Exhibit 10.1 



SUPPLY AGREEMENT 



This Supply Agreement (this
“Agreement”) is made and entered into as of May 30, 2007 (the
“Effective Date”), by and between  Perfect Circle Projectiles, LLC, an Illinois limited liability company,
 with offices at  28101 Ballard Drive, Unit C, Lake Forest, Illinois 60045
(“Seller”), and Security With Advanced Technology, Inc., a Colorado
corporation, with offices at 10855 Dover Street, Suite 1000, Westminster, Colorado
80021-3936 (“Buyer”). 



Recitals  



Whereas, Buyer wishes to
purchase from Seller, and Seller wishes to sell to Buyer, certain
quantities of spherical tactical projectiles, such sales and purchases to be implemented on the terms and
conditions set forth in this Agreement. 



Now, Therefore, Seller and
Buyer agree as follows: 



	1.	TERM;
TERMINATION 






	a) 	This
Agreement shall commence on the Effective Date and shall remain in force
               and effect (the “Term”) until the earlier of (i) the
fourth                anniversary of the Effective Date, (ii)  the
closing of Buyer’s acquisition of all or substantially all of Seller's assets necessary to manufacture
Product (as defined herein) (the “Acquisition”), and (iii) the earlier termination of
this Agreement                pursuant to Section 1.b).  






	b) 	Either
party may terminate this Agreement upon giving the other party notice of
               an event of default (“Event of Default”), which will
exist with                respect to a party if:  






	 	(i)  	a
decree or order is made by a court having jurisdiction over such party
               adjudging it to be a bankrupt under applicable law;  






	 	(ii)  	a
decree or order is made by a court having jurisdiction over such party
               appointing a receiver, or receiver-manager, who is not bound by the terms
of                this Agreement, or a liquidator or trustee or assignee in bankruptcy of
such                party or of its property, or directing the winding-up or liquidation
of its                affairs;  






	 	(iii)  	any
other decree or order has been made by a court of competent jurisdiction by
               which such party is deprived of the right to manage its undertakings and
has                remained in force undischarged and unstayed for 45 business days;  






	 	(iv)  	if
such party:  






	 	A.  	institutes
proceedings to be adjudicated a voluntary bankrupt; 






	 	B.  	consents
to                the filing of a bankruptcy proceeding against it;  





	 	C.  	consents
to the appointment of a receiver, liquidator or trustee or assignee in
               bankruptcy or insolvency of itself or its property; or  





	 	D.  	makes
an assignment for the benefit of creditors, or admits in writing its
               inability to pay its debts generally as they become due.  














          	 	(v) 	
               such party has committed a material default in the performance of its
               obligations under this Agreement, written notice has been given to such party
               specifying such default and declaring the intention of the other party to
               exercise its right to terminate this Agreement if the default is not duly
               remedied, and 


               



	 	A.  	more
than 15 business days have elapsed since the expiration of such period
               following the giving of such notice and such default remains unremedied,
or  





	 	B.  	in
case of a default that is not capable of being remedied, by the exercise of
               reasonable diligence within the period described in Section 1.(b.)(v)A.,
the                earlier of  






	 	I)  	the
day on which the party fails or refuses to act diligently to remedy the
               default, and  





	 	II)  	the
day on which it becomes evident to the other party, acting reasonably, that
               such default could not be remedied in a reasonably timely manner
regardless of                the actions to be taken by such party.  






	c) 	In
the event this Agreement is terminated by Buyer due to an Event of Default
               caused by Seller, the remaining Escrow Amount (as defined herein), if any,
shall                be returned to Buyer in accordance with the terms of the Escrow
Agreement (as                defined herein). In the event this Agreement is terminated
by Seller due to an                Event of Default caused by Buyer, the remaining Escrow
Amount (as defined                herein), if any, shall be paid to Seller as liquidated
damages in accordance                with the terms of the Escrow Agreement (as defined
herein).  






	2.	PRODUCTS 






The product covered by this Agreement
shall be .50 Caliber and .68 Caliber spherical projectiles filled with an inert powder or
PAVA powder to be provided by Buyer (“ Product ”). Parties agree that Buyer will
provide at their cost and responsibility, powder fills and packaging materials. 



Buyer shall maintain at least a 45
day supply of powder fills at Seller’s plant. Seller shall notify Buyer at least
monthly as to the quantity of fills in inventory at Seller’s plant. 




