Exhibit 10.1 



             


            
            ASSET PURCHASE AGREEMENT


             


             


            by
            and between


             


             


            
            SECURITY WITH ADVANCED TECHNOLOGY, INC.,


             


            
            PCP ACQUISITION, INC.,


             


            
            PERFECT CIRCLE PROJECTILES, LLC


             


            
            and


             


            
            GARY E. GIBSON


             


            
            Dated as of July 10, 2007


             


             

            

        

        
        

        
            


            
            TABLE OF CONTENTS


            
             


            
                	
                            
                            ARTICLE I

                        	
                            
                            DEFINITIONS

                        	
                            
                            1

                        


            


            
                	
                             

                        	
                            
                            1.1

                        	
                            
                            Definitions

                        	
                            
                            1

                        


            


            
                	
                            
                            ARTICLE II

                        	
                            
                            PURCHASE AND SALE

                        	
                            
                            6

                        


            


            
                	
                             

                        	
                            
                            2.1

                        	
                            
                            Purchase and Sale of the Assets

                        	
                            
                            6

                        


            


            
                	
                             

                        	
                            
                            2.2

                        	
                            
                            Excluded Assets and Liabilities

                        	
                            
                            6

                        


            


            
                	
                             

                        	
                            
                            2.3

                        	
                            
                            Inventory Purchase Obligation

                        	
                            
                            6

                        


            


            
                	
                            
                            ARTICLE III

                        	
                            
                            PURCHASE PRICE

                        	
                            
                            6

                        


            


            
                	
                             

                        	
                            
                            3.1

                        	
                            
                            Purchase Price

                        	
                            
                            6

                        


            


            
                	
                             

                        	
                            
                            3.2

                        	
                            
                            Valuation of the Issued Shares

                        	
                            
                            7

                        


            


            
                	
                             

                        	
                            
                            3.3

                        	
                            
                            Closing

                        	
                            
                            7

                        


            


            
                	
                             

                        	
                            
                            3.4

                        	
                            
                            Allocation of Purchase Price

                        	
                            
                            7

                        


            


            
                	
                            
                            ARTICLE IV

                        	
                            
                            REPRESENTATIONS AND WARRANTIES OF BUYER AND
                            SWAT

                        	
                            
                            7

                        


            


            
                	
                             

                        	
                            
                            4.1

                        	
                            
                            Organization, Qualification and Authority

                        	
                            
                            7

                        


            


            
                	
                             

                        	
                            
                            4.2

                        	
                            
                            No Violations

                        	
                            
                            8

                        


            


            
                	
                             

                        	
                            
                            4.3

                        	
                            
                            Capitalization

                        	
                            
                            8

                        


            


            
                	
                             

                        	
                            
                            4.4

                        	
                            
                            Litigation

                        	
                            
                            8

                        


            


            
                	
                             

                        	
                            
                            4.5

                        	
                            
                            Broker’s or Finder’s Fee

                        	
                            
                            8

                        


            


            
                	
                             

                        	
                            
                            4.6

                        	
                            
                            Buyer SEC Reports

                        	
                            
                            8

                        


            


            
                	
                             

                        	
                            
                            4.7

                        	
                            
                            Tax Returns; Taxes

                        	
                            
                            8

                        


            


            
                	
                             

                        	
                            
                            4.8

                        	
                            
                            No Omissions or Misstatements

                        	
                            
                            9

                        


            


            
                	
                             

                        	
                            
                            4.9

                        	
                            
                            Financial Statements

                        	
                            
                            9

                        


            


            
                	
                             

                        	
                            
                            4.10

                        	
                            
                            Interim Changes

                        	
                            
                            9

                        


            


            
                	
                            
                            ARTICLE V

                        	
                            
                            REPRESENTATIONS AND WARRANTIES OF SELLER

                        	
                            
                            10

                        


            


            
                	
                             

                        	
                            
                            5.1

                        	
                            
                            Organization, Qualification and Authority

                        	
                            
                            10

                        


            


            
                	
                             

                        	
                            
                            5.2

                        	
                            
                            Capitalization

                        	
                            
                            11

                        


            


            
                	
                             

                        	
                            
                            5.3

                        	
                            
                            No Violations

                        	
                            
                            11

                        


            


            
                	
                             

                        	
                            
                            5.4

                        	
                            
                            Financial Statements

                        	
                            
                            11

                        


            


            
                	
                             

                        	
                            
                            5.5

                        	
                            
                            Interim Changes

                        	
                            
                            11

                        


            


            
                	
                             

                        	
                            
                            5.6

                        	
                            
                            Licenses and Permits

                        	
                            
                            12

                        


            


            
                	
                             

                        	
                            
                            5.7

                        	
                            
                            Real Property

                        	
                            
                            13

                        


            


            
                	
                             

                        	
                            
                            5.8

                        	
                            
                            Assets

                        	
                            
                            13

                        


            


            
                	
                             

                        	
                            
                            5.9

                        	
                            
                            Contracts

                        	
                            
                            13

                        


            


            
                	
                             

                        	
                            
                            5.10

                        	
                            
                            Environmental and Safety Matters

                        	
                            
                            14

                        


            


             


            
                	
                            
                             

                        	
                            
                            -i-

                        	
                            
                             

                        


            

        


         


         


        
            

        

        
        

        
            


            
            TABLE OF CONTENTS


            
            (continued)


            
            Page


             


            
                	
                             

                        	
                            
                            5.11

                        	
                            
                            Litigation

                        	
                            
                            15

                        


            


            
                	
                             

                        	
                            
                            5.12

                        	
                            
                            Employees

                        	
                            
                            15

                        


            


            
                	
                             

                        	
                            
                            5.13

                        	
                            
                            Labor Relations

                        	
                            
                            15

                        


            


            
                	
                             

                        	
                            
                            5.14

                        	
                            
                            Reserved

                        	
                            
                            16

                        


            


            
                	
                             

                        	
                            
                            5.15

                        	
                            
                            Broker’s or Finder’s Fee

                        	
                            
                            16

                        


            


            
                	
                             

                        	
                            
                            5.16

                        	
                            
                            Proprietary Rights

                        	
                            
                            16

                        


            


            
                	
                             

                        	
                            
                            5.17

                        	
                            
                            Reserved.

                        	
                            
                            20

                        


            


            
                	
                             

                        	
                            
                            5.18

                        	
                            
                            Reserved

                        	
                            
                            20

                        


            


            
                	
                             

                        	
                            
                            5.19

                        	
                            
                            WARN Act

                        	
                            
                            20

                        


            


            
                	
                             

                        	
                            
                            5.20

                        	
                            
                            Tax Returns; Taxes

                        	
                            
                            20

                        


            


            
                	
                             

                        	
                            
                            5.21

                        	
                            
                            Affiliate Interests

                        	
                            
                            20

                        


            


            
                	
                             

                        	
                            
                            5.22

                        	
                            
                            No Omissions or Misstatements

                        	
                            
                            21

                        


            


            
                	
                            
                            ARTICLE VI

                        	
                            
                            COVENANTS OF PARTIES

                        	
                            
                            21

                        


            


            
                	
                             

                        	
                            
                            6.1

                        	
                            
                            Conduct of Defined Business

                        	
                            
                            21

                        


            


            
                	
                             

                        	
                            
                            6.2

                        	
                            
                            Access to Information; Buyer’s
                            Investigation

                        	
                            
                            22

                        


            


            
                	
                             

                        	
                            
                            6.3

                        	
                            
                            Access to Information; Seller’s
                            Investigation

                        	
                            
                            22

                        


            


            
                	
                             

                        	
                            
                            6.4

                        	
                            
                            Uniform Commercial Code

                        	
                            
                            23

                        


            


            
                	
                             

                        	
                            
                            6.5

                        	
                            
                            Enforcement, Defense and Maintenance of Proprietary
                            Rights

                        	
                            
                            23

                        


            


            
                	
                             

                        	
                            
                            6.6

                        	
                            
                            Confidentiality; Public Announcements

                        	
                            
                            23

                        


            


            
                	
                             

                        	
                            
                            6.7

                        	
                            
                            Efforts to Consummate Transaction

                        	
                            
                            23

                        


            


            
                	
                             

                        	
                            
                            6.8

                        	
                            
                            No Solicitation

                        	
                            
                            23

                        


            


            
                	
                             

                        	
                            
                            6.9

                        	
                            
                            Product Liability Insurance

                        	
                            
                            24

                        


            


            
                	
                             

                        	
                            
                            6.10

                        	
                            
                            Manufacturing Agreement between Seller and
                            PTI

                        	
                            
                            24

                        


            


            
                	
                             

                        	
                            
                            6.11

                        	
                            
                            Delivery of Financial Statements

                        	
                            
