Document:

Exhibit 10.1

    Exhibit
      10.1

    

    WPCS
      INTERNATIONAL INCORPORATED

    

    

    June
      22,
      2006

    

    

    Southeastern
      Communication Service, Inc.

    2017
      Cattleman Road

    Sarasota,
      FL 34232

    Attn:
      Mr.
      Dan Lester, President

    

    

    Re:
      Acquisition
      by WPCS International Incorporated

    

    Gentlemen:

     

    This
      binding letter of intent (the “LOI”) sets forth the agreement and understanding
      as to the terms of the acquisition of Southeastern Communication Service, Inc.,
      a Florida corporation, together with any subsidiary corporations (“SECS”), by
      WPCS International Incorporated, a Delaware corporation (“WPCS”), or a
      wholly-owned subsidiary thereof: 

     

    1.  Acquisition.
      WPCS
      will acquire 100% of the issued and outstanding capital stock of SECS from
      its
      current shareholders. In consideration for such sale, WPCS will deliver at
      the
      closing of the transaction (the “Closing Date”), (i) $1,800,000 in cash, and
      (ii) $1,400,000 in shares of WPCS common stock (valued at the last sale price
      of
      the common stock on the date prior to the Closing Date). 

     

    2.  Additional
      Conditions.
      The
      following additional parameters will be contained in the acquisition
      agreement:

    

    
      	 	
              ·

            	
              WPCS
                will seek to favorably convert existing SECS debt facilities to WPCS
                obligations with favorable re-payment parameters, acceptable in the
                sole
                discretion of WPCS. 

            

    

    

    
      	 	
              ·

            	
              WPCS
                will indemnify the SECS shareholders for all business related personal
                guarantees made on behalf of SECS.

            

    

    

    
      	 	
              ·

            	
              Satisfactory
                confirmation of backlog and
                forecasts.

            

    

    

    
      	 	
              ·

            	
              Satisfactory
                confirmation of customer relationships, such that the acquisition
                by WPCS
                will not have a negative impact on such
                agreements.

            

    

    

    
      	 	
              ·

            	
              Establishment
                of fair market lease rate and agreement for the current property
                occupied.

            

    

    

    
      	 	
              ·

            	
              As
                of the Closing Date, SECS must maintain a working capital position
                (current assets minus current liabilities and long term debt) of
                at least
                $893,000. Any excess shall be paid to the SECS shareholders and any
                shortfall will reduce the cash amount payable on
                Closing.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              ·

            	
              Prior
                to the Closing Date, SECS will not enter into any material obligations
                or
                new compensatory arrangements without the consent of WPCS. Material
                obligations do not include expenses incurred in the normal course
                of
                operations.

            

    

    

    
      	 	
              ·

            	
              The
                acquisition agreement and related documents (collectively, the “Definitive
                Agreements”) will contain representations, warranties, covenants,
                including non-competition and confidentiality covenants, conditions
                to
                close and indemnities usual to a transaction of this nature, including
                representations and warranties made by the SECS
                shareholders.

            

    

    

    
      	 	
              ·

            	
              The
                SECS
                board
                of directors shall consist of three WPCS appointees and one SECS
                executive
                member.

            

    

    

    
      	 	
              ·

            	
              The
                delivery of financial statements required by WPCS for SEC filing
                purposes.

            

    

    

    
      	 	
              ·

            	
              If
                requested by WPCS, SECS shareholders need to make an IRS Section
                338 (h)
                (10) election and if so, WPCS will reimburse SECS shareholders for
                any
                increased tax obligations at the time such tax obligations are
                due.

            

    

    

    
      	 	
              ·

            	
              The
                following employment agreements would be offered with the following
                general compensation parameters.