	3.	PRODUCT
QUANTITY FORECASTING; PRICING; EXCLUSIVE ARRANGEMENT 






	a) 	During
the Term, Seller agrees to sell to Buyer, and Buyer agrees to buy from
               Seller, Product upon the terms set forth in this Agreement.  






	b) 	During the Term, Buyer will provide Seller with purchase orders for Product six calendar months in
advance, with the initial six-month purchase orders and pricing of Product set forth on Exhibit A
attached hereto. The purchase orders shall be issued every 60 days, beginning 10 days from the Effective
Date. All purchase orders of Buyer shall be deemed to incorporate the terms of this Agreement. The
purchase orders issued by Buyer shall not modify or alter the terms of this Agreement or of the purchase
transaction without the written consent of Seller. Purchase orders also shall not be cancelled, revoked,
delayed or reduced by Buyer unless consented to in writing by Seller; provided, however, that all
unfilled purchase orders shall be cancelled on the date of termination of this Agreement pursuant to
Section 1(a). Purchase orders shall not exceed Seller's maximum stated capacity of 50,000 projectiles
per week, without Seller’s written consent. Seller's maximum stated capacity will be updated by Seller's
notice of change to Buyer.  














	c) 	
Buyer agrees that Seller shall be the sole supplier of Product to Buyer during the Term.
 If Seller fails
to                fulfill any purchase order within ninety (90) days of its requested
delivery                date, Seller shall be deemed to have materially breached this
Agreement (and                such default shall not be entitled to any cure period by
Seller under Section                1(b)).  






	4.  	DELIVERY;
TITLE  







Once Seller notifies Buyer that a shipment is ready, Buyer shall arrange for shipment, FOB Seller’s
location, and all shipping charges will go directly to Buyer The Products will be deemed shipped and
shall be invoiced by Seller at the time of such notification.
 Notice pursuant to this paragraph may be served by Seller via email or fax as
provided to in Exhibit C (or at such other email address as is provided by Buyer to Seller
from time to time) and not otherwise subject to the terms of paragraph 15. 



	5.  	TAXES  






Taxes, duties or other charges of any
nature imposed by any governmental authority that become payable by reason of a sale or
delivery of Product under this Agreement will be paid by Buyer. 



	6.	QUALITY;
WARRANTY 






	a) 	Seller
warrants that Product purchased hereunder  (other than Seller's fill material) shall conform to the
specifications set                forth on Exhibit B.  






	b) 	In
the event that 2% or more of any Product shipment received by Buyer at any
               time fails to conform to the specifications set forth on Exhibit B,
Buyer                shall promptly notify Seller and Seller shall replace or credit
Buyer for any                and all defective Product. If Seller fails to cure material
defects within 60                days of such notice, Seller shall be deemed to have
materially breached this                Agreement (and such default shall not be entitled
to any cure period by Seller                under Section 1.(b.)).  






	c) 	Notwithstanding
any provision of this Agreement to the contrary, the Seller                warranty
contained in Section 6(a) is the only warranty extended by Seller in
               connection with the Products and such warranty shall be extended to Buyer
only                and not to any successive buyers, users, third parties or employees
and is in                lieu of all other warranties, express or implied, including
warranties of                merchantability and fitness for a particular purpose.  






	7.	PAYMENT
TERMS; ESCROW 






	a) 	Within
three days of the Effective Date, Buyer shall deposit $1,000,000 in cash or in the
form of an                irrevocable letter of credit (the “Escrow Amount”)
into an                escrow account maintained by American National Bank, as escrow agent (“Escrow Agent”),
pursuant to an                Escrow Agreement in the form attached hereto as Exhibit C (the
               “Escrow Agreement”).  














	b)	         Payments
for Product purchased by Buyer shall be made as follows:  






	 	(i)  	50%
of the purchase price shall be paid to Buyer from the Escrow Amount upon
          shipment of such Product and the remaining 50% of the purchase price shall be
          paid on a net 30-day basis from the date of shipment.  






	 	(ii)  	Upon
the exhaustion of the Escrow Amount, Buyer shall then pay 100% of the           purchase
price on a net 30-day basis from the date of shipment, subject to Buyer
          maintaining a satisfactory credit profile. Credit terms may be withdrawn or
          revised, if in Seller’s reasonable discretion, Buyer is or becomes a
credit           risk.  






	c) 	
Upon termination of this Agreement at the Closing of the Acquisition, the remaining Escrow Amount, if
any, shall be paid to Seller and applied to the purchase price payable by Buyer to Seller in connection
with the Acquisition. In the event this
               Agreement is terminated upon the expiration of the Term, the remaining
Escrow                Amount, if any, shall be paid to Seller.  






	d) 	In
the event that amounts due to Seller are not paid when due, then the unpaid
               balance shall accrue interest at the rate of 1% per month until paid.
Invoices                of Seller for Products shall bear interest as provided above if
not paid within                30 days of the date of invoice which shall
 be the same date that Seller notifies Buyer that project is ready for shipment.  






	8.  	PERMITS
AND LICENSES  






Buyer will be solely responsible for
obtaining any permits and licenses and preparing any necessary paperwork for the export
and import of Product to Buyer’s location. 



