        to review same. If within thirty-five (35) business days of delivery of the
        financial statements by Purchaser to Sellers, Purchaser receives a written
        objection from Sellers, then Purchaser and Sellers shall attempt to reconcile
        their differences diligently and in good faith and any resolution by them
        shall
        be finding and conclusive. If the Sellers and the Purchaser are unable to
        reach
        a resolution within ten (10) business days of the Purchaser’s receipt of the
        Sellers’ written notice, the Sellers and the Purchaser shall submit such dispute
        for resolution to 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. The final 2006 Fiscal Year Company financial statements,
        as
        accepted by Sellers and the Purchaser shall be referred to as the “Final 2006
        Financials.” At the option of the Purchaser, any amounts due to be paid for the
        Earn-out Payment may be paid in cash or shares of the Purchaser’s common stock
        (valued at the last sale price of the common stock on the date two days prior
        to
        the payment is due). The Earn-out Payment shall be paid within ten days after
        receipt by the Sellers and the Purchaser of the Final 2006 Financials. Any
        amounts payable to the Sellers, if in cash, shall be paid to the order of
        each
        Seller or, at the Sellers' option, by wire transfer of immediately available
        funds into accounts designated by the Sellers and allocated among the Sellers
        in
        accordance with their pro rata ownership of the Shares as set forth on Schedule
        1.1. Any amounts payable to the Sellers, if in shares of the Purchaser’s common
        stock, shall be made by shares of the Purchaser’s common stock issued and
        registered in the name of each Seller and allocated among the Sellers in
        accordance with their pro rata ownership of the Shares as set forth on Schedule
        1.1.

       

      

      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 Byrne & Storm, P.C., 330 Main
        Street, Hartford, Connecticut 06106 (or at such other place as the parties
        may
        designate in writing) on June 7, 2006 and effective as of June 1, 2006 or
        on
        such other date as the Sellers and the Purchaser may designate in writing.
        The
        date on which the Closing shall be held is referred to in this Agreement
        as the
        "Closing Date".

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      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 June 30, 2006, if the
        Closing shall not have occurred by the close of business on such date, provided
        that the terminating party is not in default of any of its obligations
        hereunder;

       

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

       

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

       

      3.3 Procedure
        Upon Termination. 

       

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

       

      3.4 Effect
        of Termination.

       

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

       

      ARTICLE
        IV

      REPRESENTATIONS
        AND WARRANTIES OF THE SELLERS

       

      

                  
The
        Sellers hereby
        jointly and severally represent and warrant to the Purchaser that:

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

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

      

      4.2. Authority.

       

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

      

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

       

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

       

                  (d) Except
        as
        set forth in Section 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 10,000 shares of Common Stock,
        par value $1.00 per share, of which 3,000 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 Section 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.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

                  (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 Section 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, respective Boards of Directors and committees
        of
        such Boards of Directors of each such corporation.

      

      4.6. Subsidiaries
        and Affiliates.
        The
        Company does not have any ownership, voting or profit and loss sharing
        percentage interest in any other corporations, partnerships, businesses,
        entities, enterprises or organizations. 

       

      

      4.7. Consents.
        Except
        as set forth in Schedule 4.7, no consents or approvals of any public body
        or
        authority and no consents or waivers from other parties to leases, licenses,
        franchises, permits, indentures, agreements or other instruments are
        (i) required for the lawful consummation of the transactions contemplated
        hereby, or (ii) necessary in order that the business currently conducted
        bythe 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:

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

       

      
        	 	
                the
                  unaudited reviewed balance sheet of the Company as at December
                  31, 2004
                  and 2005, and the related reviewed statements of operations, and
                  of cash
                  flows of the Company for the period then ended and (ii) the unaudited
                  compiled balance sheet of the Company as of March 31, 2006 and
                  the related
                  compiled statement of operations of the Company for the three month
                  period
                  then ended (such statements, including the related notes and schedules
                  thereto, are referred to herein as the “Financial Statements.”
                  