                            24

                        


            


            
                	
                            
                            ARTICLE VII

                        	
                            
                            CLOSING CONDITIONS

                        	
                            
                            25

                        


            


            
                	
                             

                        	
                            
                            7.1

                        	
                            
                            Obligation of Seller to Close

                        	
                            
                            25

                        


            


            
                	
                             

                        	
                            
                            7.2

                        	
                            
                            Obligation of Buyer to Close

                        	
                            
                            25

                        


            


            
                	
                            
                            ARTICLE VIII

                        	
                            
                            INDEMNIFICATION

                        	
                            
                            26

                        


            


            
                	
                             

                        	
                            
                            8.1

                        	
                            
                            Indemnification

                        	
                            
                            26

                        


            


            
                	
                             

                        	
                            
                            8.2

                        	
                            
                            Limitations of Indemnity

                        	
                            
                            27

                        


            


            
                	
                             

                        	
                            
                            8.3

                        	
                            
                            Indemnification Procedures - Third Party
                            Claims

                        	
                            
                            27

                        


            


             


            
                	
                            
                             

                        	
                            
                            -ii-

                        	
                            
                             

                        


            

        


         


         


        
            

        

        
        

        
            


            
            TABLE OF CONTENTS


            
            (continued)


            
            Page


             


            
                	
                             

                        	
                            
                            8.4

                        	
                            
                            Indemnification Procedures - Other Claims,
                            Indemnification Generally

                        	
                            
                            29

                        


            


            
                	
                             

                        	
                            
                            8.5

                        	
                            
                            Exclusive Remedy

                        	
                            
                            29

                        


            


            
                	
                            
                            ARTICLE IX

                        	
                            
                            MISCELLANEOUS

                        	
                            
                            29

                        


            


            
                	
                             

                        	
                            
                            9.1

                        	
                            
                            Termination

                        	
                            
                            29

                        


            


            
                	
                             

                        	
                            
                            9.2

                        	
                            
                            Entire Agreement

                        	
                            
                            30

                        


            


            
                	
                             

                        	
                            
                            9.3

                        	
                            
                            Notices

                        	
                            
                            30

                        


            


            
                	
                             

                        	
                            
                            9.4

                        	
                            
                            Waivers and Amendments

                        	
                            
                            31

                        


            


            
                	
                             

                        	
                            
                            9.5

                        	
                            
                            Counterparts

                        	
                            
                            31

                        


            


            
                	
                             

                        	
                            
                            9.6

                        	
                            
                            Choice of Law

                        	
                            
                            31

                        


            


            
                	
                             

                        	
                            
                            9.7

                        	
                            
                            WAIVER OF JURY TRIAL

                        	
                            
                            31

                        


            


            
                	
                             

                        	
                            
                            9.8

                        	
                            
                            Assignment

                        	
                            
                            31

                        


            


            
                	
                             

                        	
                            
                            9.9

                        	
                            
                            Negotiated Agreement

                        	
                            
                            31

                        


            


            
                	
                             

                        	
                            
                            9.10

                        	
                            
                            Further Assurances

                        	
                            
                            32

                        


            


            
                	
                             

                        	
                            
                            9.11

                        	
                            
                            Expenses

                        	
                            
                            32

                        


            


             


             


            
                	
                            
                             

                        	
                            
                            -iii-

                        	
                            
                             

                        


            

        


         


         


        
            

        

        
        

        
            


            
            EXHIBITS


             


            
                	
                            
                            Exhibit A

                        	
                            
                            Assignment and Assumption Agreement

                        


            


            
                	
                            
                            Exhibit B

                        	
                            
                            Bill of Sale

                        


            


            
                	
                            
                            Exhibit C

                        	
                            
                            Consulting Agreement

                        


            


            
                	
                            
                            Exhibit D

                        	
                            
                            Facilities Agreement

                        


            


            
                	
                            
                            Exhibit E

                        	
                            
                            License Agreement

                        


            


            
                	
                            
                            Exhibit F

                        	
                            
                            Opinion of Buyer’s Counsel

                        


            


            
                	
                            
                            Exhibit G

                        	
                            
                            Opinion of Seller’s Counsel

                        


            


            
                	
                            
                            Exhibit H

                        	
                            
                            Registration Rights Agreement

                        


            


            
                	
                            
                            Exhibit I

                        	
                            
                            Royalty Agreement

                        


            


            
                	
                            
                            Exhibit J

                        	
                            
                            Seller Key Management Non-Compete Agreements

                        


            


            
                	
                            
                            Exhibit K

                        	
                            
                            Supply Agreement

                        


            


             


            
            SCHEDULES


             


            
                	
                            
                            Schedule A

                        	
                            
                            Buyer Disclosure Schedules

                        


            


            
                	
                            
                            Schedule B

                        	
                            
                            Seller Disclosure Schedules

                        


            


            
                	
                            
                            Schedule C

                        	
                            
                            Seller Financial Statements

                        


            


            
                	
                            
                            Schedule D

                        	
                            
                            Assets

                        


            


            
                	
                            
                            Schedule E

                        	
                            
                            Purchase Price Allocation

                        


            


             


             


             


            
                	
                            
                             

                        	
                            
                            -vi-

                        	
                            
                             

                        


            


             


             

            

        

        
        

        
            


            
            ASSET PURCHASE AGREEMENT


             


            
            ASSET PURCHASE AGREEMENT
            (“Agreement”) dated as
            of July 10, 2007, by and between Perfect Circle Projectiles, LLC, an Illinois limited
            liability company
            (“Seller”), Gary E.
            Gibson (“Executive”),
            PCP Acquisition, Inc., a Colorado corporation
            (“Buyer”), and Security
            With Advanced Technology, Inc., a Colorado corporation
            (“SWAT”).


             


            R
            E C I T A L S:


             


            
            WHEREAS, Seller conducts as part of its overall business (the
            “Seller’s
            Business”) the manufacture and sale of spherical-shaped
            projectiles for Tactical Uses and Animal Deterrent Uses (as such terms are defined
            on Schedule D) (the
            “Defined
            Business”);


             


            
            WHEREAS, SWAT and Buyer are in the business of developing, marketing and
            selling various products and services developed for the security and surveillance
            industry (the “Buyer’s
            Business”) and Buyer wishes to acquire the Defined
            Business; and


             


            
            WHEREAS, Seller desires to sell and transfer to Buyer, and Buyer wishes
            to purchase and assume from Seller, the Assets (as such term is defined below), subject
            to the terms and conditions set forth in this Agreement.


             


            
            NOW, THEREFORE, in consideration of the premises and mutual covenants
            contained in this Agreement and of other good and valuable consideration, the receipt
            and sufficiency of which are hereby acknowledged, the parties, intending to be legally
            bound hereby, agree as follows:


             


            
            Article I DEFINITIONS


            
            1.1          
            Definitions. For purposes of this
            Agreement, the following terms shall have the respective meanings set forth
            below:


            
            “Affiliate”
            of any specified Person means (i) any other Person directly or indirectly controlling
            or controlled by or under direct or indirect common control with such specified Person
            and (ii) any 5% stockholder or member of such Person. For purposes of this definition,
            “control” when used with respect to any specified Person means the power to
            direct the management and policies of such Person, directly or indirectly, whether
            through the ownership of voting securities, by contract or otherwise, and the terms
            “controlling” and “controlled” have meanings correlative to the
            foregoing.


            
            “Agreement”
            means this Agreement and includes all of the Disclosure Schedules, Exhibits and
            Schedules annexed hereto.


            
            “Animal Deterrent
            Use” has the meaning set forth in
            Schedule D.


            
            “Assets”
            has the meaning set forth in Section 2.1.


             

            

        

        
        

        
            


            
            “Assignment and Assumption
            Agreement” means an Assignment and Assumption Agreement
            between Buyer and Seller in the form of Exhibit A
            hereto.


            
            “Bill of
            Sale” means a Bill of Sale from Seller in the form
            of Exhibit B hereto.


            
            “Buyer Disclosure
            Schedules” means the Disclosure Schedules of Buyer and
            SWAT attached hereto as Schedule
            A.


            
            “Buyer’s
            Business” has the meaning set forth in the recitals to
            this Agreement.


            
            “Closing”
            means the closing of the purchase and sale of the Assets as contemplated by this
            Agreement.


            
            “Closing
            Date” has the meaning set forth in Section
            3.3.


            
            “Code”
            means the Internal Revenue Code of 1986, as amended.


            
            “Competing
            Transaction” means any sale, business combination or
            recapitalization involving the Defined Business or the Assets, or any acquisition or
            purchase of all or any portion of the assets of, or any material equity interest in,
            Seller, the Defined Business or the Assets or any other similar transaction with
            respect to the Defined Business or the Assets involving any Person or entity other than
            the Buyer or its Affiliates.