	9.  	INDEMNITY  







Buyer will, at its expense, defend,
indemnify and hold Seller and its Affiliates (as defined below), employees and agents
harmless from any and all Loss incurred as a result of any claim or action by Pepper Ball
Technologies, Inc. (“Pepper Ball”) regarding (i) Buyer’s purchase of
Product from Seller, (ii) the Product’s infringement upon any patent, copyright,
trade secret, trademark, mask work right or other proprietary right of Pepper Ball, or
(iii) the infringement upon any patent, copyright, trade secret, trademark, mask work
right or other right of Pepper Ball resulting from Seller’s production of projectiles
for FN Herstal, S.A. “Affiliate” means any person or entity directly or
indirectly controlling, controlled by, or under direct or indirect common control with,
Seller. The term “control” (including, with correlative meanings, the terms
“controlling”, “controlled by”, and “under common control
with”) means the possession, directly or indirectly, of 10% or more of the ownership
interest, beneficial or otherwise of Seller or the power otherwise to direct or cause the
direction of the management and policies of Seller, whether through voting, by contract or
otherwise. All members of the board of managers and executive officers of Seller shall be
deemed to b Affiliates of Seller. 



Notwithstanding the foregoing, in the
event that Pepper Ball prevails in litigation against Seller regarding Seller’s
infringement upon any patent, copyright, trade secret, trademark, mask work right or other
right of Pepper Ball resulting from Seller’s production of projectiles for FN
Herstal, S.A; then in that event, Seller and not Buyer shall be responsible for any and
all damage awards payable to Pepper Ball in connection with the FN Herstal projectiles. 




“Loss” means any liability,
demand, claim, action, cause of action, cost, damage, deficiency, penalty, fine or other
loss or expense, including all interest, penalties, reasonable attorneys’ fees and
expenses and all amounts paid or incurred in connection with any action, demand,
proceeding, investigation or claim. “Loss” shall not include any indirect,
punitive or consequential damages, including, without limitation, lost profits. 



	10.  	INDEPENDENT
CONTRACTOR  






This Agreement shall not constitute
or give rise to a partnership, joint venture or other affiliation between the parties. All
activities of Seller under the terms of this Agreement shall be carried on by Seller as an
independent contractor and not as an agent for Buyer. Seller shall have no right to
obligate or bind Buyer in any manner, and Seller agrees not to make any representation to
any person to the contrary. 











	11.  	GOVERNING
LAW; JURISDICTION  






THIS AGREEMENT WILL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
(REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF
VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES. 



	12.  	NON-WAIVER  






The failure of either party to insist
in any one or more instances upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall not be construed as a
waiver of any such provisions or the relinquishment of any such rights, but the same shall
continue and remain in full force and effect. 



	13.  	NO
THIRD PARTY BENEFICIARIES  






This Agreement is solely for the
benefit of Buyer, and its successors and permitted assigns, with respect to the
obligations of Seller under this Agreement, and for the benefit of Seller, and its
respective successors and permitted assigns, with respect to the obligations of Buyer
under this Agreement, and this Agreement shall not be deemed to confer upon or give to any
other third party any remedy, claim liability, reimbursement, cause of action or other
right. 



	14.  	ASSIGNMENT  






This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned, directly or
indirectly, including, without limitation, by operation of law, by any party hereto
without the prior written consent of the other party hereto, which consent shall not be
unreasonably withheld, except that, in any case, the assignee shall assume in writing the
obligations of the assigning party. 












	15.  	NOTICES  






All notices, requests, demands,
waivers and other communications required or permitted to be given under this Agreement
shall be in writing and may be given by any of the following methods: a) personal
delivery, or b) overnight delivery service. Notices shall be sent to the appropriate party
at its address given below (or at such other address for such party as shall be specified
by notice given hereunder): 

































		
	If to Seller to:




















If to Buyer to:



                  

                  

                  

                  

                  





                  



                  

                  

                  

                  

                  
	




Perfect Circle Projectiles, LLC

28101 Ballard Drive, Unit C

Lake Forest, Illinois 60045

Fax No.: (847) 367-8980

Attention: Gary E. Gibson


with a copy to:



Shadle & Associates, Ltd.

1019 W. Wise Road, Suite 200

Schaumburg, IL 60193

Fax No: (847) 891-3038

Attention: Ronald E. Shadle





Security With Advanced Technology, Inc.

10855 Dover Street, Suite 1000

Westminster, Colorado  80021-3936

Fax No.:  (303) 439-0414

Attention:  Jeffrey G. McGonegal




with a copy to:



Brownstein Hyatt Farber Schreck, P.C.

410 Seventeenth Street, Suite 2200

Denver, Colorado  80202

Fax No.: (303) 223-1111

Attention: Adam J. Agron










All such notices, requests, demands,
waivers and communications shall be deemed received i) in the case of personal delivery,
upon actual receipt thereof by the addressee, or ii) in the case of overnight delivery, on
the business day following delivery to the overnight delivery service. 