              	 

      

       

      

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

      

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

      

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

      

      

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

      

      4.10. Absence
        of Undisclosed Liabilities.
        Except
        as and to the extent reflected or reserved against in the Company’s Financial
        Statements or disclosed in Schedule 4.10, there are no liabilities or
        obligations of the Company of any kind whatsoever, whether accrued, fixed,
        absolute, contingent, determined or determinable, and including without
        limitation (i) liabilities to former, retired or active employees of the
        Company under any pension, health and welfare benefit plan, vacation plan
        or
        other plan of the Company, (ii) tax liabilities incurred in respect of or
        measured by income for any period prior to the close of business on the Balance
        Sheet Date, or arising out of transactions entered into, or any state of
        facts
        existing, on or prior to said date, and (iii) contingent liabilities in the
        nature of an endorsement, guarantee, indemnity or warranty, and there is
        no
        condition, situation or circumstance existing or which has existed that could
        reasonably be expected to result in any liability of the Company, 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.

       

      
 

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

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

      

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

      

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

      

      
        
          
          

        

        
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      (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.

      

      (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 November 8, 1995. 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 November 8, 1995.

      

      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. All such accounts
        receivable are, and will be collectible in amounts not less than the amounts
        (net of reserves) carried on the books of the Company, including the Financial
        Statements, and will be paid in accordance with their terms. Except as listed
        on
        Schedule 4.12 hereto, all such accounts receivable are and will be actual
        bona
        fide receivables from transactions in the ordinary course of
        business.

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

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

      

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

      

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

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

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

      

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

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      (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;

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      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.

      

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

      

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

      

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

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

      (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
        practive or in connection with the performance of this Agreement, and any
        such
        obligation or liability incurred in the ordinary course is not materially
        adverse, except for claims, if any, that are adequately covered by
        insurance;

      

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

      

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

      

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

      

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

       

      
 

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      (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 materially and adversely affecting any of its properties,
        assets or business, or experienced any other material adverse change or changes
        individually or in the aggregate affecting its financial condition, assets,
        liabilities or business.

      

      

      4.24. Employee
        Benefit Plans.

      

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

      

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

      

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

      

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      (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);

      

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

      

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

      

      4.25. Product
        Warranties and Product Liabilities.
        The
        product warranties and return policies of the Company in effect on the date
        hereof and the types of products to which they apply are described on Schedule
        4.25 hereto. Schedule 4.25 also sets forth all product liability claims
        involving amounts in controversy in excess of $5,000 that are currently either
        pending or, to the best of the Sellers’ and the Company’s knowledge, threatened
        against the Company. The Company has not paid in the aggregate, or allowed
        as
        credits against purchases, or received claims for more than one percent (1%)
        per
        year of gross sales, as determined in accordance with GAAP consistently applied,
        during the past three years pursuant to obligations under any warranty or
        any
        product liability claim with respect to goods manufactured, assembled or
        furnished by the Company. 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.

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      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
        Licenses of the Company are listed on Schedule 4.28 hereto.
        At the Closing, the Company will have all such Licenses which are material
        to
        the conduct of the Business and will have renewed all Licenses which would
        have
        expired in the interim. Except as listed in Schedule 4.28, no registration,
        filing, application, notice, transfer, consent, approval, order, qualification,
        waiver or other action of any kind (collectively, a “Filing”) will be required
        as a result of the sale of the Shares by Sellers in accordance with this
        Agreement (a) to avoid the loss of any License or the violation, breach or
        termination of, or any default under, or the creation of any lien on any
        asset
        of the Company pursuant to the terms of, any law, regulation, order or other
        requirement or any contract binding upon the Company or to which any such
        asset
        may be subject, or (b) to enable Purchaser (directly or through any
        designee) to continue the operation of the Company and the Business
        substantially as conducted prior to the Closing Date. All such Filings will
        be
        duly filed, given, obtained or taken on or prior to the Closing Date and
        will be
        in full force and effect on the Closing Date.