            
            “Consulting
            Agreement” means a Consulting Agreement between Buyer
            and the Executive in the form attached hereto as Exhibit
            C.


            
            “Contract”
            means any contract, lease, license, purchase order, sales order or other agreement or
            binding commitment, whether or not in written form.


            
            “Disclosure
            Schedules” or
            “Schedules” means either
            the Buyer Disclosure Schedules, the Seller Disclosure Schedules, or both, as
            applicable.


            
            “Defined
            Business” has the meaning set forth in the recitals to
            this Agreement.


            
            “Employee
            Plans” means all employee benefit plans (as defined in
            Section 3(3) of ERISA) to which Seller is a party or is bound, with respect to which
            payments or contributions are required to be made by Seller, or in respect of which
            Seller may otherwise have any liability.


            
            “Encumbrance”
            means any lien, charge, security interest, mortgage, deed of trust, pledge or other
            encumbrance of any nature whatsoever, excluding Seller’s lien or security
            interest in the Assets as provided for in the Royalty Agreement.


            
            “Environmental
            Laws” means all federal, state and municipal statutes,
            regulations, common law and similar provisions having force or effect of law, all
            orders, permits, licenses and approvals with respect to environmental, public health
            and safety, occupational health and safety, product liability and transportation
            including without limitation all such standards of conduct or bases of obligations
            relating to the presence, use, production, generation, handling, transportation,
            treatment, storage, disposal, distribution, labeling, testing, processing, discharge,
            release, control or cleanup of any contaminant, waste, hazardous materials, substances,
            chemical


             


             

            

        

        
        

        
            


            
            substances or mixtures, pesticides, toxic chemicals, petroleum products
            or byproducts, asbestos, polychlorinated biphenyls, noise or radiation.


            
            “ERISA”
            means the Employee Retirement Income Security Act of 1974, as amended.


            
            “Exchange
            Act” means the Securities Exchange Act of 1934, as
            amended.


            
            “Excluded Assets and
            Liabilities” has the meaning set forth in Section
            2.2.


            
            “Facilities
            Agreement” means a Facilities Agreement between Buyer
            and Seller in the form attached hereto as Exhibit
            D.


            
            “GAAP”
            means generally accepted accounting principles in effect in the United States
            consistently applied.


            
            “Indemnification
            Acknowledgment” has the meaning set forth in Section
            8.3(a)(ii).


            
            “Indemnitee”
            has the meaning set forth in Section 8.3(a).


            
            “Indemnitor”
            has the meaning set forth in Section 8.3(a).


            
            “Issued
            Shares” has the meaning set forth in Section
            3.1(a).


            
            “Knowledge”
            means, when used in connection with the representations and warranties and covenants
            herein, the actual knowledge, after reasonable inquiry of the relevant facts and
            circumstances, of Buyer’s or Seller’s executive officers, as the case may
            be.


            
            “License
            Agreement” means a Patent License Agreement in the form
            of Exhibit E hereto.


            
            “Licenses and
            Permits” has the meaning set forth in Section
            5.6.


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


            
             


            
            “Material Adverse
            Effect” means a material adverse effect on either (i)
            the assets, operations, personnel, condition (financial or otherwise) or prospects of
            Buyer, the Defined Business or Seller, as applicable, taken as a whole, or (ii)
            Buyer’s or Seller’s (as applicable) ability to consummate the transactions
            contemplated hereby.


            
            “Material
            Contract” means a Contract that is material to the
            Defined Business.


            
            “Notice of
            Claim” has the meaning set forth in Section
            8.3(a)(i).


            
            “Opinion of Buyer’s
            Counsel” means an Opinion of Buyer’s Counsel in
            the form of Exhibit F
            hereto.


            
            “Opinion of Seller’s
            Counsel” means an Opinion of Seller’s Counsel in
            the form of Exhibit G
            hereto.


             


             

            

        

        
        

        
            


            
            “Person”
            means any individual, partnership, limited liability company, limited liability
            partnership corporation, association, joint stock company, trust, joint venture,
            unincorporated organization or governmental entity (or any department, agency or
            political subdivision thereof).


            
            “Products”
            has the meaning set forth in Schedule
            D.


            
            “Proprietary
            Rights” means, with respect to the Assets, worldwide
            industrial and intellectual property rights and all rights associated therewith,
            including all patents and applications therefor and all reissues, divisions, renewals,
            extensions, provisionals, continuations and continuations-in-part thereof, all
            inventions (whether patentable or not), invention disclosures, improvements, trade
            secrets, proprietary information, know how, technology, technical data, proprietary
            processes and formulae, algorithms, specifications and designs.


            
            “Registration Rights
            Agreement” means a Registration Rights Agreement in the
            form of Exhibit H hereto.


            
            “Royalty
            Agreement” means a Royalty Agreement in the form
            of Exhibit I hereto.


            
            “SEC”
            means the United States Securities and Exchange Commission.


            
            “Seller”
            has the meaning set forth in the preamble to this Agreement.


            
            “Seller Disclosure
            Schedules” means the Disclosure Schedules of Seller
            attached hereto as Schedule
            B.


            
            “Seller Financial
            Statements” means the unaudited balance sheets and
            statements of income and cash flows of Seller as of and for the fiscal year ended
            December 31, 2006 (including the footnotes thereto) and the unaudited balance sheets
            and related statements of income and cash flows for each month-end and quarterly period
            since December 31, 2006, attached hereto as Schedule
            C.


            
            “Seller Key Management Non-Compete
            Agreements” mean the non-compete agreements in the form
            attached hereto as Exhibit J between
            the Seller Key Management Personnel and Buyer.


            
            “Seller Key Management
            Personnel” means the following individuals: Gary
            Gibson, Michael Varacins, and Mary Gibson.


            
            “Seller’s
            Business” has the meaning set forth in the preamble to
            this Agreement.


            
            “Seller’s Latest Balance
            Sheet” means the unaudited balance sheet of Seller as
            of March 31, 2007 included in the Seller Financial Statements.


            
            “Spherical
            Projectile” has the meaning set forth in
            Schedule D.


             


             

            

        

        
        

        
            


            
            “Software”
            means, collectively, all of the software of the Defined Business in any form (including
            all software programs, objects, modules, routines, algorithms and code, in both source
            code and object code form), and includes: (a) all past and current versions and
            releases of Seller’s software products, all work in process and developed but
            unreleased code, and all versions or releases under development as of the Closing; (b)
            any other software owned by Seller or to which Seller otherwise has rights to that is,
            has been or is intended to be used by Seller in connection with the design,
            development, testing, maintenance or utilization of the software described in this
            paragraph; and (c) all derivative works of any of the software described in this
            paragraph.


            
            “Supply
            Agreement” means a Supply Agreement between Buyer and
            Seller in the form of Exhibit K
            hereto.


            
            “SWAT Common
            Stock” means SWAT’s no par value common
            stock.


            
            “SWAT Historical
            Financials” means the audited balance sheets and
            statements of income and cash flows of SWATas of and for the fiscal year ended December
            31, 2006 (including the footnotes thereto) filed with the SEC in connection with
            Buyer’s Form 10-KSB for the fiscal year ended December 31, 2006.


            
            “SWAT SEC
            Reports” has the meaning set forth in Section
            4.6.


            
            “SWAT’s Latest Balance
            Sheet” means the audited balance sheet of SWAT as of
            December 31, 2006 included in the Historical Financials.


            
            “Tactical
            Use” has the meaning set forth in
            Schedule D.


            
            “Tax”
            means any federal, state, local or foreign income, gross receipts, license, payroll,
            employment, excise, severance, stamp, occupation, premium, windfall profits, capital
            gain, intangible, environmental (pursuant to Section 59A of the Code or otherwise),
            custom duties, capital stock, franchise, employee’s income withholding, foreign
            withholding, social security (or its equivalent), unemployment, disability, real
            property, personal property, sales, use, transfer, value added, registration,
            alternative or add-on minimum, estimated or other tax, including any interest,
            penalties or additions to tax in respect of the foregoing, whether disputed or not, and
            any obligation to indemnify, assume or succeed to the liability of any other Person in
            respect of the foregoing, and the term “Tax
            Liability” shall mean any liability (whether known or
            unknown, whether absolute or contingent, whether liquidated or unliquidated, and
            whether due or to become due) with respect to Taxes.


            
            “Tax
            Return” means any return, declaration, report, claim
            for refund, or information return or statement relating to Taxes, including any
            schedule or attachment thereto, and including any amendment thereof.


            
            “Third Party
            Claim” means a claim or demand made by any Person who
            is not a party hereto against an Indemnitee.


            
            “WARN”
            has the meaning set forth in Section 5.12.


