----

**Exhibit      2.8**

2006

Asset        Sale and Purchase Agreement

relating        to

certain        assets of McMurdo Limited's marine business

McMurdo        Limited (1)  

Signature        Industries Limited (2) 

Digital        Angel Corporation (3)  and

|   | **Bond                  Pearse LLP**Tel:                    +44 (0) 845 415 0000www.bondpearce.com |
|--------|----------------------------------------------------------------------------------------------------|

----

**CONTENTS**

| **Clause**                                          | **Page**                                                                                                          |
|-----------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|
| 1                                                   | Definitions                  and interpretation                                                                   | 1 |   |
| 2                                                   | Agreement                  to Sell and Purchase                                                                   | 9 |   |
| 3                                                   | Price                                                                                                             | 9 |   |
| 4                                                   | Completion                  Statement, Anniversary Statement and Adjustment to the Initial                  Price | 10 |   |
| 5                                                   | Conditions                  Precedent                                                                             | 11 |   |
| 6                                                   | Deposit                                                                                                           | 13 |   |
| 7                                                   | Exchange                                                                                                          | 14 |   |
| 8                                                   | Completion                                                                                                        | 14 |   |
| 9                                                   | Conduct                  of Business prior to Completion                                                          | 16 |   |
| 10                                                  | Warranties                                                                                                        | 17 |   |
| 11                                                  | Buyer’s                  remedies                                                                           | 18 |   |
| 12                                                  | Property                                                                                                          | 19 |   |
| 13                                                  | Employees                                                                                                         | 19 |   |
| 14                                                  | Business                  Contracts                                                                               | 20 |   |
| 15                                                  | Mutual                  covenants and apportionments                                                              | 22 |   |
| 16                                                  | Book                  Debts and Creditors                                                                         | 23 |   |
| 17                                                  | Obligations                  of the Seller and Buyer after Completion                                             | 23 |   |
| 18                                                  | Restrictive                  Covenants                                                                            | 24 |   |
| 19                                                  | Confidentiality                                                                                                   | 25 |   |
| 20                                                  | Value                  Added Tax                                                                                  | 25 |   |
| 21                                                  | DA                  Guarantee                                                                                     | 26 |   |
| 22                                                  | CG                  Guarantee                                                                                     | 28 |   |
| 23                                                  | Announcements                  and publicity                                                                      | 29 |   |
| 24                                                  | Notices                                                                                                           | 29 |   |
| 25                                                  | Successors,                  assigns and third parties                                                            | 30 |   |
| 26                                                  | Variation                                                                                                         | 30 |   |
| 27                                                  | Waiver                                                                                                            | 30 |   |
| 28                                                  | Costs                                                                                                             | 30 |   |
| 29                                                  | Severance                                                                                                         | 30 |   |
| 30                                                  | Further                  assurance                                                                                | 31 |   |
| 31                                                  | Entire                  Agreement                                                                                 | 31 |   |
| 32                                                  | Counterparts                                                                                                      | 31 |   |
| 33                                                  | Miscellaneous                                                                                                     | 31 |   |
| 34                                                  | Applicable                  law and jurisdiction and remedy                                                       | 31 |   |
| 35                                                  | Post-completion                  effect                                                                           | 32 |   |
| Schedule                  1                         | 33                                                                                                                |   |
| Apportionment                  of the Initial Price | 33                                                                                                                |   |
| Schedule                  2                         | 34                                                                                                                |   |
| Warranties                                          | 34                                                                                                                |   |
| Schedule                  3                         | 46                                                                                                                |   |
| Limitations                  to the Warranties      | 46                                                                                                                |   |
| Schedule                  4                         | 50                                                                                                                |   |
| The                  Employees                      | 50                                                                                                                |   |
| Schedule                  5                         | 51                                                                                                                |   |
| The                  Customer Contracts             | 51                                                                                                                |   |
| Schedule                  6                         | 53                                                                                                                |   |
| The                  Supplier Contracts             | 53                                                                                                                |   |
| Schedule                  7                         | 55                                                                                                                |   |
| Products                                            | 55                                                                                                                |   |
| Schedule                  8                         | 56                                                                                                                |   |
| Registered                  Intellectual Property   | 56                                                                                                                |   |
| Schedule                  9                         | 57                                                                                                                |   |
| The                  Deferred Price                 | 57                                                                                                                |   |
| Schedule                  10                        | 61                                                                                                                |   |
| The                  Plant                          | 61                                                                                                                |   |
| Schedule                  11                        | 62                                                                                                                |   |
| Schedule                  12                        | 63                                                                                                                |   |
| Schedule                  13                        | 71                                                                                                                |   |
| Schedule                  14                        | 72                                                                                                                |   |

----

| This                Agreement is dated | 2006 |
|----------------------------------------|------|

**Parties**

| (1) | McMurdo                Limited, a company incorporated in England (registered number 746603)                whose registered office is at 1650 Parkway, Whiteley, Fareham, Hampshire                PO15 7AH (the **Seller**). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Signature                Industries Limited, a company incorporated in England (registered                number                02800561) whose registered office is at Tom Cribb Road, Thamesmead,                London                SE28 0BH (the **Buyer**). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Digital                Angel Corporation, a company incorporated under the laws of the state                of                Delaware USA whose registered office is at 490 Villaume Avenue, South                St.                Paul, Minnesota 55075-2443, USA (**DA**). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Chemring                Group Plc, a company incorporated in England (registered number 86662)                whose registered office is 1650 Parkway, Whiteley, Fareham, Hampshire,                PO15 7AH (**CG**). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Agreed      terms:**

| **1** | **Definitions                and interpretation** |
|-------|---------------------------------------------------|
|   |   |
|--------|--------|
| 1.1 | In              this Agreement, unless the context otherwise requires, the following              words              will have the following meanings: |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Accounts** | the                  audited financial statements of the Seller for the accounting reference                  period ended on the Accounting Date comprising a balance sheet,                  profit and                  loss account, notes, the directors’ and auditors’ reports a copy of which                  is attached to the Disclosure                  Letter; |
|--------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Actual                  Plant Value** | the                  aggregate value of the Plant as shown in the Completion Statement                  as                  agreed or determined in accordance with Schedule                  12; |
|--------|-----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Actual                  S&P Value** | the                  aggregate of the Actual Plant Value and the Actual Stock                  Value; |
|--------|-------------------------------------------|-------------------------------------------------------------------------------------------------------|

|   | **Actual                  Stock Value** | the                  aggregate value of the Stock as shown in the Completion Statement                  as                  agreed or determined in accordance with Schedule                  12; |
|--------|-----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **AIS                  Business** | the                  business of the design, manufacture and sale of the AIS Products                  carried                  on by the Seller at the Transfer Date; |
|--------|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **AIS                  Contracts** | those                  contracts, engagements or orders entered into on or prior to the                  Transfer                  Date by or on behalf of the Seller with customers for the sale,                  loan or                  hire of goods or equipment or provision of services by the Seller                  in                  connection with the AIS Business; |
|--------|------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **AIS                  Products** | MT-1                  transponder, MT-1                  VDU Display, MT-2 transponder and M-2 Minimum                  Keyboard Display; |
|--------|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Anniversary                  Adjustment** | the                  Unused Stock Value less the Zero Valued Used Stock                  Value; |
|--------|---------------------------------------------|-------------------------------------------------------------------------------------------------|

|   | **Anniversary                  Date** | the                  first anniversary of the Completion                  Date; |
|--------|---------------------------------------|---------------------------------------------------------------------------------|

----

|   | **Anniversary                  Statement** | the                  anniversary statement prepared in accordance with clause 4.5 and                  Schedule                  12; |
|--------|--------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | **Assets** | the                  assets of the Business agreed to be sold and purchased pursuant                  to this                  Agreement as described in clause 2.1; |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Book                  Debts** | all                  trade and other debts owing to the Seller on the Transfer                  Date; |
|--------|---------------------------------|-------------------------------------------------------------------------------------------------------|

|   | **Business** | the                  business of the design, manufacture and sale of the Products carried                  on by                  the Seller at the Transfer Date; |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Business                  Contracts** | the                  Customer Contracts, Supplier Contracts, IP Licences and the Leasing/Hire                  Agreements; |
|--------|-----------------------------------------|----------------------------------------------------------------------------------------------------------------------------|

|   | **Business                  Day** | any                  day which is not a Saturday, a Sunday or a bank or public holiday                  in                  England and Wales; |
|--------|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Business                  Information** | all                  information, documentation, papers, books, records, know-how and                  techniques (whether or not confidential and in whatever form held)                  (if                  any) which exclusively relate to: |
|--------|-------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | all                  or any part of the Business and Assets (including all books, accounts,                  credit reports, price lists, cost records, warranty records, work                  tickets,                  catalogues, certificates of title (including all correspondence                  with the                  patent and trade mark agents relating to any registered Business                  Intellectual Property and all registration certificates                  therefor); |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | any                  products or services rendered by the Business (including formulae,                  designs, processes, specifications, drawings, data, manuals or                  instructions, plans, product descriptions, user or test reports,                  type                  approval papers or certificates, instructional and promotional                  material                  and other technical material together with any plates, blocks,                  negatives                  and similar material relating                  thereto); |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | any                  products or processes which are or were the subject of any research                  or                  development undertaken exclusively by the Business (whether or                  not                  completed or abandoned); |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | the                  operations, management, administration, or financial affairs of                  the                  Business (including all employee records and interview records;                  and |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | the                  sale or marketing of any of the products manufactured and/or sold                  or                  services rendered by the Business including, without limitation,                  all                  customer and supplier names and lists, sales advertising and marketing                  information (including without limitation, targets, sales and market                  share                  statistics, market surveys and reports on research and terms and                  conditions of sale or supply), type approvals, licences and national                  or                  local authorisations in respect of the                  Products; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Business                    Intellectual Property** | all                    Intellectual Property owned or lawfully used by the Seller exclusively                    in                    connection with the Business as carried on by the Seller as at                    the                    Transfer Date including:- |
|--------|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | those                  items of registered Intellectual Property (and applications therefor)                  described in Schedule; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | the                  Business Information; and |
|--------|-----|------------------------------------------------|

----

|   | (c) | the                  Business Name |
|--------|-----|------------------------------------|

|   | **Business                  Name** | ‘McMurdo’                  (subject always to the terms of the Connectors Licence), 'McMurdo                  Marine’                  and ‘Nova Marine Systems’; |
|--------|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Buyer's                  Group** | the                  Buyer, its holding company and all companies and undertakings which                  now or                  in the future become subsidiaries or subsidiary undertakings of                  the Buyer                  or of any such holding company; |
|--------|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Buyer’s                  Solicitors** | Kimbells                  LLP, Power House, Harrison Close, Knowlhill, Milton Keynes MK5                  8PA; |
|--------|-----------------------------------------------|----------------------------------------------------------------------------------------------------------------|

|   | **CAA** | the                  Capital Allowances Act 2001; |
|--------|---------|---------------------------------------------------|

|   | **Completion** | completion                  of the sale and purchase of the Business and the Assets in accordance                  with                  clause 8; |
|--------|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Completion                  Date** | (subject                  to clause 5.5)                  the date which is the earlier of: |
|--------|--------------------------------------|---------------------------------------------------------------------------------------------|

|   | (a) | 5                  Business Days after notice has been given in accordance with                  clause 5.2                  by                  the relevant Party that the last unsatisfied Condition has been                  satisfied;                  and |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | 5                  Business Days after the Buyer has waived the last unsatisfied Condition                  or                  Conditions in accordance with clause                  5.4 |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Completion                  Statement** | the                  completion statement prepared in accordance with the clause 4.1                  and                  Schedule 12; |
|--------|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | **Computer                  System** | all                  computer hardware and associated peripheral equipment, software,                  networks                  and technical and other documentation related thereto owned or                  used by the                  Business including all arrangements relating to the provision of                  maintenance and support, security, disaster recovery, facilities                  management, bureau and on-line services to the                  Business; |
|--------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Conditions** | the                  conditions precedent set out in clause 5.1; |
|--------|----------------|------------------------------------------------------------------|

|   | **Connectors                  Licence** | the                  trade mark licence dated 18 June 1998 between the Seller (1) and                  ITW                  Limited (2), a copy of which is at Folder 2a Section 14a of the                  Disclosure                  Bundle; |
|--------|-----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Connectors                  Novation** | the                  deed of novation in the agreed form to be entered into between                  the Seller                  (1), ITW Limited (2) and the Buyer (3); |
|--------|------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Creditors** | all                  trade and other debts, accrued charges and all other amounts owing                  by the                  Seller in connection with the Business on the Transfer                  Date; |
|--------|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Customers** | the                  persons, firms or companies who or which were either at the Transfer                  Date                  or during the period of 12 months prior to the Transfer Date a                  customer of                  the Business; |
|--------|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Customer                  Contracts** | those                  contracts, engagements or orders entered into on or prior |
|--------|-----------------------------------------|----------------------------------------------------------------------------------|