	16.  	CONFIDENTIAL
INFORMATION  






Except as provided below, all
information disclosed between the parties pursuant to, or relating to any provision of,
this Agreement, including information relating to third parties (including Buyer’s
customers), is deemed confidential (“Confidential Information”). A party
receiving Confidential Information (the “Receiving Party”) will not use
such information for any purpose other than for which it was disclosed and shall prevent
the disclosure to third parties of any and all Confidential Information provided that the
Receiving Party’s obligation hereunder shall not apply to information that: 



	a)	       is
already in the Receiving Party’s possession at the time of disclosure
          thereof;  






	b)	is
or subsequently becomes part of the public domain through no action of the
          Receiving Party;  














	c) 	is
subsequently received by the Receiving Party from a third party having no
               obligation of confidentiality to the party disclosing the confidential
               information;  






	d) 	is
disclosed to third parties as required by law; or  






	e) 	is
delivered to customers of Buyer’s business in the context of
               understanding the nature of the sale of the business; provided that, such
               communication to customers may not occur without the prior written consent
of                Seller.  






	17.	INSURANCE 






Buyer shall within 45 days of the
Effective Date of this Agreement or upon first shipment of the Products by Buyer to its
customers, (whichever shall first occur) obtain and maintain during the Term of this
Agreement and for six years thereafter, at its own expense, Products Liability/Completed
Operations insurance, to cover any product defect or liability, with a minimum and
aggregate limit of $2,000,000. Such insurance will carry a deductible not to exceed
$50,000. Buyer shall cause the insurance company issuing such policy to issue a
certificate to Seller which (i) confirms that such policies have been issued and are in
full force and effect providing coverage of Seller as required by this paragraph; (ii)
states the amount of the deductible for each such policy; and (iii) confirms that before
any cancellation or material change in coverage of any such policy, the insurance company
shall give Seller thirty (30) days prior written notice of such proposed cancellation or
material change. Such insurance company shall have a rating of at least [A-:IX],
as published by Best’s Insurance Reports. Buyer shall name Seller as an additional
insured under such insurance policies.  



	18.  	ENTIRE
AGREEMENT  






This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the parties or
any of them with respect to the subject matter hereof. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. 



	19.  	SEVERABILITY  






Should any provision of this
Agreement for any reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the application of
such invalid or unenforceable provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall be valid and enforced to the fullest
extent permitted by law. 



	20.  	COUNTERPARTS  






This Agreement may be executed
simultaneously in counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument. 



	21.  	ARBITRATION  






     	a)	
          All disputes and controversies of every kind and nature between the parties
          hereto arising out of or in connection with this Agreement as to the existence,
          construction, validity, interpretation or meaning, performance, non-performance,
          enforcement, operation, breach, continuance, or termination thereof shall be
          submitted to arbitration pursuant to the following procedure: 


          



	 	(i)  	Either
party may demand arbitration after a controversy arises, which                arbitration
shall be submitted to, and conducted under the auspices of the                American
Arbitration Association, by a panel of three (3) Arbitrators (one of                whom
shall be selected by Seller, one of whom shall be selected by Buyer and the
               third shall be selected by mutual agreement of the arbitrators so
selected).  














	 	(ii)  	Each
party shall bear its own arbitration costs and expenses.  






	 	(iii)  	The
arbitration hearing shall be held in Chicago, Illinois, pursuant to the commercial arbitration rules and procedures of the
American Arbitration Association, which are incorporated by reference herein, and the laws of evidence of the State of Delaware shall
govern the                presentation of evidence therein.  






	 	(iv)  	An
award rendered by the arbitrator(s) appointed pursuant to this Agreement
               shall be final and binding on all parties to the proceeding, and judgment
on                such award may be entered by any court, state or federal, having
jurisdiction.  






     	b)	
          The parties stipulate that the provisions hereof shall be a complete defense to
          any suit, action, or proceeding in any court or before any administrative
          tribunal with respect to any controversy or dispute arising under this Agreement
          and which is arbitrable as herein set forth. The arbitration provisions hereof
          shall, with respect to such controversy or dispute, survive the termination or
          expiration of this Agreement. 


          



     	c)	
          Nothing herein contained shall be deemed to give the arbitrators any authority,
          power, or right to alter, change, amend, modify, add to, or subtract from any of
          the provisions of this Agreement. 


          



	 	d) 	The
arbitrators shall not be authorized to award punitive or consequential           damages
or attorneys’ fees. Nothing in this Section shall prohibit any           party
hereto from instituting litigation to enforce any final judgment, award or
          determination of the arbitration.  






*  *  *  *  











IN WITNESS WHEREOF, Seller and Buyer
have executed this Supply Agreement as of the Effective Date. 




















		
		SELLER:




Perfect Circle Projectiles, LLC



By: /s/ Gary E. Gibson

Name: Gary E. Gibson

Title: Manager










BUYER:



Security With Advanced Technology, Inc.