            

    

    

        

    
      
        	 Employee:	 Title
                To
                Be:	  Term:	  Base
                Salary:	 	 Annual
                Bonus:
	 	 	 	 	 	 
	
                Dan
                  Lester

              	
                Consultant

              	
                Ending
                  12/31/06

              	
                $77,000

              	 	
                N/A

              
	
                Chris
                  Lester

              	
                President

              	
                3
                  years 

              	
                $85,000

              	 	
                Up
                  to 20% of Salary

              
	
                Karl
                  Eickemeyer

              	
                VP
                  Operations

              	
                2
                  years

              	
                $72,000

              	 	
                Up
                  to 20% of Salary

              
	
                Mike
                  Lester

              	
                VP
                  Administration

              	
                2
                  years

              	
                $64,500

              	 	
                Up
                  to 20% of Salary

              
	
                Tony
                  Ankersmit

              	
                VP
                  Technical Operations

              	
                2
                  years

              	
                $63,500

              	 	
                Up
                  to 20% of Salary

              
	
                Jeff
                  Stackhouse

              	
                Project
                  Manager

              	
                2
                  years

              	
                $56,000

              	 	
                Up
                  to 20% of Salary

              
	
                Marcella
                  Gibbs

              	
                Controller

              	
                2
                  years

              	
                $46,800

              	 	
                Up
                  to 20% of Salary

              

      

    

     

    The
      employment agreements can be renewable and will include provisions for future
      salary adjustments. The annual bonuses will be discretionary based on SECS’
performance in achieving the agreed upon financial goals for the WPCS FY2007
      fiscal year. 

    

    
      	 	
              ·

            	
              The
                401k Plan as implemented would continue to be in place for participating
                employees but the discretionary profit sharing will have to be adjusted
                in
                consideration to SECS profitability and annual bonuses paid.
                

            

    

    

    
      	 	
              ·

            	
              SECS
                can continue with its existing health/life insurance premium policy.
                

            

    

    

    
      	 	
              ·

            	
              As
                an additional benefit to SECS employees, WPCS will offer the opportunity
                to participate in the stock option plan. SECS management will decide
                which
                employees can participate.

            

    

    

    
      	 	
              ·

            	
              SECS
                will satisfy the outstanding balance due to Southeastern Communication
                Systems of Sarasota, Inc. prior to the Closing
                Date.

            

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    2.  Costs.
      Each
      party agrees to pay, without right of reimbursement from the other party and
      regardless of whether or not the transaction is consummated, the costs incurred
      by it in connection with this transaction, including legal fees and other costs
      incidental to the negotiation of the terms of the transaction and the
      preparation of related documentation. 

     

    3.  Timeline.
      The
      confidentiality/standstill agreement is attached hereto. All parties will use
      their best efforts to complete the transactions outlined above as soon as
      practicable. It is expected that an acquisition agreement will be executed
      and
      the transaction will close in no event later than July 31, 2006. Neither party
      shall be obligated to consummate the transactions prior to the execution of
      Definitive Agreements, unless the parties agree thereto in writing.

    

    4.  Conduct
      of Business.
      Each
      party hereto hereby agrees to conduct its business in accordance with the
      ordinary, usual and normal course of business heretofore conducted by it. Thus,
      there may be no material adverse changes in the business of either company
      from
      the date hereof through the closing of this transaction. 

     

     Until
      consummation or termination of the Definitive Agreements, SECS and the SECS
      shareholders shall not directly or indirectly: (i) offer for sale, sell, assign,
      pledge, distribute or enter into any contract for the sale of or otherwise
      dispose of the shares of SECS without the expressed written consent of WPCS;
      (ii) issue or cause to be issued additional shares or options or warrants to
      purchase shares of SECS to any persons or parties; (iii) offer for sale, sell,
      assign, pledge, distribute or enter into any contract for the sale of or
      otherwise dispose of all or substantially all of a material portion of the
      assets of SECS; or (iv) assume or incur a significant amount of liabilities
      or
      take any other actions outside the ordinary course of its business.

    

    5.  Access.
      From
      the date of this agreement until such time as this agreement is terminated
      or
      the Definitive Agreements are executed, WPCS shall have access to all
      information in the possession or control of SECS relating to SECS’s business,
      assets and financial condition. SECS and its representatives shall also assist
      WPCS in conducting its due diligence review. 