             


             

            

        

        
        

        
            


            
            


            
            Article II PURCHASE AND SALE


            
            2.1          
            Purchase and Sale of the Assets. Subject to
            Section 2.2, on the Closing Date, Seller shall sell, transfer, assign, convey and
            deliver to Buyer, and Buyer shall purchase and assume from Seller, the assets described
            on Schedule D hereto and all
            Proprietary Rights of the Defined Business (collectively, the
            “Assets”), free and
            clear of all Encumbrances.


            
            2.2          
            Excluded Assets and Liabilities. Seller is
            not selling or transferring, and Buyer is not purchasing or assuming, any assets,
            liabilities or obligations of Seller other than the Assets (the
            “Excluded Assets and
            Liabilities”) and following the Closing, Buyer will not
            have any right, title, interest, obligation or responsibility with respect to the
            Excluded Assets and Liabilities. For the avoidance of doubt, (a) Buyer will not assume,
            and Seller shall retain, all obligations and liabilities of Seller and any of its
            Affiliates, including without limitation, all accounts payable, payroll accruals and
            withholdings, accrued expenses, capital and operating leases, Contracts, debts or
            mortgages, deferred income or revenue obligations, accrued or deferred income Tax or
            other Tax liabilities, or liabilities for any product returns or warranty claims
            arising from any products acquired by Buyer, (b) except as may be expressly agreed by
            Buyer, none of Seller’s employees will be hired, and none of Seller’s
            employment obligations will be assumed by Buyer, including, without limitation, such
            employee’s accrued vacation, sick time, personal time and health benefits
            (including COBRA), and (c) Buyer will not assume, and Seller shall retain, all rights
            to all assets other than the Assets, including cash, cash equivalents, accounts
            receivable, deposits and prepaid expenses.


            
            2.3          
            Inventory Purchase Obligation. Buyer shall
            purchase within 30 days after the Closing Date at Seller’s cost all usable and
            undamaged inventory components owned by Seller and used or usable in the Defined
            Business.


            
            Article III PURCHASE PRICE


            
            3.1          
            Purchase Price. The purchase price payable
            to Seller for the Assets and in consideration for the agreements contained herein shall
            be paid at Closing in the following amounts and in the following manner:


            
            (a)          
            Buyer shall cause SWAT to issue to Seller’s Members an aggregate
            of $1,000,000 of newly issued, restricted SWAT Common Stock (the
            “Issued Shares”), free
            and clear of all Encumbrances, in the following percentages:


            
             


            
                	
                            MEMBER

                        	
                            PERCENTAGE

                        
	 	
                        
	
                            Gary E. Gibson

                        	
                            80 %

                        
	 	
                        
	
                            Roy Urban

                        	
                            5 %

                        
	 	
                        
	
                            Ron Urban

                        	
                            
                            5 %

                        
	 	
                        
	
                            Thomas G.
                            Kotsiopoulos

                        	
                            
                            10 %

                        


            


            
            and


             


             

            

        

        
        

        
            


            


            
            (b)          
            Buyer shall deliver to Seller the amount of $1,000,000 in immediately
            available funds.


            
            3.2          
            Valuation of the Issued Shares. For the
            purpose of determining the value of the Issued Shares as of Closing, such shares shall
            be valued at the average of (i) the average closing price of SWAT Common Stock for the
            10 trading days ended May 2, 2007, and (ii) the average closing price of SWAT Common
            Stock for the 10 trading days ended July 6, 2007.


            
            3.3          
            Closing. Subject to the terms of this
            Agreement, the Closing shall take place at 11:00 am, Denver, Colorado time, on a date
            to be agreed by Buyer and Seller, which shall be as soon as practicable following the
            satisfaction or written waiver of the conditions set forth in Article VII (the
            “Closing Date”), at the
            offices of Brownstein Hyatt Farber Schreck, 410 Seventeenth Street, Suite 2200, Denver,
            Colorado 80202, or at such other place as Buyer and Seller shall mutually
            agree.


            
            3.4          
            Allocation of Purchase Price. The parties
            agree to negotiate in good faith an allocation of the Purchase Price among the Assets
            which shall be attached as Schedule E
            hereto (the
            “Allocation”). The
            parties to this Agreement expressly agree that the Allocation shall be used by them for
            all purposes including Tax, reimbursement and other purposes. Each party to this
            Agreement agrees that it will report the transaction completed pursuant to this
            Agreement in accordance with the Allocation, including any report made under
            Section 1060 of the Code, and that no such party will take a position inconsistent
            with the Allocation except with the prior written consent of the other parties
            hereto.


            
            Article IV REPRESENTATIONS AND WARRANTIES OF BUYER AND
            SWAT


            
            As a material inducement to Seller to enter into this Agreement and to
            consummate the transactions contemplated herein, Buyer and SWAT hereby, jointly and
            severally, represent and warrant to Seller that the statements made in this Article IV
            are true and correct, except as set forth in the Buyer Disclosure Schedules attached
            hereto as Schedule A. For purposes
            of this Article IV, the term shall mean each of Buyer and SWAT.


            
            4.1          
            Organization, Qualification and Authority.
            Buyer is a corporation duly incorporated, validly existing and in good standing under
            the laws of the State of Colorado. Buyer is in good standing and duly qualified to do
            business as a foreign corporation in all jurisdictions where the operation of its
            business or the ownership of its properties make such qualification necessary. Buyer
            has the requisite corporate power and authority to own, lease and operate its
            properties and assets as presently owned, leased and operated and to carry on its
            business as it is now being conducted. Buyer has the requisite corporate right, power
            and authority to execute, deliver and carry out the terms of this Agreement and all
            documents and agreements necessary to give effect to the provisions of this Agreement
            and to consummate the transactions contemplated hereby. The execution, delivery and
            consummation of this Agreement and all other agreements and documents executed in
            connection herewith by Buyer have been duly authorized by all necessary corporate
            action on the part of Buyer. Except for the approval of Buyer’s board of
            directors, no action, consent or approval on the part of Buyer or any other Person is
            necessary to authorize the execution, delivery and consummation of this Agreement and
            all other agreements and documents executed in connection herewith. This Agreement,
            and


             


             

            

        

        
        

        
            


            all
            other agreements and documents executed in connection herewith by Buyer upon due
            execution and delivery thereof, shall constitute the valid binding obligations of
            Buyer, enforceable in accordance with their respective terms, except as enforcement may
            be limited by bankruptcy, insolvency, reorganization or similar laws affecting
            creditors’ rights generally and by general principles of equity.


            
            4.2          
            No Violations. The execution and delivery
            of this Agreement and the performance by Buyer of its obligations hereunder (i) do not
            and will not conflict with or violate any provision of the articles of incorporation or
            similar organizational documents of Buyer, and (ii) do not and will not (a) conflict
            with or result in a breach of the terms, conditions or provisions of, (b) constitute a
            default under, (c) result in the creation of any Encumbrance upon the capital stock of
            Buyer pursuant to, (d) give any third party the right to modify, terminate or
            accelerate any obligation under, (e) result in a violation of, or (f) require any
            authorization, consent, approval, exemption or other action by or notice to any court
            or administrative, arbitration or governmental body or other third party pursuant to,
            any law, statute, rule or regulation or any Contract, order, judgment or decree to
            which Buyer is subject or by which any of its assets are bound.


            
            4.3          
            Capitalization. The capitalization of Buyer
            is set forth on Schedule A.


            
            4.4          
            Litigation. Buyer has not received notice
            of any violation of any law, rule, regulation, ordinance or order of any court or
            federal, state, municipal or other governmental department, commission, board, bureau,
            agency or instrumentality which would impede or interfere with Buyer’s ability to
            enter into or consummate the transactions contemplated hereby. There are no lawsuits,
            proceedings, actions, arbitrations, governmental investigations, claims, inquiries or
            proceedings pending or, to Buyer’s Knowledge, threatened, involving Buyer that
            seeks to enjoin or obtain damages in respect of the consummation of the transactions
            contemplated by this Agreement or any action taken or to be taken by Buyer in
            connection with the consummation of the transactions contemplated hereby, and, to Buyer
            Knowledge, no reasonable basis exists for the bringing of any such claim.


            
            4.5          
            Broker’s or Finder’s Fee. Buyer
            will not be liable for the payment of any fee to any finder, broker, consultant or
            similar person in connection with the transactions contemplated under this
            Agreement.


            
            4.6          
            Buyer SEC Reports. Buyer has timely filed
            all reports with the SEC required to be filed by Buyer
            (“Buyer SEC Reports”).
            Each Buyer SEC Report complied as to form in all material respects with the
            requirements of applicable law on the date thereof.