By: /s/ Scott Sutton 

Name: Scott Sutton

Title: CEO and President 


























        EXHIBIT A

         


        PRODUCT QUANTITY AND PRICE

         


        Initial forecasted purchase order quantities:

         

             A. .50 Caliber Products

         


        


        	
                    Month

                	
                    Live Rounds

                	 	
                    Inert Rounds

                
	 	
                    Quantity

                	
                    Price

                	 	
                    Quantity

                	
                    Price

                
	
                    May 2007

                	
                    20,000

                	
                    $6,000

                	 	
                    25,000

                	
                    $4,000

                
	
                    June 2007

                	
                    20,000

                	
                    $6,000

                	 	
                    25,000

                	
                    $4,000

                
	
                    July 2007

                	
                    25,000

                	
                    $7,500

                	 	
                    30,000

                	
                    $4,800

                
	
                    August 2007

                	
                    25,000

                	
                    $7,500

                	 	
                    30,000

                	
                    $4,800

                
	
                    September 2007

                	
                    30,000

                	
                    $9,000

                	 	
                    35,000

                	
                    $5,600

                
	
                    October 2007

                	
                    30,000

                	
                    $9,000

                	 	
                    35,000

                	
                    $5,600

                
	 	
                    150,000

                	
                    $45,000

                	 	
                    180,000

                	
                    $28,800

                


        

        



        


             B. .68 Caliber Products

         


        


        	
                    Month

                	
                    Live Rounds

                	 	
                    Inert Rounds

                
	 	
                    Quantity

                	
                    Price

                	 	
                    Quantity

                	
                    Price

                
	
                    May 2007

                	
                    10,000

                	
                    $3,000

                	 	
                    15,000

                	
                    $2,400

                
	
                    June 2007

                	
                    15,000

                	
                    $4,500

                	 	
                    20,000

                	
                    $3,200

                
	
                    July 2007

                	
                    15,000

                	
                    $4,500

                	 	
                    20,000

                	
                    $3,200

                
	
                    August 2007

                	
                    20,000

                	
                    $6,000

                	 	
                    25,000

                	
                    $4,000

                
	
                    September 2007

                	
                    20,000

                	
                    $6,000

                	 	
                    25,000

                	
                    $4,000

                
	
                    October 2007

                	
                    30,000

                	
                    $9,000

                	 	
                    35,000

                	
                    $5,600

                
	 	
                    110,000

                	
                    $33,000

                	 	
                    140,000

                	
                    $22,400

                


        

        



         


        
            

        


         

        



EXHIBIT B  



PRODUCT SPECIFICATIONS 



Projectiles manufactured by Perfect
Circle Projectiles (PC) will conform to the following specifications: 



All projectiles produced for SWAT
will use SWAT’s supplied proprietary powder fills. 



Inert projectiles will have clear shells. 



PAVA filled projectiles will have 1⁄2
the shell orange and the other half clear. 



.68 caliber 



	 	
Approximate
diameter: .68"
Approximate weight: 3 grams 
When impacting a DO-JO brand rubber target
at greater than 150 FPS the projectile will break.  






.50 caliber  




	 	
Approximate
diameter: .50"
Approximate weight: 1 gram 
When impacting a DO-JO brand rubber target
at greater than 200 FPS the projectile will break.  



















EXHIBIT C  



FORM OF ESCROW
AGREEMENT 



Attached. 




















ESCROW AGREEMENT 



        THIS
ESCROW AGREEMENT (this “Agreement”) is dated as of May 30, 2007 (the
“Effective Date”), by and among Security With Advanced Technology, Inc.,
a Colorado corporation (“Buyer”), Perfect Circle Projectiles, LLC, an
Illinois limited liability company (“Seller”), and American National Bank
(the “Escrow Agent”). Capitalized terms used but not defined herein shall
have the meaning set forth in the Supply Agreement (as defined below). 



RECITALS 



        WHEREAS,
Seller and Buyer have entered into a Supply Agreement dated as of May 29, 2007 (the
“Supply Agreement”); and 



        WHEREAS,
in accordance with the Supply Agreement, Buyer is depositing with the Escrow Agent the sum
of $1,000,000 (the “Escrow Funds”), which sum shall be disbursed
in accordance with the provisions of the Supply Agreement and this Agreement. 



        NOW,
THEREFORE, for and in consideration of the mutual covenants contained in the Supply
Agreement and herein, and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Buyer, Seller and Escrow Agent hereby agree
as follows: 



        1.    Deposit
of Cash. Upon the execution of this Agreement, Buyer will cause           to be
delivered to the Escrow Agent by wire transfer of immediately available           funds
the Escrow Funds.  




        2.    Methods
of Disposition of Escrow Funds. The Escrow Agent will hold the           Escrow Funds
in its possession and will disburse such Escrow Funds, or a portion           thereof, as
follows:  




        
        (a)              Upon
Escrow Agent’s receipt of Seller’s notice that a shipment of           Product
is ready and the related invoice to Buyer, 50% of the invoice amount for           such
Product shall be disbursed to Seller. The Notice and invoice may be served           on
the Escrow Agent via email or fax provided that a copy is simultaneously
          delivered to Buyer via email or fax.  