----

|   | **Deferred                  Price** | the                  further price, if any, payable by the Buyer for the Goodwill calculated                  in                  accordance with Schedule                  5; |
|--------|-------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Deposit** | has                  the meaning given in clause 3.2.1; |
|--------|-------------|---------------------------------------------------------|

|   | **Disclosure                  Bundle** | has                  the meaning given in the Disclosure                  Letter; |
|--------|----------------------------------------|-----------------------------------------------------------------------------------|

|   | **Disclosure                  Letter** | a                  letter dated the same date as this Agreement from the Seller to                  the                  Buyer; |
|--------|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|   | **Employees** | the                  persons whose names are set out in Schedule                  4; |
|--------|---------------|--------------------------------------------------------------------------------------|

|   | **Escrow                  Agents** | the                  Buyer’s Solicitors and the Seller’s                  Solicitors; |
|--------|------------------------------------|---------------------------------------------------------------------------------------------------|

|   | **Escrow                  Bank** | National                  Westminster Bank plc, Milton                  Keynes; |
|--------|----------------------------------|---------------------------------------------------------------------------------|

|   | **Escrow                  Letter** | the                  letter, in the agreed form, to be signed by the parties instructing                  and                  authorising the Escrow Agents to establish and operate the Retention                  Account; |
|--------|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Excluded                  Assets** | the                  following assets which are excluded from the sale to the Buyer                  under this                  Agreement: (i) the Retained Business; (ii) the Book Debts; (iii)                  the                  statutory books of the Seller; (iv) cash in hand or at the bank                  and all                  cheques and other securities representing the same; (v) any right                  to use                  or continue to use after Completion any trade or service name or                  mark of                  the Seller or any member of the Seller’s Group other than the Business                  Names; (vi) the Property; (vii) the Computer System; (viii) items                  of plant                  and equipment used by the Seller in both the Business and the AIS                  Business; and (ix) all assets, property rights and other interests                  of the                  Seller other than the Assets; |
|--------|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Expert** | has                  the meaning given in clause 11.4; |
|--------|------------|--------------------------------------------------------|

|   | **Goodwill** | the                  goodwill custom and connection of the Seller exclusively in relation                  to                  the Business together with the exclusive right for the Buyer and                  its                  successors and assigns to carry on the Business and use the Business                  Names                  respectively to represent themselves as carrying on the Business                  in                  succession to the Seller; |
|--------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Guaranteed                  Agreements** | has                  the meaning given in clause 21.1 |
|--------|--------------------------------------------|-------------------------------------------------------|

|   | **HBoS                  Release** | the                  release from HBoS in the agreed                  form; |
|--------|-----------------------------------|-----------------------------------------------------------------------------|

|   | **Initial                  Price** | the                  sum of £3,117,020; |
|--------|------------------------------------|----------------------------------------------|

|   | **Initial                  Plant Value** | the                  amount specified in Schedule 1 as being that part of the Initial                  Price                  apportioned to the Plant; |
|--------|------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Initial                    S&P Value** | the                    aggregate of the Initial Plant Value and the Initial Stock |
|--------|----------------------------------------------|-----------------------------------------------------------------------------------|

----

|   | **Initial                  Stock Value** | the                  amount specified in Schedule 1 as being that part of the Initial                  Price                  apportioned to the Stock; |
|--------|------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Intellectual                  Property** | patents,                  know-how, goodwill, registered and unregistered trademarks and                  service                  marks, domain names, registered designs, design rights, utility                  models,                  copyright (including all such rights in computer software, information                  and                  any databases), database rights, moral rights and topography rights,                  trade                  secret and other similar confidential information, rights in the                  nature of                  unfair competition rights and right to sue for passing off and                  any other                  similar intellectual or commercial right (in each case whether                  or not                  registered or registrable for the full period thereof and all extensions                  and renewals thereof), applications for any of the foregoing and                  the right                  to apply for any of the foregoing in any part of the world and                  any similar                  rights situated in any country; |
|--------|--------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Interest                  Rate** | means                  2% above the base rate of the Bank of England from time to                  time; |
|--------|------------------------------------|----------------------------------------------------------------------------------------------------------|

|   | **IP                  Licences** | means,                  save for any which are incorporated into Customer Contracts or                  Supplier                  Contracts, any licences, authorisations and permissions in any                  form                  whatsoever whether express or implied, written or unwritten (a)                  pertaining                  to the use, enjoyment and exploitation by the Seller of any Business                  Intellectual Property in connection with the Business as carried                  on at the                  Transfer Date, or (b) granted by the Seller to any third party                  including a                  member of the Seller's Group in the course of the Business pertaining                  to                  the use, enjoyment and exploitation by such third party of any                  Business                  Intellectual Property together with any other such licences entered                  into                  on or after today's date; |
|--------|----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Leasing/Hire                  Agreements** | those                  leasing                  and hire agreements entered into on or prior to the Transfer Date                  by or on                  behalf of the Seller for the lease or hire of equipment exclusively                  in                  connection with and in the ordinary course of the Business which                  at the                  Transfer Date remain to be performed in whole or in part being                  those                  contracts listed                  in Schedule 11 and any other leasing or hire agreements entered                  into on or                  after today's date by the Seller exclusively in connection with                  the                  Business; |
|--------|----------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Legal                  Opinion** | the                  legal opinion in agreed form given in relation to DA entering into                  this                  Agreement; |
|--------|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Licence** | has                  the meaning given in clause 12.1; |
|--------|-------------|--------------------------------------------------------|

|   | **Management                  Accounts**  | the                  accounts comprising a balance sheet as at 24 November 2006 and                  a profit                  and loss account for the period which commenced on 1 August 2006                  and ended                  on 24 November 2006, a copy of which is annexed to the Disclosure                  Letter; |
|--------|------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Mandate                  Letters** | letters                  from the Buyer's Solicitors and the Seller's Solicitors to the                  Escrow Bank                  in the agreed form; |
|--------|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **NAV                  7 Licence** | the                  ip licence relating to the NAV7 casings and related tooling to                  be entered                  into between the Seller (1) and the Buyer (2) in the agreed                  form; |
|--------|------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Novation                  Agreement** | the                  novation agreement to be entered into by the Parties in the |
|--------|-----------------------------------------|----------------------------------------------------------------------------------|

----

|   | **Parties** | the                  parties to this Agreement (and Party means any of them depending                  on the                  context); |
|--------|-------------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Patent                  Assignment** | the                  patent assignment in the agreed form to be entered into between                  the Seller                  (1) and the Buyer (2); |
|--------|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Plant** | the                  plant, equipment (including items of office equipment used by Employees                  on                  a day to day basis other than any such items which relate to the                  Computer                  System) and machinery wherever situate, including tools and jigs                  in the                  possession of suppliers, belonging to the Seller and used exclusively                  in                  connection with the Business being those items listed in Schedule                  10                  together with any other such items acquired by the Seller after                  today’s                  date but before Completion and less any items on such list which                  are                  disposed of by the Seller after today’s date but before                  Completion; |
|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Post                  Exchange Breach** | has                  the meaning given in clause 10.6; |
|--------|-------------------------------------------|--------------------------------------------------------|

|   | **Price** | the                  total purchase price payable by the Buyer to the Seller as referred                  to in                  clause 3.1; |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Products** | the                  products listed at                  Schedule 7; |
|--------|--------------|----------------------------------------------------------------------|

|   | **Property** | the                  property known as Silver Point, Airport Service Road, Portsmouth                  PO3 5PB and any part or parts                  thereof; |
|--------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Retained                  Business** | any                  businesses (other than the Business) carried on or previously carried                  on                  by the Seller (including the AIS Business and the carrying out                  of its                  obligations pursuant to the RNLI                  Contract); |
|--------|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Retention** | has                  the meaning given in clause 3.2.3; |
|--------|---------------|---------------------------------------------------------|

|   | **Retention                  Account** | the                  joint interest bearing account to be established in accordance                  with the                  Escrow Letter; |
|--------|----------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Retention                  Account Opening Form** | the                  form opening the Retention Account in the agreed                  form; |
|--------|-----------------------------------------------------|----------------------------------------------------------------------------------------------|

|   | **RNLI                  Contract** | the                  development and licensing agreement dated 19 September 2005 between                  the                  Seller (1) and RNLI (2), a copy of which is at Folder 2a, Section                  8 of the                  Disclosure Bundle; |
|--------|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Seller’s                  Solicitors Account** | the                  Seller’s Solicitors client account held at Lloyds TSB Bank plc, sort code                  30-96-68, account number 01364135 (or such other account as the                  Seller may                  notify the Buyer in writing); |
|--------|--------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Security                  Interest** | any                  encumbrance, mortgage, charge, assignment for the purpose of security,                  pledge, lien, right of set-off, retention of title or hypothecation                  for                  the purpose, or which has the effect, of granting security interest                  of any                  kind whatsoever and any agreement, whether conditional or otherwise,                  to                  create any of the foregoing; |
|--------|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Seller’s                  Group** | the                  Seller, its holding company and all companies and undertakings                  which now                  or in the future become subsidiaries or subsidiary undertakings                  of the                  Seller or of any such holding                  company; |
|--------|-------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | **Seller’s                  Scheme** | the                  pension scheme known as the Chemring Group Staff Pension                  Scheme; |
|--------|--------------------------------------------|--------------------------------------------------------------------------------------------------------|

|   | **Seller’s                  Solicitors** | Bond                  Pearce LLP of Oceana House, 39-49 Commercial Road, Southampton                  SO15                  1GA; |
|--------|------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|

|   | **Special                  Provisions Order** | the                  VAT (Special Provisions) Order 1995 SI                  1995/1268; |
|--------|-----------------------------------------------|-----------------------------------------------------------------------------------------|

|   | **Stock** | the                  stock-in-trade exclusively relating to the Business at the Transfer                  Date                  including (without limitation) raw materials, goods and other assets                  purchased for resale, stores, component parts, work in progress,                  together                  with finished products all exclusively relating to the Business,                  including                  those items listed in Schedule 14 (to the extent they have not                  been used                  or otherwise disposed of by the Buyer after today’s                  date); |
|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Supplier                    Contracts** | those                    contracts, engagements or orders entered into on or prior to                    the Transfer                    Date by or on behalf of the Seller for the supply or sale of                    goods or                    services to the Seller exclusively in connection with and in                    the ordinary                    course of the Business which at the Transfer Date remain to be                    performed                    in whole or in part including those contracts listed in Schedule                    6. For                    the avoidance of doubt this excludes any contracts between the                    Seller and                    a third party supplier which relate to services provided by the                    Seller to                    the Buyer under the Transitional Services                    Agreement; |
|--------|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Tax                  or Taxation** | all                  taxes, levies, duties, imposts, charges, contributions and withholdings                  of                  any nature whatsoever or wheresoever imposed and all penalties,                  fines,                  charges, surcharges and interest relating                  thereto; |
|--------|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Trade                  Mark Assignment** | the                  trade mark assignment in the agreed form to be entered into between                  the                  Seller (1) and the Buyer (2) |
|--------|--------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Transfer                  Date** | the                  close of business on the Completion                  Date; |
|--------|------------------------------------|---------------------------------------------------------------------------------|

|   | **Transitional                  Services Agreement** | an                  agreement in respect of certain transitional services between the                  Seller                  and the Buyer in the agreed form; |
|--------|------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **TULRA** | the                  Trade Union and Labour Relations (Consolidation) Act                  1992; |
|--------|-----------|--------------------------------------------------------------------------------------------------|

|   | **TUPE** | the                  Transfer of Undertakings (Protection of Employment) Regulations                  2006 (as                  amended); |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Unused                  Stock** | items                  of Stock which have not been used or otherwise disposed of by the                  Buyer by                  the Anniversary Date; |
|--------|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Unused                  Stock Value** | the                  aggregate value of the Unused Stock as shown in the Anniversary                  Statement                  as agreed or determined in accordance with Schedule 12 and clause                  4.10; |
|--------|-----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **US                  Coastguard Contract** | US                  Coast Guard contract ref HSCG 23-06-R-DNQ159 dated 27 September                  2006                  between United States Coast Guard (1) and the Seller (2) a copy                  of which                  is at Folder 2a, Section 6 of the Disclosure                  Bundle; |
|--------|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **VAT** | Value                  Added Tax or any equivalent tax outside of the United                  Kingdom; |
|--------|---------|--------------------------------------------------------------------------------------------------------|

|   | **VATA** | Valued                  Added Tax Act 1994; |
|--------|----------|---------------------------------------------|