            
            4.7          
            Tax Returns; Taxes. (i) Buyer has filed and
            will timely file all federal, state and local Tax Returns and Tax reports required by
            such authorities to be filed and (ii) Buyer has paid all Taxes, assessments,
            governmental charges, penalties, interest and fines due or claimed to be due by any
            federal, state or local authority. There is no pending Tax examination or audit of, nor
            any action, suit, investigation or claim asserted or, to Buyer’s Knowledge,
            threatened, against Buyer by any federal, state or local authority; and Buyer has not
            been granted any extension of the limitation period applicable to any Tax
            claims.


             


             

            

        

        
        

        
            


            


            
            4.8          
            No Omissions or Misstatements. None of the
            information included in this Agreement and schedules hereto, the Buyer SEC Reports or
            other documents furnished or to be furnished by Buyer, or any of their representatives,
            contains any untrue statement of a material fact or is misleading in any material
            respect or omits to state any material fact necessary in order to make any of the
            statements herein or therein not misleading in light of the circumstances in which they
            were made. Copies of all documents referred to in any schedule hereto have been
            delivered or made available to Seller and constitute true, correct and complete copies
            thereof and include all amendments, schedules, appendices, supplements or modifications
            thereto or waivers thereunder.


            
            4.9          
            Financial Statements. Buyer does not have
            any material liability or obligations of any nature (absolute, accrued, contingent or
            otherwise) other than those that are either (i) reflected or appropriately reserved
            against in SWAT’s Latest Balance Sheet, (ii) not required by GAAP to be reflected
            or reserved against on SWAT’s Latest Balance Sheet or (iii) incurred in the
            ordinary course of business subsequent to the date of SWAT’s Latest Balance
            Sheet.


            
            4.10       
            Interim Changes. Except as otherwise
            disclosed in any subsequent filings on Form 10-QSB or Form 8-K, since the date of
            Buyer’s most recent filing with the SEC on Form 10-KSB, there has been
            no:


            
            (a)          
            change in the condition, financial or otherwise, of Buyer, which has, or
            could reasonably be expected to have a Material Adverse Effect;


            
            (b)          
            loss, damage or destruction of or to any of Buyer’s assets,
            whether or not covered by insurance;


            
            (c)          
            increase in the compensation payable by Buyer to its employees,
            directors, managers, independent contractors or agents other than in the ordinary
            course of business consistent with past practice, or any increase in, or institution
            of, any bonus, insurance, pension, profit sharing or other employee benefit plan or
            arrangements made to, for, or with the employees, directors, managers, or independent
            contractors of Buyer;


            
            (d)          
            adjustment or write-off of accounts receivable other than in the
            ordinary course of business consistent with past practice or any change in the
            collection, payment or credit experience or practices of Buyer;


            
            (e)          
            change in the Tax or cash basis accounting methods or practices employed
            by Buyer or change in depreciation or amortization policies;


            
            (f)           
            strike, work stoppage or other labor dispute adversely affecting the
            business of Buyer;


            
            (g)          
            termination, waiver or cancellation of any material rights or claims of
            Buyer under any Contract or otherwise, other than in the ordinary course of business
            consistent with past practice;


            
            (h)          
            any incurrence of indebtedness for borrowed money other than in the
            ordinary course of Buyer’s business consistent with past practice;


             


             

            

        

        
        

        
            


            
            (i)           
            any new Contract (or amendment to any existing Contract) obligating
            Buyer to purchase goods or services, any amendment or termination of any Material
            Contract or license relating to the business of Buyer or any waiver of material claims
            or rights of Buyer against third parties, in each case other than in the ordinary
            course of business consistent with past practice;


            
            (j)           
            any Contract, arrangement or transaction between Buyer and any Affiliate
            of Buyer;


            
            (k)          
            any other transaction not in the ordinary course of Buyer’s
            business and consistent with past practice of its business that, individually or in the
            aggregate, could have a Material Adverse Effect; or


            
            (l)           
            any commitment with respect to any of the foregoing.


            
            Article V REPRESENTATIONS AND WARRANTIES OF SELLER


            
            As a material inducement to Buyer and SWAT to enter into this Agreement
            and to consummate the transactions contemplated hereunder, Seller and Gary Gibson,
            jointly and severally, hereby represent and warrant to Buyer that the statements made
            in this Article V are true and correct, except as set forth in the Seller Disclosure
            Schedules attached hereto as Schedule
            B.


             


            
            5.1          
            Organization, Qualification and Authority.
            Seller is a limited liability company duly formed and validly existing under the laws
            of the State of Illinois. Seller is in good standing and is duly qualified to do
            business as a foreign corporation in all jurisdictions where the operation of its
            business or the ownership of its properties make such qualification necessary. Seller
            has the requisite corporate power and authority to own, lease and operate its
            facilities and assets as presently owned, leased and operated, and to carry on its
            business as it is now being conducted. Seller owns no capital stock, security, interest
            or other right, or any option or warrant convertible into the same, of any Person.
            Seller has the requisite right, power and authority to execute, deliver and carry out
            the terms of this Agreement and all documents and agreements necessary to give effect
            to the provisions of this Agreement and to consummate the transactions contemplated
            hereunder. The execution, delivery and consummation of this Agreement, and all other
            agreements and documents executed in connection herewith by Seller, have been duly
            authorized by all necessary action on the part of Seller. No other action, consent or
            approval on the part of Seller, or any other Person or entity is necessary to authorize
            Seller’s due and valid execution, delivery and consummation of this Agreement and
            all other agreements and documents executed in connection herewith. This Agreement and
            all other agreements and documents executed in connection herewith by Seller, upon due
            execution and delivery thereof, shall constitute the valid and binding obligations of
            Seller, enforceable in accordance with their respective terms, except as enforcement
            may be limited by bankruptcy, insolvency, reorganization or similar laws affecting
            creditors’ rights generally and by general principles of equity.


            
            5.2          
            Capitalization. The capitalization of
            Seller is set forth on Schedule B,
            and are owned free and clear of Encumbrances. The outstanding equity interests of
            Seller has been


             


             

            

        

        
        

        
            


            
            validly issued, fully paid and nonassessable. There are no other equity
            interests or any securities convertible into equity interests of Seller outstanding,
            and Seller has no commitment to issue or sell any such securities. No Person has any
            preemptive right or right of first refusal to purchase or subscribe for any equity
            interests of Seller.


            
            5.3          
            No Violations. The execution and delivery
            of this Agreement and the performance by Seller of its obligations hereunder (i) do not
            and will not conflict with or violate any provision of its operating agreement,
            articles or certificate of formation or organization, or similar organizational
            documents, and (ii) do not and will not (a) conflict with or result in a breach of the
            terms, conditions or provisions of, (b) constitute a default under, (c) result in the
            creation of any Encumbrance upon any of the Seller equity interests or the Assets
            pursuant to, (d) give any third party the right to modify, terminate or accelerate any
            obligation under, (e) result in a violation of, or (f) require any authorization,
            consent, approval, exemption or other action by or notice to any court or
            administrative, arbitration or governmental body or other third party pursuant to, any
            law, statute, rule or regulation or any Material Contract, judgment or decree to which
            Seller is subject or by which any of the Assets are bound.


            
            5.4          
            Financial Statements. The Seller’s
            Historical Financials attached hereto as Schedule C
            fairly present the financial position of Seller as of the dates
            specified and the results of operations in all material respects of Seller for the
            periods covered thereby, and Seller has no material liability or obligations of any
            nature (absolute, accrued, contingent or otherwise) other than those that are either
            (i) reflected or appropriately reserved against on Seller’s Latest Balance Sheet,
            (ii) not required by GAAP to be reflected or reserved against on Seller’s Latest
            Balance Sheet, (iii) incurred in the ordinary course of the Seller’s Business
            subsequent to the date of Seller’s Latest Balance Sheet or (iv) set forth
            on Schedule B.