        
        (b)              Upon
the termination of the Supply Agreement due to the closing of the           Acquisition
(as defined in the Supply Agreement), the remaining Escrow Funds, if           any, shall
be applied to the purchase price payable by Buyer to Seller in           connection with
the Acquisition and disbursed to Seller. In such event, Buyer           and Seller shall
deliver to the Escrow Agent a certificate in the form attached           hereto as Schedule
I;  




        
        (c)              Upon
the fourth anniversary of the Effective Date of this Agreement, the           remaining
Escrow Funds, if any, shall be disbursed to Seller;  




        
        (d)              In
the event the Supply Agreement is terminated by Buyer due to an Event of
          Default (as defined in the Supply Agreement) caused by Seller, the remaining
          Escrow Funds, if any, shall be disbursed to Buyer. In such event, Buyer and
          Seller shall deliver to the Escrow Agent a certificate in the form attached
          hereto as Schedule I;  














        
        (e)              In
the event the Supply Agreement is terminated by Seller due to an Event of
          Default (as defined in the Supply Agreement) caused by Buyer, the remaining
          Escrow Funds, if any, shall be disbursed to Seller. In such event, Buyer and
          Seller shall deliver to the Escrow Agent a certificate in the form attached
          hereto as Schedule I; or  




        
        (f)              As
directed by Section 4 herein.  




        3.    Execution
of Certificate. To the extent all or any portion of the Escrow           Funds are
required pursuant to the Supply Agreement to be delivered to either           Buyer or
Seller, Buyer and Seller agree to promptly (but in no event more than           two
business days after such amount is determined) execute and deliver to the
          Escrow Agent a certificate as contemplated by Section 2 herein.  




        4.    Disputes.
If a dispute occurs between the parties hereto and Buyer or           Seller has served a
demand for arbitration in accordance with Section 21 of the           Supply Agreement,
then the Escrow Agent shall be entitled to take all actions           provided for in
Section 6(l) herein and thereupon be discharged from all further           duties and
liabilities under this Agreement. The filing of any such demand for           arbitration
shall not deprive the Escrow Agent of its compensation earned prior           to such
filing and the provisions of this Section 4 shall survive as to such           action.  




        5.    Investments;
Disposition of Income. The Escrow Agent shall invest the           Escrow Funds in
the SEI Daily Income Trust Treasury Fund unless otherwise           directed in
writing by Seller and Buyer. A sweep fee of 0.25% annually will           apply to the
average daily balances. Any income received by the Escrow Agent           from
investments of the Escrow Funds pursuant to this Section 5 shall be added           to
the Escrow Funds and distributed as part of the Escrow Funds.  




        6.    Concerning
the Escrow Agent.  




        
        (a)              The
Escrow Agent shall not be under any duty to give the Escrow Funds held by it
          hereunder any greater degree of care than it gives its own similar property and
          shall not be required to invest any funds held hereunder except as directed
          pursuant to Section 5 herein.  




        
        (b)              This
Agreement expressly sets forth all the duties of the Escrow Agent with           respect
to any and all matters pertinent hereto. No implied duties or           obligations shall
be read into this Agreement against the Escrow Agent. The           Escrow Agent shall
not be bound by the provisions of any other agreement among           the parties hereto
except this Agreement.  




        
        (c)              The
Escrow Agent shall not be liable, except for its own gross negligence or
          willful misconduct, and, except with respect to claims based upon such gross
          negligence or willful misconduct that are successfully asserted against the
          Escrow Agent, the other parties hereto shall jointly and severally indemnify
and           hold harmless the Escrow Agent (and any successor Escrow Agent) from and
against           any and all losses, liabilities, claims, actions, damages and expenses,
          including reasonable attorney’s fees and disbursements, arising out of and
          in connection with this Agreement. Without limiting the foregoing, the Escrow
          Agent shall in no event be liable in connection with its investment or
          reinvestment of any Escrow Funds held by it hereunder in good faith, in
          accordance with the terms hereof, including, without limitation, any liability
          for any delays (not resulting from its gross negligence or willful misconduct)
          in the investment or reinvestment of the Escrow Funds, or any loss of interest
          incident to any such delays.  














        
        (d)              The
Escrow Agent shall be entitled to rely upon any arbitration award, order,
          judgment, certification, demand, notice, instrument or other writing delivered
          to it hereunder without being required to determine the authenticity or the
          correctness of any fact stated therein or the proprieties, validity or the
          service thereof. The Escrow Agent may act in reliance upon any instrument or
          signature reasonably believed by it to be genuine and may assume that any
person           purporting to give notice or advice, accept receipt of or execute any
document,           or make any statement in connection with the provisions hereof, has
been duly           authorized to do so.  




        
        (e)              The
Escrow Agent may act pursuant to the reasonable advice of counsel with           respect
to any matter relating to this Agreement and, except for its own gross
          negligence or willful misconduct, the Escrow Agent shall not be liable for any
          action taken or omitted in accordance with such advice.  