      

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

       

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

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      (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. 

      

      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. 

      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      4.33. 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
        or in connection with the transactions contemplated hereby 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 or
        in
        connection with the transactions contemplated hereby 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 the Purchaser Documents or the compliance by Purchaser with
        any of
        the provisions hereof or thereof.

       

      5.4 Litigation.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      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.

       

      Except
        for Punk Ziegel & Company, the Purchaser has not retained any broker in
        connection with any transaction contemplated by this Agreement. Sellers shall
        not be obligated to pay any fee or commission associated with the retention
        or
        engagement by the Purchaser of any broker in connection with any transaction
        contemplated by this Agreement.

       

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

      

      

      ARTICLE
        VI

      COVENANTS

       

      6.1 Access
        to Information.

       

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

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      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, the Sellers shall, and shall cause the Company
        to:

       

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

       

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

       

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

       

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

       

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

       

      (b) Except
        as
        otherwise expressly contemplated by this Agreement or with the prior written
        consent of the Purchaser, 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;

       

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      6.3 Consents.

       

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

       

      6.4 Other
        Actions.

       

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

       

      6.5 No
        Solicitation.

       

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

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      6.6 Preservation
        of Records.

       

      Subject
        to Section 9.4(e) hereof (relating to the preservation of Tax records), the
        Sellers and the Purchaser agree that each of them shall preserve and keep
        the
        records held by it relating to the business of the Company for a period of
        three
        years from the Closing Date and shall make such records and personnel available
        to the other as may be reasonably required 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 agrees that upon the consummation of the transactions
        contemplated hereby, the Purchaser and the Company shall have the sole right
        to
        the use of the name "New England Communications Systems, Inc." and the Sellers
        shall not, and shall not cause or permit any Affiliate to, use such name
        or any
        variation or simulation thereof.

       

      6.9 Employment
        Agreements. 

       

      On
        or
        prior to the Closing Date, each of Myron Polulak and Carolyn Windesheim 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 one
        executive officer of the Company and three members appointed by the
        Purchaser.

       

      6.11 Vehicle
        Leases.

       

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      All
        leases related to vehicles which are not used directly for the business of
        the
        Company shall be terminated or assumed by third parties on or prior to the
        Closing Date.

      

      6.12 Gary
        Tallmon Consulting Agreement.

       

      On
        or
        prior to the Closing Date, Gary Tallmon shall enter into a consulting agreement
        with the Company, substantially in the form of agreement attached hereto
        as
        Exhibit 6.12 (the “Consulting Agreement”). The Consulting Agreement shall become
        effective as of July 1, 2006.

      

      6.13 Financial
        Statements.

       

      The
        Sellers shall cooperate with the Purchaser, at Purchaser’s expense, to provide
        all information required for the completion of audited financial statements
        of
        the Company for the years ended December 31,2004 and 2005 to be prepared
        and
        delivered no later than 60 days from the Closing Date.

      

      6.14 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”). Within sixty (60) days of Purchaser’s requiring such 338(h)(10)
        election, Sellers shall provide a tax opinion from certified public accountants
        stating the extent of such Tax liabilities for the Sellers to the extent
        Purchaser requires a 338(h)(10) election. Unless within thirty-five (35)
        business days of delivery of such tax opinion by Sellers to Purchaser, Sellers
        have received a written objection from Purchaser to such tax opinion then
        such
        tax opinion shall be considered the final tax opinion with respect to this
        matter (the “Final Tax Opinion”). If within thirty-five (35) business days of
        delivery of the tax opinion by Sellers to Purchaser, Seller receives a written
        objection from Purchaser to such tax opinion, then the Sellers and Purchaser
        shall attempt to reconcile their differences diligently and in good faith
        and
        any resolution by them shall be final, binding and conclusive. If the Sellers
        and the Purchaser are unable to reach a resolution with such effect within
        ten
        (10) business days of the Sellers’ receipt of the Purchaser’s written notice,
        the Sellers and the Purchaser shall submit such dispute for resolution to
        an
        independent tax accounting firm mutually appointed by the Sellers and the
        Purchaser (the “Independent Tax Firm”), which shall determine and report to the
        parties and such report shall be final, binding and conclusive on the parties
        hereto. The fees and disbursements of the Independent Tax Firm shall be shared
        equally by the Sellers and the Purchaser. In the event that the Sellers incur
        any Tax obligations as a result of the 338(h)(10) election as determined
        by the
        Final Tax Opinion 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
        Seller
        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. 