            
            5.5          
            Interim Changes. Since the date of the
            Seller’s Latest Balance Sheet, there has been no:


            
            (a)          
            change in the condition, financial or otherwise, of Seller which has, or
            could reasonably be expected to have a Material Adverse Effect;


            
            (b)          
            loss, damage or destruction of or to any of the Assets, whether or not
            covered by insurance;


            
            (c)          
            sale, lease, transfer or other disposition by Seller, or mortgages or
            pledges of or the imposition of any Encumbrance on, any portion of the Assets, other
            than in the ordinary course of business consistent with past practice;


            
            (d)          
            adjustment or write-off of accounts receivable, other than in the
            ordinary course of business consistent with past practice, or any change in the
            collection, payment or credit experience or practices of Seller;


            
            (e)          
            change in the Tax or cash basis accounting methods or practices employed
            by either of Seller or change in depreciation or amortization policies;


             


             

            

        

        
        

        
            


            


            
            (f)           
            issuance or sale by Seller, or any Contract entered into by Seller for
            the issuance or sale, of any equity interest of Seller or securities convertible into
            or exchangeable for equity interest of Seller;


            
            (g)          
            payment by Seller of any dividend, distribution (except in the ordinary
            course of business) or extraordinary or unusual disbursement or expenditure;


            
            (h)          
            merger, consolidation or similar transaction involving
            Seller;


            
            (i)           
            strike, work stoppage or other labor dispute adversely affecting the
            Defined Business;


            
            (j)           
            termination, waiver or cancellation of any material rights or claims of
            Seller, under any Contract or otherwise;


            
            (k)          
            any incurrence of indebtedness for borrowed money other than in the
            ordinary course of the Defined Business consistent with past practice;


            
            (l)           
            any new Contract (or amendment to any existing Contract) obligating
            Seller to purchase goods or services, other than in the ordinary course of business
            consistent with past practice, any amendment or termination of any Material Contract or
            license relating to the Defined Business or any waiver of material claims or rights of
            Seller against third parties;


            
            (m)         
            any agreement, arrangement or transaction between Seller and any
            Affiliate of Seller;


            
            (n)          
            any other transaction not in the ordinary course of the Defined Business
            and consistent with past practice of the Defined Business that, individually or in the
            aggregate, could have a Material Adverse Effect; or


            
            (o)          
            any commitment with respect to any of the foregoing.


            
            5.6          Licenses
            and Permits.


            
            (a)          
            Seller has all material local, state and federal licenses, permits,
            registrations, certificates, contracts, consents, accreditations and approvals material
            to the Defined Business (collectively, the “Licenses and
            Permits”) necessary to occupy, operate and conduct its
            business as now conducted, and there does not exist any waivers or exemptions relating
            thereto. There is no material default on the part of Seller, nor, to Seller’s
            Knowledge, any other party under any of the Licenses and Permits. To Seller’s
            Knowledge, there exist no grounds for revocation, suspension or limitation of any of
            the Licenses or Permits. No notices have been received by Seller with respect to any
            threatened, pending, or possible revocation, termination, suspension or limitation of
            the Licenses and Permits.


            
            (b)          
            Each employee of Seller has all Licenses and Permits required for each
            such employee to perform such employees’ designated functions and duties for
            Seller in connection with conducting its business. There is no default under, nor, to
            Seller’s Knowledge,


             


             

            

        

        
        

        
            


            
            does there exist any grounds for revocation, suspension or limitation
            of, any such Licenses and Permits.


            
            5.7          
            Real Property. The Defined Business
            includes no real property, whether owned or leased..


            
            5.8          
            Assets. Schedule
            D contains a list of the Assets. Except as set forth
            on Schedule B, Seller has good and
            marketable title to the Assets, free and clear of all Encumbrances, except as provided
            for in the Royalty Agreement. The Assets are sufficient to conduct the Defined Business
            as presently conducted. No assets utilized in connection with the Defined Business are
            owned by or in the possession of any Person other than Seller. The machinery, equipment
            and other tangible assets of Seller have been maintained in good working condition in
            accordance with customary industry practice (normal wear and tear excepted) and are
            sufficient for the conduct of the Defined Business. The Assets are suitable for their
            intended uses. The Assets reflected on Schedule D
            constitute all of the assets, properties and other rights used in the
            conduct of the Defined Business, except as otherwise indicated on
            Schedule D.


            
            5.9          
            Contracts.
            Schedule B sets forth a complete and
            correct list of all Contracts relating to the Defined Business to which Seller is a
            party or to which the Assets are subject (excluding customary purchase orders in the
            ordinary course of business) and which:


            
            (a)          
            involve payment of more than $10,000 on behalf of Seller, other than
            payments for customary services or trade payables in the ordinary course of the Defined
            Business;


            
            (b)          
            which will require Seller (or Buyer) to purchase or provide goods or
            services following the Closing Date;


            
            (c)          
            are a franchise, distributor or similar agreement;


            
            (d)          
            evidence or provide for any indebtedness for borrowed money or any
            Encumbrance on any of the Assets;


            
            (e)          
            guarantee the performance, liabilities or obligations of any other
            entity, which restrict in any material respect the ability of Seller to conduct any
            business activities, which involve any related party, including Seller or any of its
            Affiliates;


            
            (f)           
            provide for noncompetition agreements;


            
            (g)          
            relate to the hiring or leasing of employees, which are not in the
            ordinary course of the Defined Business;


            
            (h)          
            relate to independent contractor services being provided to
            Seller;


            
            (i)          
            are subject to termination or modification by any third party as a
            result of the transactions contemplated by this Agreement; or


            
            (j)          
            are otherwise material to the Defined Business.


             


             


             

            

        

        
        

        
            


            


            
            Seller is not in material breach of any Contract set forth on
            Schedule B, nor, to Seller’s
            Knowledge, is any third party in material breach of any such Contract. True and
            complete copies of all Contracts or forms of such Contracts set forth on
            Schedule B have previously been delivered
            or made available to Buyer.


            
            5.10          Environmental
            and Safety Matters.


            
            (i)           
            to Seller’s knowledge, Seller is and has been in material
            compliance at all times with all applicable Environmental Laws and has received no
            notice, report or information regarding any liabilities (whether accrued, absolute,
            contingent, unliquidated or otherwise), or any corrective, investigatory or remedial
            obligations, arising under applicable Environmental Laws with respect to the past or
            present operations or properties of the Defined Business;


            
            (ii)          
            to Seller’s Knowledge, Seller has obtained, and is and has been in
            material compliance at all times with all terms and conditions of, all Licenses and
            Permits pursuant to Environmental Laws for the occupation of its premises and the
            conduct of its operations;


            
            (iii)        
            to Seller’s Knowledge, Seller has filed, and is and has been in
            material compliance at all times with, all disclosures, reporting, and notifications
            required pursuant to Environmental Laws for the occupation of its premises and the
            conduct of the Defined Business;


            
            (iv)         
            Seller has not received notice that any of the following exists at any
            of Seller’s properties (other than de minimis amounts of cleaning supplies) in
            violation of applicable Environmental Laws: hazardous or toxic materials, substances,
            pollutants, contaminants or waste; polychlorinated biphenyl containing materials or
            equipment;


            
            (v)          
            to Seller’s Knowledge, the transactions contemplated by this
            Agreement do not impose any obligations under Environmental Laws for site investigation
            or cleanup or notification to or consent of any government agencies or third parties
            that has the right to enforce Environmental Laws;


            
            (vi)         
            Seller has not received any notice that there are facts, events or
            conditions relating to the past or present properties or operations of the Defined
            Business which will (x) prevent, hinder or limit continued compliance with applicable
            Environmental Laws, (y) give rise to any corrective, investigatory or remedial
            obligations on the part of Buyer pursuant to applicable Environmental Laws, or (z) give
            rise to any liabilities on the part of Buyer (whether accrued, absolute, contingent,
            unliquidated or otherwise) pursuant to applicable Environmental Laws, including without
            limitation those liabilities relating to onsite or offsite hazardous substance
            releases, personal injury, property damage or natural resources damage; and


            
            (vii)       
            Seller has not assumed nor, to Seller’s Knowledge, succeeded (by
            operation of law or otherwise), to any liabilities or obligations of any third party
            under Environmental Laws for which Buyer will have any liability following the Closing
            Date.


            
            (viii)       Seller
            has delivered or made available to Buyer true and correct copies of all environmental
            studies conducted by Seller.


             


             

            

        

        
        

        
            


            


            
            5.11         
            Litigation. Seller has not received notice
            of any violation of any law, rule, regulation, ordinance or order of any court or
            federal, state, municipal or other governmental department, commission, board, bureau,
            agency or instrumentality (including, without limitation, legislation and regulations
            applicable to environmental protection, civil rights, public health and safety and
            occupational health) since January 1, 2002. There are no lawsuits, proceedings,
            actions, arbitrations, governmental investigations, claims, inquiries or proceedings
            pending or, to Seller’s Knowledge, threatened, involving Seller, any of the
            Assets or the Defined Business, and, to Seller’s Knowledge, no reasonable basis
            exists for the bringing of any such claim. Seller has no warranty claims, insurance
            claims or product liability claims outstanding and Seller has received no notice of or
            filed any such claims since January 1, 2002.


            
            5.12         
            Employees. Solely with respect to the
            Defined Business, Seller has no employment agreements with its employees and all of
            Seller’s employees are employed on an at “at will” basis.
            Schedule B sets forth all former employees
            of Seller utilizing or eligible to utilize COBRA health insurance.
            Schedule B includes a complete list of all
            agreements that have been signed by employees or former employees relating to such
            employees’ confidentiality and assignment of Proprietary Rights of Seller with
            respect to the Defined Business. Copies of such executed employee agreements have been
            previously provided or made available to Buyer.