        
        (f)              The
Escrow Agent is serving as escrow holder only and has no interest in the           Escrow
Funds deposited hereunder. Any payments of income from this Agreement           shall be
subject to withholding regulations then in force with respect to United           States
Taxes. The parties hereto will provide the Escrow Agent with appropriate           W-9
forms for tax identification number certification or nonresident alien
          certifications. This Section 6(f) and Section 6(c) herein shall survive
          notwithstanding any termination of this Agreement or the resignation of the
          Escrow Agent.  




        
        (g)              The
Escrow Agent makes no representation as to the validity, value, genuineness           or
the collectibility of any security or other documents or instrument held by           or
delivered to it.  




        
        (h)              The
Escrow Agent shall not be called upon to advise any party as to the wisdom           in
selling or retaining or taking or refraining from any action with respect to
          any securities or other property deposited hereunder.  




        
        (i)              The
Escrow Agent (and any successor Escrow Agent) may at any time resign as such           by
delivering the Escrow Funds to any successor Escrow Agent jointly designated           by
the other parties hereto in writing, or to any court of competent           jurisdiction,
whereupon the Escrow Agent shall be discharged of and from any and           all further
obligations arising in connection with this Agreement. The           resignation of the
Escrow Agent will take effect on the earlier of (i) the           appointment of a
successor (including a court of competent jurisdiction) or (ii)           the day which
is thirty days after the date of delivery of its written notice of           resignation
to the other parties hereto. If at that time the Escrow Agent has           not received
a designation of a successor Escrow Agent, the Escrow Agent’s           sole
responsibility after that time shall be to safekeep the Escrow Funds until
          receipt of a designation of successor Escrow Agent or a joint written
          disposition instruction by the other parties hereto or a final order of a court
          of competent jurisdiction.  














        
        (j)              The
Escrow Agent shall have no responsibility for the contents of any writing of
          the court or any third party contemplated herein as a means to resolve disputes
          and may rely without any liability upon the contents thereof.  




        
        (k)              In
the event of any disagreement between the other parties hereto resulting in
          adverse claims or demands being made in connection with the Escrow Funds, or in
          the event that the Escrow Agent in good faith is in doubt as to what action it
          should take hereunder, the Escrow Agent shall be entitled to retain the Escrow
          Funds until the Escrow Agent shall have received (i) a final nonappealable
order           of a court of competent jurisdiction directing delivery of the Escrow
Funds or           (ii) a written agreement executed by the other parties hereto
directing delivery           of the Escrow Funds, in which event the Escrow Agent shall
disburse the Escrow           Funds in accordance with such order or agreement. Any court
order referred to in           (i) above shall be accompanied by a legal opinion of
counsel for the presenting           party satisfactory to the Escrow Agent to the effect
that said court order is           final and nonappealable. The Escrow Agent shall act on
such court order and           legal opinions without further question.  




        
        (l)              Notwithstanding
anything to the contrary contained herein, in the event of any           dispute between
the parties hereto as to the facts of default, the validity or           meaning of these
instructions or any other fact or matter relating to the           transaction between
the parties, the Escrow Agent is instructed as follows:  




        
        
        (i)              That
it shall be under no obligation to act, except under process or order of           court,
or until it has been adequately indemnified to its full satisfaction, and           shall
sustain no liability for its failure to act pending such process or court           order
or indemnification; and  




        
        
        (ii)              That
it may in its sole and absolute discretion, deposit the property herein or           so
much thereof as remains in its hands with the then Clerk, or acting Clerk, of
          the District Court of the City and County of Denver, State of Colorado,
          interplead the parties hereto, and upon so depositing such property and filing
          its complaint in interpleader it shall be relieved of all liability under the
          terms hereof as to the property so deposited, and furthermore, the parties
          hereto for themselves, their heirs, legal representatives, successors and
          assigns do hereby submit themselves to the jurisdiction of said court. The
          institution of any such interpleader action shall not impair the rights of the
          Escrow Agent under Section 6(c) above. The right of the Escrow Agent to file
          such an interpleader action shall not alter the fact that the dispute shall be
          resolved by arbitration by the American Arbitration Association as provided in
          the Supply Agreement.  




        
        (m)              Seller
agrees to pay the Escrow Agent’s compensation for the services           hereunder,
which is an aggregate of $500 per year. All reasonable expenses,           disbursements
and advances incurred or made by the Escrow Agent in performance           of its duties
hereunder (including reasonable fees, expenses and disbursements           of its
counsel), shall be paid by Buyer.  




        
        (n)              No
printed or other matter in any language (including, without limitation,
          prospectuses, notices, reports and promotional materials) which mentions the
          Escrow Agent’s name or the rights, powers or duties of the Escrow Agent
          shall be issued by the other parties hereto or on such parties’ behalf
          unless the Escrow Agent shall first have given its specific written consent
          thereto.  