----

|   | **Warranties** | the                  warranties set out in clause 10                  and Schedule                  2. |
|--------|----------------|-------------------------------------------------------------------------------------------------------------|

|   | **Zero                  Valued Used Stock** | items                  of Stock which were given a value of zero when calculating the                  Actual                  Stock Value and which have been used by the Buyer after                  Completion; |
|--------|---------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Zero                  Valued Used Stock Value** | the                  aggregate value of the Zero Valued Used Stock as shown in the Anniversary                  Statement as agreed or determined in accordance with Schedule 12                  and                  clause 4.10; |
|--------|---------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1.2 | In                this Agreement, unless the context requires                otherwise: |
|-----|-----------------------------------------------------------------------------------------|

|   | 1.2.1 | a                document **in                the agreed form**                is                a document which has been agreed by the parties before today's date                and                which has been initialled by them or on their behalf for                identification; |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.2 | references                to a Clause or Schedule are to a clause of or a schedule to this                Agreement; references to this Agreement include its schedules; and                references in a Schedule to a paragraph are to a paragraph of that                Schedule; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.3 | all                words and terms defined in a Schedule have the same meaning when                used                elsewhere in this Agreement; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.4 | references                to this Agreement or any other document are to this Agreement or                that                document as amended from time to                time; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.5 | the                singular includes the plural and vice versa; references to any gender                include every gender, and references to persons include corporations,                partnerships and other unincorporated associations or bodies of                persons; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.6 | all                headings are for convenience, have no legal effect and should be                ignored                in the interpretation of this                Agreement; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.7 | the                words **other**,                **including**                and **in                particular**                do                not limit the generality of any preceding                words; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.8 | any                obligation not to do anything is deemed to include an obligation                not to                suffer, permit or cause that thing to be done if it is within the                power of                the relevant person to prevent that thing being                done; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.9 | **agreements**                includes any agreement, arrangement, contract, commitment, scheme                or                understanding whether legally binding or not and references to being                party                to an agreement will be construed                accordingly; |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.10 | **enactment**                means any statute or statutory provision (of the United Kingdom or                elsewhere) and any subordinate legislation made under any statute                or                statutory provision; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.11 | a                reference to any enactment includes a reference                to: |
|--------|--------|-------------------------------------------------------------------------------------|

|   | (a) | any                enactment which that enactment has directly or indirectly replaced                (with                or without modification); and |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | that                enactment as re-enacted, replaced or modified at any time except                to the                extent that the liability of any party would be increased or extended                as a                result. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.12 | **subsidiary**                and **holding                company**                have the meanings given to them by section 736 Companies Act 1985                and                **subsidiary                undertaking**                and **parent                undertaking**                will have the meanings given to them by section 258 Companies Act                1985;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 1.2.13 | **associate**                has the meaning given to it by section 435 Insolvency Act 1986 and                a                person is regarded as **associated**                with any person which is an associate of his and with any company                of which                any director is an associate of his. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **2** | **Agreement                to Sell and Purchase** |
|-------|---------------------------------------------------|

| 2.1 | With                effect from the Transfer Date the Seller will sell and the Buyer                (relying                on the Warranties) will purchase the Business as a going concern                together                with the following assets: |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.1 | the                Goodwill; |
|--------|-------|------------------------------|

|   | 2.1.2 | the                Plant; |
|--------|-------|---------------------------|

|   | 2.1.3 | the                Stock; |
|--------|-------|---------------------------|

|   | 2.1.4 | the                benefit (subject to the burden) of the Business                Contracts; |
|--------|-------|----------------------------------------------------------------------------------------------|

|   | 2.1.5 | the                Business Intellectual Property; |
|--------|-------|----------------------------------------------------|

|   | 2.1.6 | the                Business Information; and |
|--------|-------|----------------------------------------------|

|   | 2.1.7 | all                the Seller’s rights against third parties including all rights under any                of the warranties, conditions, guarantees or indemnities or under                the Sale                of Goods Act 1979 exclusively relating to any of the Assets and the                benefit of all sums to which the Seller is entitled from third parties                or                insurers in respect of damage to those Assets                listed in clauses 2.1.1                to 2.1.6                (inclusive); |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2 | The                Seller will sell the Business and the Assets with full title guarantee                free from all Security Interests. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| 2.3 | Title                to and beneficial ownership of each of the Assets will pass to the                Buyer                on Completion. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| 2.4 | For                the avoidance of doubt this Agreement shall not operate to assign                to the                Buyer any liabilities or obligations except as specifically stated                in this                Agreement or any documents which are in the agreed                form. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3** | **Price** |
|-------|-----------|

| 3.1 | The                price is the total of the Initial Price (as adjusted in accordance                with                clause 4 and Schedule 12) and the Deferred Price. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | The                Initial Price will be paid as                follows: |
|-----|--------------------------------------------------------------------------|

|   | 3.2.1 | £250,000                of the Initial Price (**Deposit**)                will be paid on the date of this Agreement in accordance with clause                6.1; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2.2 | £2,792,020                of the Initial Price will be paid on Completion in accordance with                clause                8.1.2(b); and |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2.3 | £75,000                of the Initial Price (**Retention**)                will be paid on Completion into the Retention Account in accordance                with                clause 8.1.2(c). |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | The                provisions of Schedule 13 apply to the Retention once it has been                deposited in the Retention Account. The Buyer and the Seller shall                instruct their respective solicitors to open the Retention Account                using                the Retention Account Opening Form and Mandate                Letters. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.4 | The                provisions of Schedule 9 apply to the calculation and payment of                the                Deferred Price. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

----

| 3.5 | Subject                to adjustment in accordance with clause 4, the Initial Price will                be                apportioned as set out in Schedule 1. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **4** | **Completion                Statement, Anniversary Statement and Adjustment to the Initial                Price** |
|-------|-------------------------------------------------------------------------------------------------------------------|

| 4.1 | The                Buyer and the Seller will ensure that the Completion Statement is                prepared                in accordance with Schedule 12. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | If                the Actual S&P Value: |
|-----|---------------------------------------------|

|   | 4.2.1 | is                equal to the Initial S&P Value there shall be no adjustment of the                Initial Price; |
|--------|-------|------------------------------------------------------------------------------------------------------------------------|

|   | 4.2.2 | is                less than the Initial S&P Value the Seller will repay to the Buyer so                much of the Initial Price as is equal to the deficiency, provided                always                that the Seller shall not be required pursuant to this clause to                repay an                amount which is more than Initial S&P Value;                or |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2.3 | is                more than the Initial S&P Value the Buyer will pay to the Seller an                additional amount of consideration, such amount being equal to the                excess. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | Any                payment required to be made under clause 4.2.2 or 4.2.3 will be made                in                cleared funds by electronic funds transfer within five Business Days                of                the Completion Statement being agreed, deemed agreed or determined                by the                Independent Accountants in accordance with Schedule 12 and will be                paid,                in the case of clause 4.2.2, to the Buyer’s Solicitors and in the case of                clause 4.2.3, to the Seller’s Solicitors. The relevant Solicitors are                hereby authorised to receive the same and their receipt will be an                absolute discharge of the Seller or the Buyer (as the case may                be).  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | If                any Party fails to make full payment under clause 4.2, the outstanding                balance of that payment from time to time will bear interest (as                well                after as before judgment) from the due date for payment in accordance                with                clause 4.3 to the actual date of payment (both dates inclusive) at                the                rate of 4 % per annum above the base rate of National Westminster                Bank plc                from time to time. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5 | The                Buyer and the Seller will ensure that the Anniversary Statement is                prepared in accordance with Schedule 12 and clause                4.10. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.6 | If                the Anniversary Adjustment: |
|-----|-----------------------------------------------|

|   | 4.6.1 | is                  zero there shall be no further adjustment of the Initial Price; |
|--------|-------|-------------------------------------------------------------------------------------|

|   | 4.6.2 | is                more than zero the Seller will repay to the Buyer so much of the                Initial                Price as is equal to the excess, provided always that the Seller                shall not                be required pursuant to this clause to repay an amount which is more                than                Actual Stock Value; or |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.6.3 | is                less than zero the Buyer will pay to the Seller an additional amount                of                consideration, such amount being equal to the                excess. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.7 | Subject                to clause 4.8, any payment required to be made under clause 4.6.2                or 4.6.3                will be made in cleared funds by electronic funds transfer within                five                Business Days of the Completion Statement being agreed, deemed agreed                or                determined by the Independent Accountants in accordance with Schedule                12                and will be paid, in the case of clause 4.6.2, to the Buyer’s Solicitors                and in the case of clause 4.6.3, to the Seller’s Solicitors. The relevant                Solicitors are hereby authorised to receive the same and their receipt                will be an absolute discharge of the Seller or the Buyer (as the                case may                be). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.8 | Payment                obligations under clause 4.6 will first be satisfied from the Retention                Account in accordance with Schedule                13. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.9 | If                any Party fails to make full payment under clause 4.6, the outstanding                balance of that payment from time to time will bear interest (as                well                after as before judgment) from the due date for payment in accordance                with                clause 4.7 to the actual date of payment (both |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4.10 | In                the period between Completion and the Anniversary Date the Buyer                shall                always use the items of Stock before using similar items acquired                by it                after Completion. For the purpose of the Anniversary Statement if                the                Buyer has failed to comply with its obligation under this clause                the                Unused Stock, the Zero Valued Used Stock, the Unused Stock Value,                Zero                Valued Used Stock and the Anniversary Adjustment shall be calculated                on                the basis that they are what they would have been had the Buyer complied                with its obligation under this                clause. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.11 | The                Buyer and the Seller agree that when it is agreed they will both                initial                the list of Stock prepared for the purpose of the Completion Statement.                A                copy of such Stock list will be kept by both of them so that it is                available for the purpose of the Anniversary Statement. The Buyer                and the                Seller acknowledge that, subject only to paragraph 6.2 of part 3                of                Schedule 12, for the purposes of the Anniversary Statement such Stock                list                will be conclusive evidence of the                Stock. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **5** | **Conditions                Precedent** |
|-------|-----------------------------------------|

| 5.1 | Completion                of this Agreement is conditional upon                the Buyer or Seller : |
|-----|------------------------------------------------------------------------------------------------------|