    

    6.  Binding
      Effect.
      This
      agreement is binding on the parties provided, however, that in the event that
      WPCS, acting in its sole discretion, is not fully satisfied with the results
      of
      its due diligence review or other information provided by or related to SECS,
      WPCS, acting in its sole discretion, may terminate the proposed agreement at
      any
      time prior to the execution of the Definitive Agreements, which shall be
      controlling thereafter, and SECS and the SECS shareholders agree to hold WPCS
      harmless for any attorney’s fees, accountant’s fee, expenses or other damages
      which may be incurred by WPCS from the failure to consummate the contemplated
      Definitive Agreements. 

    

    7.  Counterparts.
      This
      Letter of Intent may be executed in two or more counterparts, each of which
      shall be deemed an original, but all of which together shall constitute one
      and
      the same instrument.

    

    8.  Entire
      Agreement.
      This
      Letter of Intent constitutes the entire agreement of the parties covering
      everything agreed upon or understood in this transaction. There are no oral
      promises, conditions, representations, understandings, interpretations or terms
      of any kind other than as set forth herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    If
      the
      foregoing accurately reflects our discussions, please execute and return to
      the
      undersigned one copy of this letter.

     

     

     

    
      	 	 	 
	 	WPCS
              INTERNATIONAL INCORPORATED
	 
 	 
 	 
 
	 	By:  	/s/ JOSEPH
              HEATER
	 	
              
Joseph
              Heater, 
	 	Chief
              Financial Officer 

    

    

    

    

    

    AGREED
      AND ACCEPTED

    This
      22nd
      day of June, 2006

     

    
      	 	 	 
	 	SOUTHEASTERN
              COMMUNICATION SERVICE, INC.
	 
 	 
 	 
 
	 	By:  	/s/ DAN
              LESTER
	 	
              
Dan
              Lester,
	 	President 

    

     

     

    
       

      
        	 	 
	SOUTHEASTERN
                COMMUNICATION SERVICE, INC.
	 
 	 
 
	By:  	
                /s/ DAN
                  LESTER

                
                  

                

                Dan Lester,

                Presidentexv4w2

 

	[FACE OF CERTIFICATE]

	COMMON STOCK

	NUMBER
RDYN

	INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

	[LOGO]

	COMMON STOCK

	SHARES

	CUSIP 76028W 10 7
SEE REVERSE FOR CERTAIN DEFINITIONS

	THIS CERTIFIES THAT
is the record holder of

	FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, PAR VALUE OF $0.001 PER SHARE, OF

	Replidyne, Inc.

	transferable on the books of the Corporation by the holder hereof in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.

	WITNESS the facsimile signatures of its duly authorized officers.

	Dated:

	/sig/
SECRETARY

	/sig/
PRESIDENT

	COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE

 

 

	[REVERSE OF CERTIFICATE]

	Replidyne, Inc.

	A statement of the powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences and/or rights as
established, from time to time, by the Certificate of Incorporation of the Corporation and by any
certificate of determination, the number of shares constituting each class and series, and the
designations thereof, may be obtained by the holder hereof upon request and without charge at the
principal office of the Corporation.

	The following abbreviations, when used in the inscription on the face of this certificate, shall be
construed as though they were written out in full according to applicable laws or regulations:

	TEN COM — as tenants in common
TEN ENT — as tenants by the entireties
JT TEN — as joint tenants with right of survivorship and not as tenants in common

	UNIF GIFT MIN ACT — .(Cust). Custodian .(Minor). under Uniform Gifts to Minors Act .(State).

	UNIF TRF MIN ACT — .(Cust). Custodian (until age .) .(Minor). under Uniform Transfers to Minors
Act .(State).

	Additional abbreviations may also be used though not in the above list.

	FOR VALUE RECEIVED, ___hereby sell, assign and transfer unto

	PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

	Shares of the common stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint

	Attorney to transfer the said stock on the books of the within named Corporation with full power of
substitution in the premises.

	Dated

	X
X
NOTICE:
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

	Signature(s) Guaranteed
By
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

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