      

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      6.15 Tax
        Matters.
        

       

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

      

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

      

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

      

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

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

      

      (d) Cooperation
        on Tax Matters.

      

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

      

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

      

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

      

      

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      

      

      ARTICLE
        VII

      CONDITIONS
        TO CLOSING

       

      7.1 Conditions
        Precedent to Obligations of Purchaser. 

       

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

       

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

       

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

       

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

       

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

       

      (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;

       

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      (i) the
        Purchaser shall have received the written resignations of each director of
        the
        Company, other than Myron Polulak;

       

      (j) 
        the
        Employment Agreements shall have been executed by Myron Polulak, Carolyn
        Windesheim and the Company and the Consulting Agreement shall have been executed
        by Gary Tallmon and the Company;

       

      (k) the
        Purchaser shall have received information satisfactory in its sole discretion
        to
        verify the accuracy of the backlog and financial projections delivered by
        the
        Sellers to the Purchaser; and

       

      (l) On
        the
        Effective Date, the Company must have a GAAP working capital position (current
        assets minus current liabilities) of at least $972,000. 

       

      

      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;

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      (f) the
        Employment Agreements shall have been executed by Myron Polulak, Carolyn
        Windesheim and the Company and the Consulting Agreement shall have been executed
        by Gary Tallmon and the Company; and

       

      (g) appropriate
        actions shall have been taken to remove each Seller from any personal guarantees
        provided on behalf of the Company or indemnification shall have been provided
        for such guarantees which is acceptable in the sole discretion of the
        Sellers.

       

      

      ARTICLE
        VIII

      DOCUMENTS
        TO BE DELIVERED

       

      8.1 Documents
        to be Delivered by the Sellers. 

       

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

       

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

       

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

       

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

       

      (d) Employment
        Agreements, substantially in the form of Exhibit 6.9 hereto, duly executed
        by
        each Seller;

       

      (e) written
        resignations of each of the directors of the Company, other than Myron
        Polulak;

       

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

       

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

       

      8.2 Documents
        to be Delivered by the Purchaser. 

       

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

       

      (a) The
        Purchase Price;

       

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

       

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

       

      

      
        
          
          

        

        
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      ARTICLE
        IX

      INDEMNIFICATION

       

      9.1 Indemnification.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      (ii) any
        and
        all Losses based upon, attributable to or resulting from the breach of any
        covenant or other agreement on the part of the Purchaser under this Agreement
        or
        arising from the ownership or operation of the Company from and after the
        Closing Date; and

       

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

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      

      9.2 Limitations
        on Indemnification for Breaches of Representations and
        Warranties.

       

      An
        indemnifying party shall not have any liability under Section 9.1(a)(ii)
        or
        Section 9.1(b)(i) hereof unless the aggregate amount of Losses and Expenses
        to
        the indemnified parties finally determined to arise thereunder based upon,
        attributable to or resulting from the failure of any representation or warranty
        to be true and correct, other than the representations and warranties set
        forth
        in Sections 4.3, 4.11, 4.24 and 4.29 hereof, exceeds $25,000 (the “Basket”) and,
        in such event, the indemnifying party shall be required to pay the entire
        amount
        of such Losses and Expenses in excess of $25,000 (the
“Deductible”).

       

      9.3 Indemnification
        Procedures.

       

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

       

      (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.