|   | 5.1.1 | receiving                the consent of Davis Instruments Corp to the assignment (conditional                on                Completion taking place) of the agreement dated 1 December 2002 between                the Seller (1) and Davis Instruments Corp (2) (a copy of which is                at                Folder 2c, Section D.1 of the Disclosure Bundle) from the Seller                to the                Buyer in accordance with the terms of such agreement or in such other                manner or form as the Seller and Buyer may                agree; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.2 | receiving                the consent of Simrad Limited to the assignment (conditional on Completion                taking place) of the agreement dated 7 February 2003 between the                Seller                (1) and Simrad Limited (2) (a copy of which is at Folder 2a, Section                7 of                the Disclosure Bundle) from the Seller to the Buyer in accordance                with the                terms of such agreement or in such other manner or form as the Seller                and                Buyer may agree; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.3 | receiving                the consent of Furuno Electric Co. Limited to the assignment (conditional                on Completion taking place) of the agreement dated 30 June 2005 between                the Seller (1) and Furuno Electric Co. Limited (2) (a copy of which                is at                Folder 2a, Section 5 of the Disclosure Bundle) from the Seller to                the                Buyer in accordance with the terms of such agreement or in such other                manner or form as the Seller and Buyer may                agree; |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.4 | receiving                confirmation from Kelvin Hughes Limited that other than as a result                of                matters which only become apparent after Completion the identity                of the                Buyer will not lead it to exercise its rights (under the second paragraph                of clause 11.1.3 of such agreement) to terminate the agreement dated                30                June 2005 between the Seller (1) and Kelvin Hughes Limited (2) (a                copy of                which is at Folder 2a, Section 4 of the Disclosure                Bundle); |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.5 | receiving                confirmation from Mitsubishi (or its relevant group company or agent)                that: (i) the patent licence (a copy of which is at Folder 2b, Section                6                of the Disclosure Bundle) has been assigned or will be assigned to                the                Buyer subject only to the Buyer or Seller confirming that the Business                and                Assets have transferred to the Buyer; or (ii) a replacement of such                patent                licence has been granted to or will be granted to the Buyer subject                only                to the Buyer or Seller confirming that the Business and Assets have                transferred to the Buyer; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.6 | receiving                confirmation from the Seller that the two software bugs referred                to at                Disclosure 41 of the Disclosure Bundle have been resolved and that                the                testing carried out by the Seller to check that they have been resolved                the Seller has carried out following the appropriate testing procedures                included in the Seller’s quality approved                system; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 5.1.7 | receiving                confirmation from the relevant authority or authorities that the                UK                product approvals which the Seller has in place at today’s date in                relation to each of the Products (such approvals being listed in                the                document at Folder 2a, Section 13c of the Disclosure Bundle) (**UK                Approvals**)                either have been issued or will be issued to the Buyer subject only                to the                relevant authority or authorities receiving confirmation that the                Business                and Assets have transferred to the                Buyer; |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.8 | receiving                confirmation from the relevant authority or authorities that the                Danish                product approvals which the Seller has in place at today’s date in                relation to each of the Products (such approvals being listed in                the                document at Folder 2a, Section 13c of the Disclosure Bundle) either                have                been issued or will be issued to the Buyer subject only to the relevant                authority receiving confirmation that the Business and Assets have                transferred to the Buyer and/or confirmation that any of the UK Approvals                specified by such authority or authorities have been                issued; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.9 | receiving                confirmation from the relevant authority or authorities that the                French                product approvals which the Seller has in place at today’s date in                relation to each of the Products (such approvals being listed in                the                document at Folder 2a, Section 13c of the Disclosure Bundle) either                have                been issued or will be issued to the Buyer subject only to the relevant                authority receiving confirmation that the Business and Assets have                transferred to the Buyer and/or confirmation that any of the UK Approvals                specified by such authority or authorities have been                issued; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.10 | receiving                confirmation from the relevant authority or authorities that the                German                product approvals which the Seller has in place at today’s date in                relation to each of the Products (such approvals being listed in                the                document at Folder 2a, Section 13c of the Disclosure Bundle) either                have                been issued or will be issued to the Buyer subject only to the relevant                authority receiving confirmation that the Business and Assets have                transferred to the Buyer and/or confirmation that any of the UK Approvals                specified by such authority or authorities have been                issued; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.11 | receiving                confirmation from the relevant authority or authorities that the                Greek                product approvals which the Seller has in place at today’s date in                relation to each of the Products (such approvals being listed in                the                document at Folder 2a, Section 13c of the Disclosure Bundle) either                have                been issued or will be issued to the Buyer subject only to the relevant                authority receiving confirmation that the Business and Assets have                transferred to the Buyer and/or confirmation that any of the UK Approvals                specified by such authority or authorities have been                issued; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.12 | receiving                confirmation from the relevant authority or authorities that the                Italian                product approvals which the Seller has in place at today’s date in                relation to each of the Products (such approvals being listed in                the                document at Folder 2a, Section 13c of the Disclosure Bundle) either                have                been issued or will be issued to the Buyer subject only to the relevant                authority receiving confirmation that the Business and Assets have                transferred to the Buyer and/or confirmation that any of the UK Approvals                specified by such authority or authorities have been                issued; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.13 | receiving                confirmation from the relevant authority or authorities that the                Singaporean product approvals which the Seller has in place at today’s                date in relation to each of the Products (such approvals being listed                in                the document at Folder 2a, Section 13c of the Disclosure Bundle)                either                have been issued or will be issued to the Buyer subject only to the                relevant authority receiving confirmation that the Business and Assets                have transferred to the Buyer and/or confirmation that any of the                UK                Approvals specified by such authority or authorities have been                issued; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.14 | receiving                confirmation from the relevant authority or authorities that the                United                States (FFC) product approvals which the Seller has in place at today’s                date in relation to each of the Products (such approvals being listed                in                the document at Folder 2a, Section 13c of the Disclosure Bundle)                either                have been issued or will be issued to the Buyer subject only to the                relevant authority receiving confirmation that the Business and Assets                have transferred to the Buyer and/or confirmation |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 5.1.15 | receiving                confirmation from the relevant authority or authorities that the                Spanish                product approvals which the Seller has in place at today’s date in                relation to each of the Products (such approvals being listed in                the                document at Folder 2a, Section 13c of the Disclosure Bundle) either                have                been issued or will be issued to the Buyer subject only to the relevant                authority receiving confirmation that the Business and Assets have                transferred to the Buyer and/or confirmation that any of the UK Approvals                specified by such authority or authorities have been issued;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.1.16 | receiving                confirmation from the relevant authority or authorities that the                Netherlands product approvals which the Seller has in place at today’s                date in relation to each of the Products (such approvals being listed                in                the document at Folder 2a, Section 13c of the Disclosure Bundle)                will be                issued to the Buyer subject only to the relevant authority receiving                confirmation that the Business and Assets have transferred to the                Buyer                and/or confirmation that any of the UK Approvals specified by such                authority or authorities have been                issued. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.2 | The                Seller and Buyer shall respectively use all reasonable endeavours                to                ensure the satisfaction of all the Conditions as soon as possible                so far                as lies within their respective power so to do. As soon as a Condition                is                satisfied the Party who received notice from the relevant third party                that                it has been will promptly give written notice of this fact to the                Buyer or                Seller (as the case may be). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.3 | All                costs and expenses relating to obtaining the consents or approvals                or                other matters referred to in clauses 5.1.1 to 5.1.16 will be borne                by the                Seller and the Seller shall indemnify the Buyer and keep it indemnified                against any such costs and expenses provided always that the obligations                of the Seller under this clause 5.3 shall immediately cease in relation                to                any consent or approval or other matter if the Buyer waives the Condition                relating to such consent or approval or other                matter. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.4 | The                Buyer may waive in writing all or any of the Conditions.  |
|-----|-----------------------------------------------------------------------------------|

| 5.5 | If                all the Conditions are not satisfied or waived in accordance with                clause 5.4                on                or before 16 April 2007 (or such other date as the Seller and the                Buyer in                their absolute discretion may agree in writing) this Agreement (save                for                clauses 5.6, 6 (in relation to to whom the Deposit                belongs)and 23                which shall remain in force) shall become null and void and no party                shall                be entitled to make a claim against any other party in connection                with                this Agreement save for any claim which arises in respect of clauses                5.6,                6 (in relation to to whom the Deposit belongs) and 23. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.6 | If                any of the approvals referred to in this clause 5 are granted to                the Buyer                and for whatever reason Completion does not take place, the Buyer                will (at                the Buyer's expense) do, execute and perform and will procure to                be done,                executed and performed all such acts, deeds, documents and things                as the                Seller may require to ensure that any such approvals are reissued                in the                name of the Seller (or in such name as it may direct) and that they                cease                to be issued in the name of the Buyer. As security for the performance                of                its obligations under this clause 5.6, the Buyer hereby irrevocably                and                unconditionally appoints any director (for the time being) of the                Seller                severally as its attorney with full power and authority in the Buyer’s                name and on its behalf to do, sign and execute all acts, documents                or                deeds that the attorney, in its absolute discretion, considers necessary                or desirable for the performance of these                obligations. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **6** | **Deposit** |
|-------|-------------|

| 6.1 | Upon                signing this Agreement the Buyer will pay the Deposit by electronic                transfer to the Seller’s Solicitors Account and the Seller’s Solicitors                are hereby authorised to receive the same and whose receipt will                be an                absolute discharge of the Buyer. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.2 | If                all the Conditions are satisfied and the Buyer fails to complete                the                purchase of the Business and the Assets under clause 8                on                the Completion Date (other than where it properly rescinds this Agreement                pursuant to clause 8.5                or                it properly terminates this |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 6.3 | If: |
|-----|-----|

|   | 6.3.1 | all                the Conditions are not satisfied or waived in accordance with                clause 5.4                on                or before 16 April 2007 (or such other date as the Seller and the                Buyer in                their absolute discretion may agree in writing);                or |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.3.2 | the                Buyer rescinds the Agreement pursuant to clause 8.5;                or |
|--------|-------|-------------------------------------------------------------------------------------------|

|   | 6.3.3 | the                Buyer terminates the Agreement pursuant to clause 11.1.2; |
|--------|-------|------------------------------------------------------------------------------|

| **7** | **Exchange** |
|-------|--------------|

| 7.1 | Exchange                will take place at the offices of the Seller’s Solicitors on today’s date                (or such other place as the parties may agree), when the following                will                take place: |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.1 | the                Seller will deliver, or procure delivery, (in the case of items (a)                to (d)                below at the Property) to the Buyer                of: |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | the                Disclosure Letter; and |
|--------|-----|-------------------------------------------|

|   | (b) | a                certified copy of an extract from the minutes of a meeting of the                directors of the Seller and Chemring in the agreed form authorising                the                execution by such party of this Agreement and of any other documentation                that may be necessary or desirable arising out of or in connection                with                this Agreement and appointing the relevant signatory or signatories                to                sign the same; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.2 | against                compliance by the Seller with its obligations under clause 8.1.1                the                Buyer will deliver, or procure delivery, to the Seller                of: |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | a                certified copy of the minutes of a meeting of the directors of the                Buyer                and DA in the agreed form authorising the execution by such party                of this                Agreement and of any other documentation that may be necessary or                desirable arising out of or in connection with this Agreement and                appointing the relevant signatory or signatories to sign the same; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | a                duly countersigned copy of the Disclosure                Letter; |
|--------|-----|-----------------------------------------------------------------------------------|

|   | (c) | the                Legal Opinion duly given by the relevant lawyers; |
|--------|-----|----------------------------------------------------------------------|

|   | (d) | evidence                satisfactory to the Seller that the Buyer will be able fund the payments                this Agreement requires it is to make on                Completion |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **8** | **Completion** |
|-------|----------------|

| 8.1 | Subject                to clause 5,                Completion will take place at the offices of the Seller’s Solicitors on                the Completion Date (or such other place as the parties may agree),                when                the following will take place: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 8.1.1 | the                Seller will deliver, or procure delivery, (in the case of items (a)                to (d)                below at the Property) to the Buyer                of: |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | all                the Assets capable of passing by delivery (and title to those assets                will                pass by delivery); |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | all                documents of title and certificates it may hold exclusively relating                to                the lawful operation and use of, and all service documents pertaining                to                the Plant, and the Stock; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | all                documents of title, certificates, deeds, licences, agreements and                other                documents it may hold exclusively relating to the Business Intellectual                Property (including any correspondence with the patent and trade                mark                agents relating to any registered Business Intellectual Property                and all                registration certificates therefor) and all manuals, drawings, plans,                documents and other materials and media it may hold on which the                Business                Information is exclusively                recorded; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | the                Business Contracts to the extent they are                written; |
|--------|-----|--------------------------------------------------------------------------------------|

|   | (e) | the                duly executed HBoS Release in the agreed form; |
|--------|-----|-------------------------------------------------------------------|

|   | (f) | the                Licence duly executed by the                Seller; |
|--------|-----|------------------------------------------------------------------------|

|   | (g) | duly                executed board minutes and written resolution evidencing the change                of                name of McMurdo Limited, McMurdo Marine Limited, McMurdo Lights Limited                and Nova Marine Systems Limited; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (h) | the                NAV 7 Licence duly executed by the                Seller; |
|--------|-----|------------------------------------------------------------------------------|

|   | (i) | the                Trade Mark Assignment duly executed by the Seller; |
|--------|-----|-----------------------------------------------------------------------|

|   | (j) | the                Transitional Services Agreement duly signed by the Seller;                and |
|--------|-----|--------------------------------------------------------------------------------------------------|

|   | (k) | the                Patent Assignment duly executed by the                Seller |
|--------|-----|---------------------------------------------------------------------------------|

|   | 8.1.2 | against                compliance by the Seller with its obligations under clause                8.1.1                the Buyer will: |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | deliver,                or procure delivery, to the Seller of: |
|--------|-----|----------------------------------------------------------------|

|   | (i) | the                Licence duly executed by the Buyer; |
|--------|-----|--------------------------------------------------------|

|   | (ii) | the                NAV 7 Licence duly executed by the                Seller; |
|--------|------|------------------------------------------------------------------------------|

|   | (iii) | the                Trade Mark Assignment duly executed by the Seller;                and |
|--------|-------|------------------------------------------------------------------------------------------|

|   | (iv) | the                Patent Assignment duly executed by the Seller; |
|--------|------|-------------------------------------------------------------------|

|   | (v) | the                Transitional Services Agreement duly signed by the Buyer; |
|--------|-----|------------------------------------------------------------------------------|

|   | (b) | pay                £2,792,020 of the Initial Price by electronic transfer to the Seller’s                Solicitors Account and the Seller’s Solicitors are hereby authorised to                receive the same and whose receipt will be an absolute discharge                of the                Buyer; and |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | pay                the Retention by electronic transfer to the Retention Account. |
|--------|-----|-----------------------------------------------------------------------------------|

| 8.2 | The                Buyer will not be obliged to complete the purchase of any of the                Assets                unless the purchase of all the Assets is completed in accordance                with this                Agreement. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 8.3 | At                Completion the Seller and the Buyer shall sign the Escrow Letter                and                procure that the Escrow Agents sign and deliver the Retention Account                Opening Form and the Mandate Letter to the Escrow                Bank. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.4 | The                Buyer may, in its absolute discretion, waive any requirement contained                in                clause 8.1.1.                The Seller may, in its absolute discretion, waive any requirement                contained in clause 8.1.2. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.5 | If                any of the provisions obligations set out in clause 8.1                are not fully complied with on the Completion Date by the Buyer or                the                Seller (as the case may be) (the “**Party                in Default**”)*** ***the                Party to whom the relevant obligation is owed may, on one or more                occasions, by written notice to the Party                in Default |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.5.1 | defer                Completion to a date not more than 10 Business Days following the                intended                Completion Date or the next following intended Completion Date if                Completion has already been deferred under this Clause (and the provisions                of Clause 8                apart from this Clause 8.5                will                apply to the deferred Completion);                or |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.5.2 | proceed                to Completion so far as practicable (without prejudice to its rights                under                this Agreement); or |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.5.3 | rescind                this Agreement. |
|--------|-------|----------------------------------------|