            
            5.13         
            Labor Relations. Seller is not a party to
            any labor contract, collective bargaining agreement, contract, letter of understanding,
            or any other arrangement, formal or informal, with any labor union or organization
            which obligates Seller to compensate its employees at prevailing rates or union scale,
            nor are any of its employees represented by any labor union or organization. There is
            no pending or, to Seller’s Knowledge, threatened, labor dispute, work stoppage,
            unfair labor practice complaint, strike, administrative or court proceeding or order
            between Seller and any of its present or former employee(s). There is no pending or, to
            Seller’s Knowledge, threatened, suit, action, investigation or claim between
            Seller and any present or former employee(s) of Seller. There has not been any labor
            union organizing activity at any location of Seller, or elsewhere, with respect to
            Seller’s employees within the last three years. To Seller’s Knowledge,
            Seller has complied in all respects with immigration and naturalization laws in
            connection with the employment of its work force.


            
            5.14         Reserved.


            
            5.15         
            Broker’s or Finder’s Fee.
            Except for the fee payable to the Christman Group, LLC (which shall be the sole
            responsibility of Seller), Seller will not be liable for the payment of any fee to any
            finder, broker, consultant or similar person in connection with the transactions
            contemplated under this Agreement.


            
            5.16       Proprietary
            Rights.


            
            (a)          
            Each of Seller and PC IP Group, LLC (i) owns and has independently
            developed or (ii) has the valid right or license to any and all Proprietary Rights used
            in the conduct of the Defined Business as currently conducted or as proposed to be
            conducted, including the design, development, manufacture, use, import and sale of
            products and technology and the performance of services (such Proprietary Rights being
            collectively referred to as the


             


             

            

        

        
        

        
            


            
            “Seller IP
            Rights”). The Seller IP Rights are sufficient for the
            conduct of the Defined Business as currently conducted and as proposed to be conducted
            by Seller.


            
            (b)          
            Seller has not transferred ownership of any Proprietary Rights that is
            or was Seller-Owned IP Rights (“Seller-Owned IP
            Rights” means Seller IP Rights that are owned by or
            exclusively licensed to Seller and PC IP Group, LLC) to any third party or knowingly
            permitted Seller’s rights in any Proprietary Rights that is or was Seller-Owned
            IP Rights to lapse or enter the public domain; except various patents which have been
            assigned to PC IP Group, LLC (which patents and all of PC IP Group, LLC’s rights
            and interests therein will be assigned and transferred to Buyer pursuant to the
            Assignment and Assumption Agreement). Each of Seller and PC IP Group, LLC owns and has
            good and exclusive title to each item of Seller-Owned IP Rights owned by it, free and
            clear of any Encumbrances. The right, license and interest of Seller and PC IP Group,
            LLC in and to all Proprietary Rights licensed by Seller or PC IP Group, LLC from a
            third party are free and clear of all Encumbrances (excluding restrictions contained in
            the applicable license agreements with such third parties). After the Closing, all
            Seller-Owned IP Rights will be fully transferable, alienable or licensable by Buyer
            without restriction and without payment of any kind to any third party, except as
            provided in the Royalty Agreement.


            
            (c)          
            Schedule B lists all United States,
            international and foreign: (i) patents and patent applications (including provisional
            applications, concerning the Assets, that is the subject of an application,
            certificate, filing, registration or other document issued, filed with, or recorded by
            any governmental authority owned by, registered or filed in the name of, Seller and PC
            IP Group, LLC (“Seller Registered Proprietary
            Rights”), including the jurisdictions in which each
            such item of Proprietary Rights has been issued or registered or in which any
            application for such issuance and registration has been filed, or in which any other
            filing or recordation has been made. Each item of Seller Registered Proprietary Rights
            is subsisting, all necessary registration, maintenance and renewal fees currently due
            in connection with such Seller Registered Proprietary Rights have been made and all
            necessary documents, recordations and certificates in connection with such Seller
            Registered Proprietary Rights have been filed with the relevant patent, copyright,
            trademark or other authorities in the United States or foreign jurisdictions, as the
            case may be, for the purposes of prosecuting, maintaining and perfecting such Seller
            Registered Proprietary Rights and recording Seller’s and PC IP Group, LLC’s
            ownership interests therein. Schedule B
            sets forth a list of all actions that are required to be taken by Seller
            and PC IP Group, LLC within 120 days of the date hereof with respect to any of Seller
            Registered Proprietary Rights in order to avoid prejudice to, impairment or abandonment
            of such Seller Registered Proprietary Rights.


            
            (d)          
            Schedule D lists all products or services
            produced, marketed, licensed, sold, distributed, demonstrated or provided by or on
            behalf of Seller and PC IP Group, LLC and all products or services currently under
            development by Seller and PC IP Group, LLC with respect to the Defined Business (each
            such product or service being a “Seller
            Product”) by name and version number.


            
            (e)          
            With respect to the Assets, neither Seller nor PC IP Group, LLC has any
            (i) licenses, sublicenses and other Contracts as to which Seller or PC IP Group, LLC is
            a party and pursuant to which any Person is authorized to use any Seller IP Rights,
            (ii) other than “shrink


             


             

            

        

        
        

        
            


            
            wrap” and similar widely available commercial end-user licenses
            that have an individual acquisition cost of $5,000 or less, licenses, sublicenses and
            other Contracts to which Seller or PC IP Group, LLC is a party and pursuant to which
            Seller or PC IP Group, LLC acquired or are authorized to use any third party
            Proprietary Rights (“Third Party Proprietary
            Rights”); and (iii) licenses, sublicenses and other
            Contracts pursuant to which Seller or PC IP Group, LLC has agreed to any restriction on
            the right of Seller or PC IP Group, LLC to use or enforce any Seller-Owned IP Rights.
            None of the licenses or Contracts listed in Schedule
            B grants any third party exclusive rights to or under any
            Seller IP Rights or grants any third party the right to sublicense any Seller IP
            Rights.


            
            (f)           
            Neither Seller nor PC IP Group, LLC is or shall be as a result of the
            execution and delivery or effectiveness of this Agreement or the performance of
            Seller’s or PC IP Group, LLC’s obligations under this Agreement, in breach
            of any agreement governing any Seller IP Rights (the
            “Seller IP Rights
            Agreements”) and the consummation of the transactions
            contemplated by this Agreement will not result in the modification, cancellation,
            termination, suspension of, or acceleration of any payments with respect to Seller IP
            Rights Agreements, or give any party to any Seller IP Rights Agreement the right to do
            any of the foregoing. Following the Closing, Buyer will be permitted to exercise all of
            Seller’s and PC IP Group, LLC’s rights under Seller IP Rights Agreements to
            the same extent Seller and PC IP Group, LLC would have been able to had the
            transactions contemplated by this Agreement not occurred and without the payment of any
            additional amounts or consideration other than ongoing fees, royalties or payments
            which Seller or PC IP Group, LLC would otherwise be required to pay. Neither the
            execution and delivery or effectiveness of this Agreement nor the performance of
            Seller’s obligations under this Agreement will cause the forfeiture or
            termination of, or give rise to a right of forfeiture or termination of any
            Seller-Owned IP Right, or impair the right of Seller or Buyer to use, possess, sell or
            license any Seller-Owned IP Right or portion thereof. There are no royalties,
            honoraria, fees or other payments payable by Seller or PC IP Group, LLC to any Person
            (other than salaries payable to employees, consultants and independent contractors not
            contingent on or related to use of their work product) as a result of the ownership,
            use, possession, license in, license-out, sale, marketing, advertising or disposition
            of any Seller-Owned IP Rights by Seller or PC IP Group, LLC. Neither Seller nor PC IP
            Group, LLC has entered into any Contract to indemnify any other person against any
            charge of infringement or misappropriation of any Proprietary Rights of any third
            party.


            
            (g)          
            To the Knowledge of Seller, there is no unauthorized use, disclosure,
            infringement or misappropriation of any Seller IP Rights by any third party, including
            any employee or former employee of Seller or PC IP Group, LLC, except that Seller
            believes that PepperBall Technologies, Inc.
            (“PTI”) manufactures a
            three part Spherical Projectile which may infringe on Seller’s Patents. Neither
            Seller nor PC IP Group, LLC has brought any action, suit or proceeding for infringement
            or misappropriation of Proprietary Rights or breach of any license or agreement
            involving Proprietary Rights against any third party.