        7.    Notices.
Any notice, request, demand, waiver, consent, approval or other           communication
which is required or permitted hereunder shall be in writing. All           such notices
shall be delivered personally, by facsimile, by email or by           reputable overnight
courier (costs prepaid), and shall be deemed given or made           when delivered
personally, the business day sent if sent by facsimile or email           or one business
day after delivery to the overnight courier for next business           day delivery. All
such notices are to be given or made to the parties at the           following addresses
(or to such other address as any party may designate by a           notice given in
accordance with the provisions of this Section):  





	 	
If
to Seller: 






	 	
Perfect Circle Projectiles, LLC 
28101 Ballard Drive, Unit C
 Lake Forest,
Illinois 60045
 Fax No.: (847) 367-8980
 Attention: Gary E. Gibson

Email: gary@airgun.com 






	 	
With
a copy (which shall          
not constitute notice) to: 






	 	
Shadle & Associates, Ltd. 
1019 W. Wise Road, Suite 200 
Schaumburg, Illinois
60193 
Fax No: (847) 891-3176 
Attention: Ronald E. Shadle 
Email:
shadlelaw1@sbcglobal.net 






	 	
If
to Buyer: 






	 	
Security With Advanced Technology, Inc. 
10855 Dover Street, Suite 1000

Westminster, Colorado 80021-3936 
Fax No.: (303) 439-0414 
Attention: [Jeffrey G.
McGonegal] 
Email: jmcgonegal@aol.com 






	 	
With
a copy (which shall          
not constitute notice) to: 






	 	
Brownstein Hyatt Farber Schreck, P.C. 
410 Seventeenth Street, Suite 2200 
Denver,
Colorado 80202 
Fax No.: (303) 223-1111 
Attention: Adam J. Agron 
Email:
aagron@bhfs.com 

















	 	
If
to the Escrow Agent: 






	 	
American National Bank 
3033 East First Avenue 
Denver, Colorado 80206-5698
Attention: Kathleen Connelly 
Facsimile: (303) 394-5320 
Email:
kconnelly@anbbank.com 







        8.    Waivers
and Amendments. This Agreement may be amended, superseded,           canceled,
renewed or extended and the terms hereof may be waived only by a           written
instrument signed by Buyer and Seller.  




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




        10.    Governing
Law; Severability. This Agreement shall be governed by, and           construed in
accordance with, the internal laws of the State of Delaware,           without reference
to the choice of law or conflicts of law principles thereof.           Should any clause,
section or part of this Agreement be held or declared to be           void or illegal for
any reason, all other clauses, sections or parts of this           Agreement shall
nevertheless continue in full force and effect.  




        11.    Assignment.
Neither the rights nor the obligations of any party to this           Agreement may be
transferred or assigned, except by the express written           agreement of the parties
hereto. Any purported assignment of this Agreement           shall be null, void and of
no effect.  




        12.    Termination.
This Agreement shall terminate upon the complete           distribution of the Escrow
Funds in accordance with the terms hereof. If any           Escrow Funds are subject to a
dispute under Section 4 herein, this Agreement           shall remain in full force and
effect until such dispute is resolved in           accordance with Section 4 herein.  




        13.    Binding
Effect. This Agreement shall inure to the benefit of and be           binding upon
the parties hereto and their respective representatives, successors           and
permitted assigns.  




     *  *  *  *  * 













        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed on the date
and year first written above. 




































		
		
SELLER:


PERFECT CIRCLE PROJECTILES, LLC





By:         /s/ Gary E. Gibson

Name:    Gary E. Gibson

Title:      Manager





BUYER:



SECURITY WITH ADVANCED TECHNOLOGY, INC.





By:          /s/ Scott G. Sutton

Name:    Scott G. Sutton

Title:      CEO & President







ESCROW AGENT:



AMERICAN NATIONAL BANK





By:          /s/ Kathleen Connelly

Name:    Kathleen Connelly

Title:      Vice President 





















SCHEDULE I  



CERTIFICATE 



        Reference
is hereby made to the Escrow Agreement dated as of May 29, 2007, by and among Security
With Advanced Technology, Inc., a Colorado corporation (“Buyer”), Perfect
Circle Projectiles, LLC, an Illinois limited liability company
(“Seller”), and American National Bank (the “Escrow
Agent”). Capitalized terms used herein but not defined herein have the meaning
assigned such terms in the Escrow Agreement. 



         1.       
          Buyer and Seller acknowledge and agree that Escrow Funds shall be released to
          [Buyer / Seller] pursuant to Section [2(b), (d) or (e)] of the Escrow Agreement;
          and 



         2.       
          Accordingly, Buyer and Seller hereby instruct the Escrow Agent to disburse
          [$________] of the Escrow Funds to [Buyer / Seller] as follows: 



[Add Buyer’s or
Seller’s wire transfer instructions] 



[Remainder of page
intentionally left blank; signature page to follow] 




















        IN
WITNESS WHEREOF, Buyer and Seller have executed this certificate as of _____________. 

























		
		SELLER:



PERFECT CIRCLE PROJECTILES, LLC





By:          __________________________

Name:     __________________________

Title:       __________________________





BUYER:



SECURITY WITH ADVANCED TECHNOLOGY, INC.





By:          __________________________

Name:    __________________________

Title:      __________________________