| 8.6 | If                this Agreement is rescinded pursuant to this clause 8.6, it shall                become                null and void (save for clauses 5.6, 6                (in relation to to whom the Deposit belongs) and 23                which shall remain in force) and no Party shall be entitled to make                a                claim against any other party in connection with this Agreement save                for                any claim which arises in respect of clauses 5.6, 6                (in relation to to whom the Deposit belongs) and 23. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **9** | **Conduct                of Business prior to                Completion** |
|-------|---------------------------------------------------------------------------|

| 9.1 | Pending                the Transfer Date, ownership of the Assets shall be retained by and                risk                in the Assets shall remain with the                Seller. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.2 | Subject                to the provisions of clause 9.3,                the Seller shall continue to carry on the Business for its own benefit                and                at its own risk up to the Transfer                Date. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.3 | Save                in circumstances where in the Seller's reasonable opinion a failure                to                take or make the relevant act or omission may prejudice the interests                of                any company in the Seller's group, the Seller undertakes to the Buyer                that                pending the Completion Date unless it has obtained the prior written                consent of the Buyer to the contrary (such consent not to be unreasonably                withheld or delayed): |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.1 | the                Business will in all material respects continue to be carried on                in the                same manner as it is presently carried on as regards the nature,                scope and                manner of conducting it and so as to maintain it as a going                concern; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.2 | it                will not enter into a long term contract (being a contract which                cannot be                terminated by the Seller on less than 3 months notice) or a contract                with                an aggregate contract value of more than £25,000 in relation to the                Business (provided that where details of any such contract are contained                in the Disclosure Letter the Buyer shall be deemed to have given                its prior                written consent to such contract being entered                into); |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.3 | it                will not engage any person as an employee of the Business other than                the                Employees; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.4 | it                will not create, issue or grant or agree to create, issue or grant                any                Security Interest over any of the Assets unless, the Assets will                be                released from such Security Interest on or prior to the                Completion; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.5 | there                shall be no merger or amalgamation of the Business with any other                company                or business; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 9.3.6 | it                shall not (and shall procure that no member of the Seller’s Group)                directly or indirectly acquire any business which is competitive                with any                business carried on by the                Business; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.7 | no                scheme of arrangement will be entered into in relation to the                Seller; |
|--------|-------|--------------------------------------------------------------------------------------------------------|

|   | 9.3.8 | there                shall be no change to the corporate and/or trading names currently                used by                the Seller; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.9 | no                resolution for the cessation of business or the winding-up of the                Seller                shall be proposed, made or take place except in the event of the                insolvency of the Seller; |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.10 | the                Seller will not directly request or procure the appointment of a                receiver                or an administrative receiver of the whole or any part of the                Assets; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3.11 | it                will not commence any legal or arbitration proceedings (other than                routine                debt collection) in relation to the                Business; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.4 | Pending                Completion or earlier termination of the Agreement pursuant to this                Agreement, the Buyer and the Seller will use reasonable endeavours                to                resolve constructively any issues that arise in relation to the Business                so as to achieve an orderly transfer under this                Agreement. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.5 | Pending                Completion the Seller will, on the Buyer’s reasonable request, give to the                Buyer or its professional advisers such facilities and information                (including access to Employees) regarding the Business and Assets                as it                may reasonably request. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.6 | Pending                Completion the Seller will have Robert Hill telephone Brian Clayton                of the                Buyer on a weekly basis to give him a business update in relation                to the                Business. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9.7 | Pending                Completion the Seller will provide the Buyer with monthly management                accounts (in a form consistent with the Management Accounts) relating                to                the Business. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **10** | **Warranties** |
|--------|----------------|

| 10.1 | The                Seller warrants to the Buyer in the terms set out in Schedule 2                and acknowledges that the Buyer is entering into this Agreement in                reliance on the Warranties. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | The                Warranties are given subject only to matters fairly disclosed in                the                Disclosure Letter and for this purpose fairly disclosed means disclosed                in                a manner and with sufficient detail to enable a reasonable buyer                to make a                reasonably informed assessment of the matter                concerned. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Where                any Warranty is qualified by “to the best of the Seller’s knowledge and                belief” or “so far as the Seller is aware” or other similar qualification,                such warranty will be deemed to include additional statements that                it has                been made after reasonable enquiry of Paul Rayner, Sarah Ellard,                Robert                Hill and Peter Pridmore of the Seller and the Seller will be deemed                to                have knowledge only of that information revealed by such                enquiries. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Each                of the Warranties is separate and independent of other                Warranties. |
|------|-------------------------------------------------------------------------------------------------------|

| 10.5 | The                Parties agree that any claims under the Warranties will be limited                in                accordance with Schedule 3. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | The                Seller undertakes that pending Completion it will as soon as reasonably                practicable notify the Buyer in writing of any fact, matter or                circumstance arising after today’s date of which it becomes aware (such                awareness being deemed to be the actual knowledge of Paul Rayner,                Sarah                Ellard, Robert Hill and Peter Pridmore) which causes any of the                Warranties, whether given at today’s date or if they were to be repeated                immediately before Completion, to be breached (“**Post                Exchange Breach**”); |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **11** | **Buyer’s                remedies** |
|--------|-------------------------------------------|

| 11.1 | If,                on or before Completion the Seller notifies the Buyer that there                has been                a material breach (as defined in clause 11.4)                the Buyer may within 15 Business Days (or longer if extended pursuant                to                clause 11.5)                of receipt of such notice, either: |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.1.1 | elect                to waive such material breach and proceed to Completion. If the Completion                Date has already passed when the Buyer so elects it shall be deemed                to be                5 Business Days after the date on which such election is made;                or |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.1.2 | elect                to terminate this Agreement (save for clause 5.6, clause 6 (in relation                to                to whom the Deposit belongs) and clause 23                which shall remain in force) by serving written notice on the Seller                and                following such termination the Agreement shall become null and void                and no                Party shall be entitled to make a claim against any other party in                connection with this Agreement save for any claim which arises in                respect                of clause 5.6, clause 6 (in relation to to whom the Deposit belongs)                and                clause 23. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.2 | If                the Buyer proceeds to Completion having received notice of a material                breach (as defined in clause 11.4)                it shall be deemed to have irrevocably waived any claim it may have                against the Seller in respect of the facts matters and circumstances                giving rise to such material breach and the circumstances or consequences                which flow from them. If the Buyer terminates this Agreement having                received notice of a material breach (as defined in clause                11.4)                it shall have no further claim whatsoever against the Seller or Chemring                pursuant to this Agreement. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.3 | If,                on or before Completion the Seller notifies the Buyer that there                has been                a Post Exchange Breach which has arisen as a result of an act or                omission                of the Seller after today’s date and such breach is not a material breach                (as defined in clause 11.4)                the Buyer shall be entitled to bring claim in respect of such breach                provided that for all purposes such claim shall be deemed to be claim                for                breach of the Warranties. The Buyer shall have no other remedy against                the                Seller whatsoever in respect of such                breach. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.4 | For                the purposes of this clause 11                a                “**material                breach**”                shall mean any Post Exchange Breach in respect of which the quantum                of                damages is agreed or determined to be in excess of £300,000.                If                there is a dispute as to whether the relevant Post Completion Breach                amounts to a material breach, the Buyer and the Seller shall acting                reasonably attempt to agree the level of such quantum. If they have                not                agreed it within 7 Business Days, either of them may refer the matter                for                determination by an independent chartered accountant or other suitable                expert (**the                “Expert”**)                agreed on by them (or appointed by the President for the time being                of the                Institute of Chartered Accountants of England and Wales on the request                of                either of them). The Expert shall act as an expert (not an arbitrator)                and                his determination shall (in the absence of manifest error) be conclusive.                The Expert’s fees shall be paid as he determines equitable.  |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.5 | If                the Expert’s determination is sought and he determines that it is a                material breach, the 15 Business Day period specified in clause                11.1                shall be deemed to end 5 Business Days after the Expert issues his                determination. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.6 | If                the Expert’s determination is sought and he determines that it is not a                material breach then clause 11.3                applies. If the Completion Date has already passed when his determination                is made then it shall be deemed to be 5 Business Days after the date                on                which the Expert made his                determination. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.7 | If                : |
|------|---------------------|

|   | 11.7.1 | within                the period of 15 Business Days referred to in clause 11.1                there is no agreement and no determination has been sought as to                whether                the Post Exchange Breach amounts to a material breach;                or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 11.7.2 | the                Buyer and Seller have agreed that the Post Exchange Breach amounts                to a                material breach and the Buyer has not made its election pursuant                to clause                11.1;                or |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.7.3 | the                Expert has made a determination of whether the Post Exchange Breach                amounts to a material breach and the Buyer has not made its election                pursuant to clause 11.1, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **12** | **Property** |
|--------|--------------|

| 12.1 | In                accordance with the terms of the Transitional Services Agreement,                the                Seller shall procure that Chemring grants the Buyer a non-exclusive                licence (the “**Licence**”)                to occupy the Property for a period of 9 months from the Completion                Date. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **13** | **Employees** |
|--------|---------------|

| 13.1 | The                parties acknowledge and agree that irrespective of any determination                by a                court of competent jurisdiction to the contrary that the sale and                purchase                pursuant to this Agreement will constitute a relevant transfer for                the                purposes of TUPE and accordingly that it will not operate so as to                terminate any of the contracts of employment of the Employees and                such                contracts will be transferred to the Buyer pursuant to TUPE with                effect                from the Transfer Date which will be the time of transfer under TUPE. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.2 | The                Seller undertakes to the Buyer (for itself and as trustee for all                other                owners for the time being of the whole or any part of the Business                and the                Assets) to indemnify fully and keep indemnified the Buyer and all                other                owners referred to in this clause 13.2                against all losses, damages, costs, actions, awards, penalties, fines,                proceedings, claims, demands, liabilities (including without limitation                any liability to Tax), and expenses (including, without limitation,                legal                and other professional fees and expenses) which the Buyer or any                of such                owners may suffer, sustain, incur, pay or be put to by reason or                on                account of or arising from:- |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.2.1 | any                claim or other legal recourse by all or any of the Employees in respect                of                any fact or matter concerning or arising from employment with the                Seller                prior to the Transfer Date; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.2.2 | any                claim or other legal recourse by any trade union or staff association                or                employee representatives in respect of all or any of the Employees                arising                from or connected with the failure by the Seller to comply with its                legal                obligations to such trade union or staff association or employee                representatives; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.2.3 | any                act or omission done or omitted to be done by the Seller in relation                to                the Employees or any other employee of the Seller which by virtue                of TUPE                is deemed to be an act or omission of the Buyer. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.3 | If                any contract of employment or collective agreement not disclosed                to the                Buyer will have effect as if originally made between the Buyer and                any of                the Employees or a trade union as a result of the provisions of                TUPE: |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.3.1 | the                Buyer may, within 28 days of the Transfer Date, terminate such contract                or                agreement forthwith; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.3.2 | the                Seller will indemnify and will keep indemnified the Buyer against                all                losses, damages, costs, actions, proceedings, claims, demands, liabilities                (including, without limitation, any liability to Taxation), and expenses                (including, without limitation, legal and other professional fees                and                expenses) which the Buyer may suffer, incur, sustain, pay or be put                to by                reason or on account of or arising out of |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 13.4 | Without                prejudice to the other provisions of this clause, the Seller will,                at its                own expense, give the Buyer such assistance as the Buyer may reasonably                require to contest any claim by any person employed in the Business                at or                prior to Completion resulting from or in connection with this                Agreement. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.5 | The                Buyer will                perform and observe all the employer’s obligations, whether under the                contract of employment or otherwise, arising out of or in connection                with                any employee’s employment including, without limitation, payment for wages                or salaries, accrued holiday pay, sick pay, maternity pay, liability                to                tax, accrued bonuses or commissions and other periodic payment for                any                period after the Transfer Date. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.6 | The                Buyer confirms and acknowledges that it has supplied the Seller in                writing                with all relevant information for the purposes of Regulation 13 of                TUPE on                a timely basis in connection with the sale and purchase of the                Business. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.7 | The                Buyer will indemnify the Seller against each and every cost, claim,                liability, expense or demand arising                from: |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.7.1 | any                act or omission of the Buyer in relation to an Employee occurring                after                the Transfer Date; or |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.7.2 | any                claim or allegation by an Employee that as a result of the sale of                the                Business to the Buyer, there has been or will be a significant detrimental                change in that Employee’s working                conditions. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.8 | If                the Seller employs any person in connection with the Business between                today’s date and Completion then, if the Buyer’s written consent to this                employment has been obtained (but not otherwise) that person is deemed                to                be an Employee. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.9 | If                any person employed in connection with the Business is dismissed                or his                employment otherwise terminates for any reason between today’s date and                Completion then that person is deemed not to be an                Employee. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **14** | **Business                Contracts** |
|--------|---------------------------------------|