       

       

      
        
          
          

        

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

       

      9.4 Tax
        Treatment of Indemnity Payments. 

       

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

       

      

      

      ARTICLE
        X

      MISCELLANEOUS

       

      10.1 Payment
        of Sales, Use or Similar Taxes. 

       

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

       

      10.2 Survival
        of Representations and Warranties. 

       

      The
        parties hereto hereby agree that the representations and warranties contained
        in
        this Agreement or in any certificate, document or instrument delivered in
        connection herewith, shall survive the execution and delivery of this Agreement,
        and the Closing hereunder, regardless of any investigation made by the parties
        hereto; provided, however, that any claims or actions with respect thereto
        (other than claims for indemnifications with respect to the representation
        and
        warranties contained in Sections 4.3, 4.11, 4.24 and 4.29 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.

       

      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.

       

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      10.4 Specific
        Performance. 

       

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

       

      10.5 Further
        Assurances. 

       

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

       

      10.6 Submission
        to Jurisdiction; Consent to Service of Process.

       

      (a) The
        parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
        of
        any federal or state court located within the State of Connecticut 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.

       

      10.7 Entire
        Agreement; Amendments and Waivers.
        

       

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

       

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

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

       

      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 or mailed by certified mail,
        return receipt requested, to the parties (and shall also be transmitted by
        facsimile to the Persons receiving copies
        thereof) at the following addresses (or to such other address as a party
        may
        have specified by notice given to the other party pursuant to this
        provision):

       

      

      
        	 	
                (a)

              	
                Purchaser:

              

      

      

      WPCS
        International Incorporated

      One
        East
        Uwchlan Avenue, Suite 301

      Exton,
        Pennsylvania 19341

      Attn:
        Andrew Hidalgo, President

      Phone:
        (610) 903-0400

      Facsimile:
        (610) 903-0401

      

      Copy
        to:

      

      Thomas
        A.
        Rose, Esq.

      Sichenzia
        Ross Friedman Ference LLP

      1065
        Avenue of the Americas

      New
        York,
        New York 10018

      Phone:
        (212) 930-9700

      Facsimile:
        (212) 930-9725

      

      
        	 	
                (b)

              	
                Sellers
                  and Company:

              

      

      

      Myron
        Polulak

      Carolyn
        Windesheim

      Gary
        Tallmon

      New
        England Communications Systems, Inc.

      15
        Industrial Park Place

      Middletown,
        Connecticut 06457

      Phone:
        (860) 632-2678

      Facsimile:
        (860) 613-0827

      

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

      Copy
        to:

      

      Robert
        L.
        Iamonaco, Esq.

      Byrne
        & Storm, P.C.

      330
        Main
        Street

      Hartford,
        Connecticut 06106

      Phone:
        (860) 525-3700

      Facsimile:
        (860) 525-0287

      

       

      10.11 Severability. 

       

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

       

      10.12 Binding
        Effect; Assignment.

       

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

       

      [intentionally
        blank]

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

      

       

       

      
        	 	 	 
	 	
                WPCS
                  INTERNATIONAL INCORPORATED

              
	 
 	 
 	 
 
	 	By:  	/s/
                ANDREW HIDALGO 
	 	
                
Andrew
                Hidalgo,
	 	President

      

      
        	 	 	 
	 	
                SELLERS:

              
	 
 	 
 	 
 
	 	By:  	/s/ MYRON
                POLULAK
	 	
                

                Myron Polulak

      

      
        	 	 	 
	 	 
	 
 	 
 	 
 
	 	By:  	/s/ 
CAROLYN
                WINDESHEIM
	 	
                

                Carolyn Windesheim

      

      
        	 	 	 
	 	 
	 
 	 
 	 
 
	 	By:  	/s/ GARY
                TALLMON
	 	
                

                Gary Tallmon
	 	Title 

      

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      

      

      

      ANNEX
        A

       

      
 

      
        	
                 Seller

              	 Voting	 Non-Voting   	Shares

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