| 14.1 | With                effect from the Transfer Date the Buyer will: |
|------|-------------------------------------------------------------------|

|   | 14.1.1 | become                entitled to the benefit of the Seller under the Business Contracts;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | 14.1.2 | carry                out and perform and complete all the obligations and liabilities                created                by or arising under the Business Contracts (except to the extent                that any                obligations or liabilities which are attributable to a breach on                the part                of the Seller or its employees, agents or sub-contractors). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.2 | With                effect from the Transfer Date the Seller hereby assigns to the Buyer                all                the Business Contracts which are capable of assignment without the                consent                of other parties. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.3 | If                any of the Business Contracts cannot be assigned to the Buyer without                the                agreement of or novation by or consent to the assignment from another                party this Agreement will not constitute an assignment or attempted                assignment if the same would constitute a breach of such Business                Contracts. In the event that consent or novation is required to such                assignment: |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.3.1 | at                the Buyer’s request the Seller will use all reasonable endeavours with the                co-operation of the Buyer to procure such novation or assignment                on terms                reasonably satisfactory to the Buyer; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.3.2 | unless                and until any such Business Contract will be novated or assigned                the                Seller will continue its corporate existence and will hold such Business                Contract on trust |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 14.4 | If                the Seller receives any payment in respect of the Business Contracts                on or                after the Transfer Date the Seller will hold the same as trustee,                record                such payment separately in its books and will account to the Buyer                for the                same within 5 Business Days of                receipt. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.5 | The                Buyer will fully and effectively indemnify the Seller (and keep the                Seller                so indemnified) against all liabilities, losses, actions, costs,                claims,                demands and expenses brought or made against or incurred by the Seller                in                respect of the non-performance or defective or negligent performance                by                the Buyer of the Business Contracts after the Transfer                Date. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.6 | Save                as otherwise herein expressly provided, the Seller will fully and                effectively indemnify the Buyer (and keep the Buyer so indemnified)                against all liabilities, losses, actions, costs, claims, demands                and                expenses brought or made against or incurred by the Buyer in respect                of                the non-performance or defective or negligent performance by the                Seller of                the Business Contracts prior to the Transfer                Date |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.7 | In                relation to the Connectors Licence it is the intention of the Buyer                and                the Seller that any novation of it will be on the terms (or substantially                the terms) of the Connectors Novation. It is the intention of the                Buyer                and the Seller that the Connectors Novation (or a novation on                substantially similar terms) will be entered into on Completion and                if ITW                Connectors Limited executes such novation on or before Completion                the                Buyer and the Seller will also execute such novation on Completion.                If                such novation is not executed by ITW Limited until after Completion,                then                the Buyer and the Seller will each execute it as soon as reasonably                practicable after ITW Limited has executed                it. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.8 | If                the protest which has been made in the United States by a third party                in                relation to the US Coast Guard Contract is sustained and the Buyer                loses                the US Coast Guard Contract, such contract shall cease to be treated                as a                Customer Contract and the Buyer shall have no claim whatsoever against                the                Seller or CG in relation to such cessation. The Seller acknowledges                that                in relation to such protest it is responsible for paying the legal                fees                involved in defending such protest until such time as the Government                Accountability Office (**GAO**)                has made it decision to sustain, dismiss or deny such protest (expected                January/February 2007). For the avoidance of doubt, when the GAO                has made                such decision the Parties agree that neither the Seller nor CG shall                have                any further obligation relation to such                protest. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.9 | Unless                agreed otherwise by the Seller and the Buyer, the supply contract                with                Reactive Data in relation to the flash memory cards (further detail                in                respect of which is at Disclosure 25 in the Disclosure Letter) shall                not                be a Business Contract for the purpose of this Agreement and the                liability                in relation to it will remain with the Seller. If following Completion                the                Buyer needs to buy flash memory cards of the type referred to in                the                preceding sentence, it shall first buy them from the Seller (at a                price                equal to the cost to the Seller) until such time as the Seller has                none                left in stock. For the avoidance of doubt, subject to the limit specified                in paragraph 5.4 of Part 1 of Schedule 12, nothing in this clause                shall                prevent flash memory cards being included in Stock at a level no                greater                than they are at in the list of stock at Schedule                14. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.10 | The                Seller confirms that any claims (including any claim which may be                brought                by Furuno for liquidated damages under the relevant contract) by                Furuno                arising from the breach of the Furuno contract details of which are                set                out at Disclosure 27 of the Disclosure Letter are the liability of                the                Seller and the Seller shall indemnify the Buyer and keep it indemnified                from any liabilities under the relevant contract to the extent that                they                arise from such breach. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.11 | The                Seller shall indemnify the Buyer and keep it indemnified from any                liabilities it may suffer as a result of the Seller not owning the                intellectual property rights in the beacon circuit board and the                antenna                receiver for the SEPIRB (as more particularly described in Disclosure                21)                provided always that the Buyer shall not be entitled to make a claim                under |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **15** | **Mutual                covenants and                apportionments** |
|--------|-----------------------------------------------------------------------|

| 15.1 | Save                as otherwise herein expressly provided the Seller covenants with                the Buyer                that                the Seller will pay, satisfy, discharge and fulfil all costs, claims,                expenses, liabilities, obligations and undertakings whatsoever relating                to                the Business arising in respect of or by reference to any period                up to and                including the Transfer Date and will indemnify and hold harmless                the Buyer                in respect of the same. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.2 | Save                as otherwise herein expressly provided the Buyer covenants with the                Seller                that it will pay, satisfy, discharge and fulfil all costs, claims                and                expenses, liabilities, obligations and undertakings whatsoever relating                to                the Business in respect of any period commencing immediately after                the                Transfer Date and will indemnify and hold harmless the Seller in                respect                of the same. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.3 | Subject                to the remainder of this clause 15, all costs, claims, expenses,                liabilities, obligations and undertakings whatsoever ("***Remedial                Costs***")                resulting from any defects in, or alleged defects in, goods or parts                of                goods sold or supplied or services provided in the course of the                Business                prior to the Transfer Date shall be the responsibility of the Seller                and                not the Buyer. For the avoidance of doubt the Seller confirms that                any                costs arising from any refit instruction given by the Seller in relation                to the HRU units (as more particularly described in Disclosure 40                in the                Disclosure Letter) shall be its liability (or that of another company                in                its group) and not the Buyer’s. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.4 | If                the Buyer receives notice from a customer of the Business of any                defect or                alleged defect of the type referred to in clause 15.3 and there is                no                potential right of recovery for the Seller against a third party,                the                Buyer shall be entitled to carry out repair or replacement work on                behalf                of the Seller in relation to such defect or alleged defect provided                always                that the cost of such repair or replacement does not exceed £250                (excluding VAT). In calculating the cost of such work parts and stock                will                be charged at cost price and labour shall be charged at the rates                the                Buyer is entitled to charge under the Transitional Services Agreement                for                the relevant work. For the avoidance of doubt the Buyer requires                the                consent of the Seller under clause 15.6 before it initiates a product                recall and cannot use its rights under this clause 15.4 to do so. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.5 | To                the extent the Buyer carries out work in accordance with clause 15.4,                it                shall be entitled to recover the costs from the Seller by submitting                a                monthly invoice at the end of each month together with papers reasonably                supporting such invoice and a statement of work carried out in the                period                to which the invoice relates.                The Seller shall pay such invoice within 30 days of                receipt. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.6 | If                following Completion the Buyer receives notice of claims relating                to                defects or alleged defects of the kind referred to in clause 15.3,                it                shall promptly give notice of such claims to the Seller. Save where                the                relevant costs fall within Clause 10,                the Buyer shall not take any preventative action in order to avoid                claims                relating to defects or alleged defects of the kind referred to in                Clause                5.2 or carry out any maintenance and/or repair work and/or replace                any                items in connection with such claims without the prior approval of                the                Seller or CG (such approval not to be unreasonably withheld or                delayed).  |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.7 | The                Buyer shall indemnify the Seller and keep it indemnified against                any                increase in its liability arising under claims relating to defects                or                alleged defects of the kind referred to in clause 15.3 where such                increased liability arises as a result of work carried out by the                Buyer                pursuant to this clause 15. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.8 | Save                to the extent covered by the Licence or the Transitional Services                Agreement, all rents, rates, gas, water, electricity and telephone                charges                and other outgoings relating to or payable in respect of the Business                in                its ordinary and normal course up to and including the Transfer Date                and                all wages, salaries, holiday pay and maternity pay and other outgoings                related to the Employees up to and including the Transfer Date shall                be                borne by the Seller and as from the Transfer Date shall be borne                by the                Buyer and all rents, royalties and other periodical payments receivable                in                respect of the Business up to and including the |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 15.9 | Prepayments                and payments in advance made to the Seller on or before the Transfer                Date                in respect of goods or services to be supplied by the Buyer after                Completion shall be payable by the Seller to the Buyer and prepayments                and                payments in advance made by the Seller in respect of goods ordered                but not                delivered and services contracted for but not rendered to the Seller                in                connection with the Business prior to Completion shall be refundable                by                the Buyer to the Seller. All necessary apportionments shall be made                by the                Seller and the Buyer. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.10 | The                amount of apportionments specified in clauses 15.8 and 15.9 and the                balancing payment due either to the Seller or the Buyer (as the case                may                be) shall be agreed or determined in accordance with clauses 15.8                and 15.9                and Schedule 12 and such balancing payment shall be specified in                the                Completion Statement. The balancing payment so agreed or determined                shall                be paid by the relevant party to the other within 5 Business Days                of                agreement or determination of the Completion                Statement. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.11 | To                the extent that Lombard Finance invoice the Buyer in respect of any                of the                Assets the Seller shall either pay such invoice on the Buyer’s behalf or                promptly reimburse the Buyer any amount it pays to settle such                invoice. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **16** | **Book                Debts****and Creditors** |
|--------|------------------------------------------------|

| 16.1 | The                Seller is entitled, for its own account, to collect the Book Debts.                The                Buyer is under no obligation to collect the Book                Debts. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.2 | The                Buyer will hold on trust for the Seller any payment which it may                receive                after the Transfer Date in respect of the Book Debts and will account                to                the Seller for the same at the end of the week following Completion                and                thereafter at weekly intervals. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.3 | Any                sum received by the Buyer in respect of the Business which is not                specifically appropriated by the debtor to a particular transaction                will                be appropriated first to the oldest debt outstanding (whether due                to the                Buyer or a Book Debt). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.4 | The                Seller will collect the Book Debts in an orderly manner and in a                manner                which is consistent with the way in which the Seller has collected                trade                and other debts in the course of carrying on the Business prior to                the                Transfer Date. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.5 | After                the Transfer Date the Seller will pay the Creditors in a manner which                is                consistent with the way in which the Seller has paid Creditors in                the                course of carrying on the Business prior to the Transfer                Date. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **17** | **Obligations                of the Seller and Buyer after Completion**** ** |
|--------|-----------------------------------------------------------------------------------|

| 17.1 | For                the 12 months following Completion, the                Seller: |
|------|-----------------------------------------------------------------------------------|

|   | 17.1.1 | will                promptly refer to the Buyer all enquiries relating to the Business                and                assign to the Buyer all orders relating to the Business, including                enquiries relating to orders for any stocks, spares, parts, accessories                and other equipment manufactured or sold, or any services provided                in                connection with the Business, which the Seller may receive after                Completion; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 17.1.2 | will                retain for the period required by law, the books, accounts, records                and                returns of the Seller relating exclusively to or exclusively in connection                with the Business and will give to the Buyer reasonable access to                such                books, accounts, records and returns as the Buyer may reasonably                require                (including the right to take copies and extracts on reasonable advance                notice) and will keep them in good                order. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 17.2 | The                Buyer: |
|------|---------------------------|

|   | 17.2.1 | will                promptly refer to the Seller all enquiries relating to the Retained                Business and assign to the Buyer all orders relating to the Retained                Business, including enquiries relating to orders for any stocks,                spares,                parts, accessories and other equipment manufactured or sold, or any                services provided in connection with the Retained Business, which                the                Buyer may receive after Completion; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 17.2.2 | will                retain, for the period required by law, the books, accounts, records                and                returns of the Buyer relating exclusively to or exclusively in connection                with the Business and will give to the Seller reasonable access to                such                books, accounts, records and returns (insofar as they relate to the                pre-transfer Business) as the Seller may reasonably require (including                the                right to take copies and extracts on reasonable advance notice) and                will                keep them in good order. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.3 | The                Seller will ensure that within one month of Completion, McMurdo Pains                Wessex Inc and all other group companies which include the name “McMurdo”                will change their respective corporate names so that no longer include                the                word “McMurdo”. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.4 | The                Buyer will allow the Seller to use the name and trade mark "McMurdo"                alone                or in combination with other words and marks solely for the purposes                of: |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 17.4.1 | selling                or otherwise supplying any stock of AIS Products manufactured prior                to                Completion and which carry the McMurdo mark;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 17.4.2 | collecting                any Book Debts whether relating to the Business or the Retained                Business. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

| **18** | **Restrictive                Covenants** |
|--------|------------------------------------------|

| 18.1 | Subject                always to clause 18.2,                the Seller covenants with the Buyer that it will not and will procure                that                any other member of the Seller’s Group will not either on its or their own                account or through or in conjunction, association or by arrangement                with                or on behalf of any person or persons whether for its own benefit                or that                of others and whether directly or indirectly for the period of three                years                from Completion: |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 18.1.1 | in                competition with the Business as carried on at Completion supply                products                or provide services to any person, firm or company who or which was                either                at Completion or during the period of 24 months prior to Completion                a                client or customer of the Business where such goods or services are                the                same as or similar to or compete with products sold or services provided                by the Business to that person, firm or company at or during the                period of                24 months prior to Completion; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 18.1.2 | in                competition with the Business as carried on at Completion solicit                or                endeavour to solicit the custom of or canvas or approach any person,                firm                or company who or which was either at Completion or during the period                of                24 months prior to Completion had been a client or customer of the                Business, for the supply of products or the provision of services                which                are the same as or similar to or compete with those products sold                or                services provided by the Business to that person, firm or company                at or                during the period of 24 months prior to                Completion; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 18.1.3 | other                than by way of general advertisement solicit or entice away or endeavour                to solicit or entice away from the Buyer any officer, manager, or                other                senior employee who was either at Completion or during the period                of 12                months prior to Completion engaged in the Business whether or not                such                person would commit a breach of his contract of employment by reason                of                leaving service; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 18.1.4 | carry                on or be engaged, concerned or interested in any business which competes                with the Business as the same was carried on at Completion (other                than as                a holder of securities listed on a recognised investment exchange                or                provided that such holding will not exceed five per cent of the class                of                securities of which the said holding forms part);                or |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 18.1.5 | employ                or conclude any contract for services with any director, senior manager,                or senior employee (being an employee with an annual salary of more                than                £50,000) who worked in the Business at Completion. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.2 | Nothing                in this Agreement shall prevent Chemring Australia Pty Ltd, ACN 004                669                452 ABN 96 004 669 452 of Suite 4/1955 Malvern Road, East Malvern,                Victoria, Australia 3145 (whose registered office is at 230 Staceys                Road                Lara Victoria Australia 3212) from carrying on its business in                fulfilling: |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 18.2.1 | its                obligations under its contract dated 12 July 2005 with Kinetic Technology                International Pty Ltd, copy of which is attached to the Disclosure                Letter                at Folder 2b, Section 7 of the Disclosure Letter; or |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 18.2.2 | any                obligations it may have arising as a result of carrying on its business                prior to the Transfer Date to the extent that they relate either:                (i) to                its liabilities in relation services and/or products supplied or                sold by                it prior to the Transfer Date; or (ii) to the                Products. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.3 | Each                restriction in clause 18.1                constitutes an entirely independent restriction on the                Seller. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| 18.4 | If                any restriction in clause 18.1                is                determined to be unenforceable in whole or in part, its unenforceability                will not affect the enforceability of the remaining restrictions                or (in                the case of restrictions enforceable in part) the remainder of that                restriction. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **19** | **Confidentiality** |
|--------|---------------------|

| 19.1 | The                Seller undertakes and will procure that any member of the Seller’s Group                will undertake to keep confidential and not at any time to disclose                or                make known to anyone whatsoever or use for their own or any other                person’s                benefit all Business Information. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19.2 | The                obligations imposed by the provisions of clause 19.1                will not apply to the extent that the Business Information in                question: |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 19.2.1 | is                or comes into the public domain without fault on the part of the                party to                whom the same was disclosed, or to whose attention the same has                come; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 19.2.2 | was                already known to the relevant party at the time the same, was disclosed                to                it or came to its attention; or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 19.2.3 | has                been lawfully disclosed to the relevant party by a third                party; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | 19.2.4 | is                required to be disclosed by law; or |
|--------|--------|-------------------------------------------------------|

|   | 19.2.5 | is                required to be disclosed by a contractual obligation existing at                the date                of this Agreement. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

| **20** | **Value                Added Tax** |
|--------|------------------------------------|

| 20.1 | All                amounts expressed in this Agreement as being payable by the Buyer                are                expressed exclusive of any VAT which may be chargeable and the Buyer                will                pay to the Seller in addition to such amounts an amount equal to                any VAT                (to include any interest and penalties) for which the Seller is liable                to                account to HM Revenue and Customs in respect of any supply made by                it to                the Buyer under or in connection with this                Agreement. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.2 | The                parties intend that section 49 VATA and paragraph 5 of the Special                Provisions Order will apply to the transfer of the Business and the                Seller                and the Buyer will each use its reasonable endeavours to secure that                pursuant to the provisions referred to above the sale of the Business                is                treated as neither a supply of goods nor a supply of services for                the                purposes of VAT but as the transfer of a business as a going                concern. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 20.3 | If                HM Revenue and Customs do not agree that the sale of the Business                pursuant                to this Agreement falls within section 49 VATA and paragraph 5 of                the                Special Provisions Order the Seller will issue to the Buyer a valid                VAT                invoice in respect of the sale of the Business. The Buyer will forthwith                on receipt of such invoice pay to the Seller the VAT (to include                any                interest and penalties) charged on the sale of the Business in addition                to                the Price. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.4 | The                Seller and the Buyer will give to HM Revenue and Customs such notice                of                the sale and purchase of the Assets pursuant to this Agreement as                may be                required by paragraph 11 of Schedule 1 VATA or as may otherwise be                required by law. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.5 | The                Buyer warrants that it is registered for VAT purposes in the United                Kingdom and that it will use the Assets to be transferred under this                Agreement with the intention of continuing the                Business. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20.6 | The                Seller warrants that it is duly registered for VAT purposes in the                United                Kingdom. |
|------|-------------------------------------------------------------------------------------------------------------------------------------|

| 20.7 | The                Seller will as soon as reasonably practicable after the execution                of this                Agreement request a direction from HM Revenue and Customs under section                49(1)(b) VATA that from and after Completion the Seller will retain                and                preserve all records relating to the Business which are required                to be                preserved by paragraph 6 of Schedule 11 VATA. If HM Revenue and Customs                gives such a direction, the Seller undertakes to preserve such records                for                such periods as may be required by law and to allow the Buyer and                its                agents access to, and to take copies of, such records on a reasonable                notice during normal business                hours. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **21** | **DA                Guarantee** |
|--------|---------------------------------|

| 21.1 | In                consideration of the Seller entering into this Agreement DA                unconditionally and irrevocably guarantees to the Seller and its                successors, transferees and                assigns: |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.1.1 | the                due and punctual performance and observance by the Buyer of all the                Buyer’s obligations; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.1.2 | the                punctual discharge by the Buyer of all the Buyer’s liabilities to the                Seller; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

**the      Guaranteed Agreements**

| 21.2 | If                the Buyer defaults in the payment when due of any amount payable                to the                Seller under the Guaranteed Agreements DA will immediately on demand                by                the Seller pay to the Seller the amount payable by the Buyer in the                manner                prescribed in the relevant Guaranteed Agreement and as if DA were                the                principal obligor in respect of that                amount. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.3 | As                an independent and primary obligation and without prejudice to                clauses 21.1                and 21.2                DA                will unconditionally and irrevocably indemnify and keep fully and                effectively indemnified the Seller against all and any losses, costs,                claims, liabilities, damages, demands and expenses suffered or incurred                by                the Seller arising from the failure of the Buyer to comply with any                of its                obligations or discharge any of its obligations under the Guaranteed                Agreements. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.4 | The                guarantee and indemnity contained in this clause 21                (**DA                Guarantee Obligations**): |
|------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.4.1 | is                a continuing guarantee and indemnity and will continue in full force                and                effect until all liabilities or purported liabilities of the Buyer                arising                under, and all monies owing or payable or purported to be owing or                payable                by the Buyer under the Guaranteed Agreements have been paid, discharged                or                satisfied in full and notwithstanding any insolvency of the Buyer                or any                change in name or status of the Buyer;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.4.2 | is                in addition to and is not in any way prejudiced by any other security                now                or subsequently held by the Seller. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 21.5 | The                DA Guarantee Obligations will not be discharged, diminished or in                any way                adversely affected as a result of any of the                following: |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.5.1 | any                time, consent or waiver given to, or composition made with, the Buyer                or                any other person; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.5.2 | any                amendment to, or replacement of, any Guaranteed Agreement (however                fundamental) or any other agreement or security entered into by the                Buyer; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.5.3 | the                taking, variation, compromise, exchange, renewal, release or refusal                or                neglect to take, perfect or enforce any rights or remedies against                or                security over the assets of the Buyer or any other person or any                non-observance of any formality or other requirement under any Guaranteed                Agreement or any failure to realise the full value of any                security; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.5.4 | the                release of the Buyer, any other guarantor or other person under the                terms                of any composition or arrangement, including any corporate or individual                voluntary arrangement; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.5.5 | any                incapacity, lack of power, authority or legal personality of or                dissolution or change in the members or status of the Buyer or any                other                person; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.5.6 | any                unenforceability, illegality or invalidity of any obligation of any                person                under any Guaranteed Agreement or any other document or                security; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.5.7 | any                insolvency or similar proceedings;                and |
|--------|--------|--------------------------------------------------------------------------|

|   | 21.5.8 | any                other act, omission, circumstance, matter or thing which, but for                this                clause 21.5,                might operate to release, reduce or otherwise exonerate DA but which                would                not have discharged a person primarily liable in respect                thereof. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.6 | DA                may not determine its liabilities under the guarantees and indemnities                given in this clause 21. |
|------|---------------------------------------------------------------------------------------------------------------------------------------|

| 21.7 | The                Seller will not be obliged to enforce any other rights, security                or claims                it may have against the Buyer or any other person before claiming                under                the guarantees and indemnities given by this clause 21. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.8 | Until                all amounts which may be or become payable by the Buyer under or                in                connection with the Guaranteed Agreements have been irrevocably paid                in                full DA agrees that it will not exercise any rights which it may                have: |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.8.1 | to                be subrogated to or otherwise to share in any security or monies                held,                received or receivable by the Seller or, to claim any right of                contribution in relation to any payment made by DA under this                Agreement; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.8.2 | to                enforce any of its right of subrogation, indemnity, or to make any                application for quia timet relief against or in respect of the Buyer                or                DA; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.8.3 | following                a claim made on DA under the DA Guarantee Obligations, to demand                or accept                repayment of any monies due from the Buyer or to claim any set off                or                counter claim against the Buyer; or |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.8.4 | to                claim or prove in any liquidation or other insolvency proceeding                of or                affecting the Buyer or any co-surety in competition with the                Seller. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.9 | Following                the making of a demand on DA under the DA Guarantee Obligations,                DA will                (at its own cost) promptly take such steps or action as are referred                to in                clause 21.8                above as the Seller may from time to time                stipulate. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.10 | All                amounts payable in respect of the DA Guarantee Obligations will be                paid by                DA without set off, deduction or counterclaim of any kind being                made. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **22** | **CG                Guarantee** |
|--------|---------------------------------|

| 22.1 | In                consideration of the Buyer entering into this Agreement CG unconditionally                and irrevocably guarantees to the Buyer and its successors, transferees                and assigns: |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.1.1 | the                due and punctual performance and observance by the Seller of all                the                Seller’s obligations; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.1.2 | the                punctual discharge by the Seller of all the Seller’s liabilities to the                Buyer; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

| 22.2 | If                the Seller defaults in the payment when due of any amount payable                to the                Buyer under the Guaranteed Agreements CG will immediately on demand                by the                Buyer pay to the Buyer the amount payable by the Seller in the manner                prescribed in the relevant Guaranteed Agreement and as if CG were                the                principal obligor in respect of that                amount. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.3 | As                an independent and primary obligation and without prejudice to clauses                22.1 and 22.2 CG will unconditionally and irrevocably indemnify and                keep                fully and effectively indemnified the Buyer against all and any losses,                costs, claims, liabilities, damages, demands and expenses suffered                or                incurred by the Buyer arising from the failure of the Seller to comply                with any of its obligations or discharge any of its obligations under                the                Guaranteed Agreements. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.4 | The                guarantee and indemnity contained in this clause 22 (**CG                Guarantee Obligations**): |
|------|-----------------------------------------------------------------------------------------------------------------------|

|   | 22.4.1 | is                a continuing guarantee and indemnity and will continue in full force                and                effect until all liabilities or purported liabilities of the Seller                arising under, and all monies owing or payable or purported to be                owing or                payable by the Seller under the Guaranteed Agreements have been paid,                discharged or satisfied in full and notwithstanding any insolvency                of the                Seller or any change in name or status of the Seller;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.4.2 | is                in addition to and is not in any way prejudiced by any other security                now                or subsequently held by the Buyer. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.5 | The                CG Guarantee Obligations will not be discharged, diminished or in                any way                adversely affected as a result of any of the                following: |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.5.1 | any                time, consent or waiver given to, or composition made with, the Seller                or                any other person; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.5.2 | any                amendment to, or replacement of, any Guaranteed Agreement (however                fundamental) or any other agreement or security entered into by the                Seller; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.5.3 | the                taking, variation, compromise, exchange, renewal, release or refusal                or                neglect to take, perfect or enforce any rights or remedies against                or                security over the assets of the Seller or any other person or any                non-observance of any formality or other requirement under any Guaranteed                Agreement or any failure to realise the full value of any                security; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.5.4 | the                release of the Seller, any other guarantor or other person under                the terms                of any composition or arrangement, including any corporate or individual                voluntary arrangement; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.5.5 | any                incapacity, lack of power, authority or legal personality of or                dissolution or change in the members or status of the Seller or any                other                person; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.5.6 | any                unenforceability, illegality or invalidity of any obligation of any                person                under any Guaranteed Agreement or any other document or                security; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.5.7 | any                insolvency or similar proceedings;                and |
|--------|--------|--------------------------------------------------------------------------|

----

|   | 22.5.8 | any                other act, omission, circumstance, matter or thing which, but for                this                clause 22.5 might operate to release, reduce or otherwise exonerate                CG but which would not have discharged a person primarily liable                in                respect thereof. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.6 | CG                may not determine its liabilities under the guarantees and indemnities                given in this clause 22. |
|------|---------------------------------------------------------------------------------------------------------------------------------------|

| 22.7 | The                Buyer will not be obliged to enforce any other rights, security or                claims                it may have against the Seller or any other person before claiming                under                the guarantees and indemnities given by this                clause 22. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.8 | Until                all amounts which may be or become payable by the Seller under or                in                connection with the Guaranteed Agreements have been irrevocably paid                in                full CG agrees that it will not exercise any rights which it may                have: |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.8.1 | to                be subrogated to or otherwise to share in any security or monies                held,                received or receivable by the Buyer or, to claim any right of contribution                in relation to any payment made by CG under this                Agreement; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.8.2 | to                enforce any of its right of subrogation, indemnity, or to make any                application for quia timet relief against or in respect of the Seller                or                CG; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.8.3 | following                a claim made on CG under the CG Guarantee Obligations, to demand                or accept                repayment of any monies due from the Seller or to claim any set off                or                counter claim against the Seller;                or |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 22.8.4 | to                claim or prove in any liquidation or other insolvency proceeding                of or                affecting the Seller or any co-surety in competition with the                Buyer. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.9 | Following                the making of a demand on CG under the CG Guarantee Obligations,                CG will                (at its own cost) promptly take such steps or action as are referred                to in                clause 22.8 above as the Buyer may from time to time                stipulate. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 22.10 | All                amounts payable in respect of the CG Guarantee Obligations will be                paid by                CG without set off, deduction or counterclaim of any kind being                made. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **23** | **Announcements                and publicity** |
|--------|------------------------------------------------|

| 23.1 | No                announcement or circular or other publicity in connection with the                subject                matter of this Agreement (other than as permitted by this Agreement)                will                be made by or on behalf of the Seller and the Buyer without the approval                of the other as to its content, form and manner of publication (such                approval not to be unreasonably withheld or delayed) save that any                announcement, circular or other publicity required to be made or                issued by                any of the parties pursuant to any legal or regulatory authority                may be                made or issued without such                approval. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **24** | **Notices** |
|--------|-------------|

| 24.1 | Any                notice or other communication required to be given under this Agreement                must be in writing signed by (or by some person duly authorised by)                the                person giving it and may be served by delivering it personally or                sending                it by pre-paid recorded delivery or registered post to the then registered                office address of the relevant party (or as otherwise notified by                that                party in accordance with this clause 24).                Any notice so served will be deemed to have been                received: |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 24.1.1 | if                delivered personally, at the time of delivery;                or |
|--------|--------|------------------------------------------------------------------------------------|

|   | 24.1.2 | in                the case of a notice sent by pre-paid recorded delivery or registered                post, at the time of delivery. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

| 24.2 | In                proving service: |
|------|------------------------------------|

----

|   | 24.2.1 | by                delivery by hand it will be necessary only to produce receipt for                the                communication signed by or on behalf of the addressee;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 24.2.2 | by                post it will be necessary only to prove that the communication was                contained in an envelope which was duly addressed and posted in accordance                with this clause 24. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 24.3 | For                the avoidance of doubt, any notice or communication given under this                Agreement will not be validly served if sent by                email. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **25** | **Successors,                assigns and third parties** |
|--------|----------------------------------------------------------|

| 25.1 | This                Agreement will be binding upon and enure for the benefit of each                party’s                successors. No party to this Agreement can assign or establish a                trust of                the benefit to this Agreement save that (i) provided that the Seller’s                liability under this Agreement (including the Warranties) shall not                be                increased as a result of such assignment, the Buyer may freely assign                the                benefit of this Agreement (including the Warranties) to another company                in                the Buyer’s Group provided that if any such assignee shall leave the                Buyer’s Group, prior to leaving it shall re-assign to the Buyer any rights                assigned under this clause and (ii) the Seller may assign or novate                its                rights and obligations under this Agreement to another company in                the                Seller’s Group and in the case of such novation if the Seller so requires                the Buyer and DA will enter into a novation agreement in the form                of the                Novation Agreement or in such other from as may be agreed between                the                Parties. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 25.2 | The                Parties agree that (save where may be expressly stated otherwise                in this                Agreement) for the purposes of the Contracts (Rights of Third Parties)                Act                1999 they do not intend any person other than a party to this Agreement                to                be able to enforce any term of this                Agreement. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **26** | **Variation** |
|--------|---------------|

| 26.1 | No                variation of this Agreement will be valid unless made in writing                and                signed by or on behalf of each of the                parties. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **27** | **Waiver** |
|--------|------------|

| 27.1 | Any                waiver of any provision of this Agreement must be in writing and                signed by                or on behalf of each of the parties. No failure or delay by any party                in                exercising any right, power or privilege under this Agreement will                operate                as a waiver thereof nor will any single or partial exercise thereof                preclude any other or further exercise thereof or the exercise of                any                other right, power or privilege. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 27.2 | Any                waiver by any party of a breach of any provision of this Agreement                will                not be a waiver of any subsequent breach of the same or any other                provision. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 27.3 | All                the Parties' respective rights and remedies under this Agreement                or by law                are cumulative so a reference to or the exercise of one remedy does                not                affect any of the others and any failure to exercise or delay in                exercising any rights or remedies, will not operate as a waiver or                prevent                any further exercise of them. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **28** | **Costs** |
|--------|-----------|

| 28.1 | The                Parties will pay their own costs and expenses in relation to the                negotiation, preparation, execution and implementation of this                Agreement. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **29** | **Severance** |
|--------|---------------|

| 29.1 | If                any provision of this Agreement will be found by any court or                administrative body of competent jurisdiction to be invalid or                unenforceable such invalidity or unenforceability will not affect                the                other provisions of this Agreement which will remain in full force                and                effect. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **30** | **Further                assurance** |
|--------|--------------------------------------|

| 30.1 | The                Seller will (at the Seller's expense) do, execute and perform and                will                procure to be done, executed and performed all such further acts,                deeds,                documents and things as the Buyer may reasonably require from time                to time                in order to carry out, evidence and confirm its rights and the intended                purpose of this Agreement in order to vest the Assets in the Buyer                on the                terms of this Agreement and otherwise to give to the Buyer the full                benefit of this Agreement. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 30.2 | The                Buyer will do, execute and perform and will procure to be done, executed                and performed all such further acts, deeds, documents and things                as the                Seller may reasonably require from time to time in order to carry                out,                evidence and confirm the Seller’s rights and the intended purpose of this                Agreement and to give to the Seller the full benefit of this                Agreement. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **31** | **Entire                Agreement** |
|--------|-------------------------------------|

| 31.1 | This                Agreement, the Disclosure Letter, the documents in the agreed form                and all                agreements entered, or to be entered into, pursuant to the terms                of this                Agreement or entered into between the Seller and the Buyer in writing                and                expressly referring to this Agreement:  |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1.1 | together                constitute the entire agreement and understanding between the parties                with                respect to the subject matter of this Agreement;                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1.2 | (in                relation to such subject matter) supersede all prior discussions,                understandings and agreements between the parties and their agents                (or any                of them) and all prior representations and expressions of opinion                by any                party (or its agent) to any other party (or its                agent). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Each                of the Parties acknowledges that it is not relying on any statements,                warranties or representations given or made by any of them in relation                to                the subject matter hereof, save those expressly set out in this Agreement,                and other documents referred to in clause 31.1,                and that it will have no rights or remedies with respect to such                subject                matter otherwise than under this Agreement (and the documents executed                at                the same time as it or on Completion or referred to in it) save to                the                extent that they arise out of the fraud, fraudulent misrepresentation                or                fraudulent concealment of any party. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **32** | **Counterparts** |
|--------|------------------|

| 32.1 | This                Agreement may be entered into in any number of counterparts, each                of which                when executed and delivered will be an original, but all the counterparts                will together constitute one and the same agreement. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **33** | **Miscellaneous** |
|--------|-------------------|

| 33.1 | The                Buyer and DA jointly and severally confirm to the Seller that no                member of                the Buyer’s Group (including the Buyer and DA) or any of their respective                advisers on behalf of any of them is at the date of this Agreement                in                discussions or negotiations with any third party with a view to acquiring                any business which is similar to or is in competition with the                Business. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 33.2 | The                Buyer acknowledges that after today’s date the Seller will be discussing                the RNLI Contract with RNLI and telling it that the Buyer is keen                to                become the supplier of choice in relation to the MOB Guardian product.                The                Buyer confirms to the Seller that following Completion it will act                reasonably in negotiating with RNLI with a view to agreeing a formal                contract for the Buyer to supply the MOB Guardian                product. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **34** | **Applicable                law and jurisdiction****and remedy** |
|--------|------------------------------------------------------------------|

| 34.1 | English                law governs this Agreement. Each party irrevocably agrees to submit                to the                exclusive jurisdiction of the courts of England over any claim or                matter                arising out of or in connection with this                Agreement. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 34.2 | The                only remedy available to a party for breach of any of the provisions                of                this Agreement is for breach of contract under the terms of this                Agreement. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.3 | Nothing                in clauses 31,                34.2 or                Schedule 3                will operate to limit or exclude any liability for                fraud. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **35** | **Post-completion                effect** |
|--------|-------------------------------------------|

| 35.1 | This                Agreement will remain in full force and effect after and notwithstanding                Completion in respect of all obligations, agreements, covenants,                undertakings or conditions contained in or implied by this Agreement                which                have not been done, observed or performed at or prior to Completion                and                all warranties and indemnities contained in or implied by this Agreement                (including the Warranties) will continue in full force and effect                after                and notwithstanding Completion and the parties may take action for                any                breach of non-fulfilment of any of them after                Completion. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**In      witness wherof **

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| **Executed**                by                as a Deed by  | /s/              Paul Rayner  |   |
|-------------------------------------------------------------|-------------------------------|--------|
|                                                        | Director                      |   |
|                                                        |                          |   |
| **McMurdo                Limited**                acting by | /s/              Sarah Ellard |   |
|                                                        | Director/Secretary            |   |

| **Executed**                by                as a Deed by              | /s/              David Cairnie |   |
|-------------------------------------------------------------------------|--------------------------------|--------|
|                                                                    | Director                       |   |
|                                                                    |                           |   |
| **Signature                Industries Limited**acting                by | /s/              Brian Clayton |   |
|                                                                    | Director/Secretary             |   |

| **Executed**                by                as a Deed by            | /s/              Kevin McGrath      |   |
|-----------------------------------------------------------------------|-------------------------------------|--------|
|                                                                  | Authorised                Signatory |   |
|                                                                  |                                |   |
| **Digital                Angel Corporation**                acting by | /s/              Pat Petersen       |   |
|                                                                  | Authorised                Signatory |   |

| **Executed**                by                as a Deed by     | /s/              Paul Rayner  |   |
|----------------------------------------------------------------|-------------------------------|--------|
|                                                           | Director                      |   |
|                                                           |                          |   |
| **Chemring                Group Plc**                acting by | /s/              Sarah Ellard |   |
|                                                           | Director/Secretary            |   |

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