            
            (h)          
            Neither Seller nor PC IP Group, LLC has been sued in any suit, action or
            proceeding (or received any notice or, to the knowledge of Seller, “threat”
            (except for PTI’s threats) which involves a claim of infringement or
            misappropriation of any Proprietary Rights right of any third party or which contests
            the validity, ownership or right of Seller or PC IP Group, LLC to exercise any
            Proprietary Rights right. Neither Seller nor PC IP Group, LLC has


             


             

            

        

        
        

        
            


            
            received any communication that involves an offer to license or grant
            any other rights or immunities under any Proprietary Rights of any third party. To the
            Knowledge of Seller, the operation of the Defined Business as currently conducted and
            as proposed to be conducted, including (i) the design, development, manufacturing,
            reproduction, marketing, licensing, sale, offer for sale, importation, distribution
            and/or use of any the Seller Product and (ii) Seller’s or PC IP Group,
            LLC’s use of any product, device or process used in the Defined Business as
            currently conducted and as proposed to be conducted, does not and will not infringe or
            misappropriate the Proprietary Rights of any third party and does not and will not
            constitute unfair competition or unfair trade practices under the laws of any
            jurisdiction and there is no substantial basis for a claim that the manufacture, use,
            importation, sale, offer for sale, or other distribution or license of any Seller
            Product or the operation of the Defined Business is infringing or has infringed on or
            misappropriated any Proprietary Rights of a third party. None of the Seller-Owned IP
            Rights, Seller Products, Seller or PC IP Group, LLC is subject to any proceeding or
            outstanding order, contract or stipulation (A) restricting in any manner the use,
            transfer, or licensing by Seller or PC IP Group, LLC of any Seller-Owned IP Right or
            any Seller Product, or which may affect the validity, use or enforceability of any such
            Seller-Owned IP Right or Seller Product, or (B) restricting the conduct of the Defined
            Business in order to accommodate third party Proprietary Rights.


            
            (i)           
            Neither Seller nor PC IP Group, LLC has not received any opinion of
            counsel that any third party Proprietary Rights applies to any Seller Product or the
            operation of the Defined Business, as previously or currently conducted, or as proposed
            to be conducted by Seller or PC IP Group, LLC.


            
            (j)           
            Seller and PC IP Group, LLC have secured from all of their consultants,
            employees and independent contractors who independently or jointly contributed to the
            conception, reduction to practice, creation or development of any Seller IP Rights,
            unencumbered and unrestricted exclusive ownership of all such third party’s
            Proprietary Rights in such contribution that Seller or PC IP Group, LLC does not
            already own by operation of law and such third party has not retained any rights or
            licenses with respect thereto. Seller and PC IP Group, LLC have obtained proprietary
            information and invention disclosure and assignment agreements from all current and
            former employees and consultants of Seller and PC IP Group, LLC. To the Knowledge of
            Seller, no current or former employee, consultant or independent contractor of Seller
            or PC IP Group, LLC: (i) is in violation of any term or covenant of any Contract
            relating to employment, invention disclosure, invention assignment, non-disclosure or
            non-competition or any other Contract with any other party by virtue of such
            employee’s, consultant’s or independent contractor’s being employed
            by, or performing services for, Seller or PC IP Group, LLC, or using trade secrets or
            proprietary information of others without permission; or (ii) has developed any
            technology, software or other copyrightable, patentable or otherwise proprietary work
            for Seller or PC IP Group, LLC that is subject to any agreement under which such
            employee, consultant or independent contractor has assigned or otherwise granted to any
            third party any rights (including Proprietary Rights) in or to such technology,
            software or other copyrightable, patentable or otherwise proprietary work. The
            employment of any employee of Seller and PC IP Group, LLC or the use by Seller or PC IP
            Group, LLC of the services of any consultant or independent contractor does not subject
            Seller or PC IP Group, LLC to any liability to any third party for improperly
            soliciting such employee, consultant or independent contractor to work for Seller or PC
            IP Group, LLC, whether such liability is based


             


             

            

        

        
        

        
            


            on
            contractual or other legal obligations to such third party. No current or former
            employee, consultant or independent contractor of Seller or PC IP Group, LLC has any
            right, license, claim or interest whatsoever in or with respect to any Seller IP
            Rights. To the extent that any technology, software or other Proprietary Rights
            developed or otherwise owned by a third party is incorporated into, integrated or
            bundled with, or used by Seller or PC IP Group, LLC in the development, manufacture or
            compilation of any of Seller Products, Seller and PC IP Group, LLC have a written
            agreement with such third party with respect thereto pursuant to which Seller or PC IP
            Group, LLC either (A) has obtained complete, unencumbered and unrestricted ownership
            of, and are the exclusive owners of, or (B) has obtained perpetual, non terminable
            licenses (sufficient for the conduct of the Defined Business as currently conducted and
            as proposed to be conducted) to all such third party’s technology, software or
            other Proprietary Rights by operation of law or by valid assignment, to the fullest
            extent it is legally possible to do so.


            
            (k)          
            Seller has taken all reasonable steps to protect and preserve the
            confidentiality of all confidential or non-public information included in Seller IP
            Rights (“Confidential
            Information”). All use, disclosure or appropriation of
            Confidential Information owned by Seller or PC IP Group, LLC by or to a third party has
            been pursuant to the terms of a written agreement between Seller or PC IP Group, LLC
            and such third party. All use, disclosure or appropriation of Confidential Information
            not owned by Seller or PC IP Group, LLC has been pursuant to the terms of a written
            agreement between Seller or PC IP Group, LLC and the owner of such Confidential
            Information, or is otherwise lawful. All current and former key employees and
            consultants of Seller or PC IP Group, LLC having access to Confidential Information or
            proprietary information of any of its customers or business partners have executed and
            delivered to Seller or PC IP Group, LLC a written agreement regarding the protection of
            such Confidential Information or proprietary information (in the case of proprietary
            information of Seller’s customers and business partners, to the extent required
            by such customers and business partners).


            
            (l)           Reserved.


            
            (m)         Reserved.


            
            (n)          Reserved.


            
            (o)          
            No (i) government funding; (ii) facilities of a university, college,
            other educational institution or research center; or (iii) funding from any Person
            (other than funds received in consideration for equity interests in Seller) was used in
            the development of the Proprietary Rights owned by Seller or PC IP Group, LLC. No
            current or former employee, consultant or independent contractor of Seller or PC IP
            Group, LLC, who was involved in, or who contributed to, the creation or development of
            any Proprietary Rights, has performed services for any government, university, college
            or other educational institution or research center during a period of time during
            which such employee, consultant or independent contractor was also performing services
            for Seller or PC IP Group, LLC.


            
            (p)          
            Neither Seller nor any other Person acting on its behalf has disclosed,
            delivered or licensed to any Person, agreed to disclose, deliver or license to any
            Person, or permitted the disclosure or delivery to any escrow agent or other Person of,
            any Seller Source


             


             

            

        

        
        

        
            


            
            Code. No event has occurred, and no circumstance or condition exists,
            that (with or without notice or lapse of time, or both) will, or would reasonably be
            expected to, result in the disclosure, delivery or license by Seller or any Person
            acting on its behalf to any Person of any Seller Source Code. As used in this Section,
            “Seller Source Code”
            means, collectively, any software source code or confidential manufacturing
            specifications or designs, any material portion or aspect of software source code or
            confidential manufacturing specifications or designs, or any material proprietary
            information or algorithm contained in or relating to any software source code or
            confidential manufacturing specifications or designs, of any Seller IP Rights or Seller
            Products.


            
            5.17         
            Reserved.


            
            5.18         
            Reserved.


            
            5.19         
            WARN Act. Within the period 90 days prior
            to the date hereof, Seller has not temporarily or permanently closed or shut down any
            single site of employment or any facility or any operating unit, department or service
            within a single site of employment, as such terms are used in WARN.


            
            5.20         
            Tax Returns; Taxes. (i) Seller has filed
            and will timely file all federal, state and local Tax Returns and Tax reports required
            by such authorities to be filed and (ii) Seller has paid all Taxes, assessments,
            governmental charges, penalties, interest and fines due or claimed to be due by any
            federal, state or local authority. There is no pending Tax examination or audit of, nor
            any action, suit, investigation or claim asserted or, to Sellers’ Knowledge,
            threatened, against Seller by any federal, state or local authority; and Seller has not
            been granted any extension of the limitation period applicable to any Tax
            claims.


            
            5.21         
            Affiliate Interests. Seller is not a party
            to any transaction with: (a) any employee, officer, or director of Seller, (b) any
            relative of any such employee, officer, or director, or (d) any Person that, directly
            or indirectly, is controlled by or under common control with Seller or with any such
            employee, officer, director, or relative, including without limitation any contract,
            agreement or other arrangement (i) providing for the furnishing of services by such
            person, (ii) providing for the rental of real or personal property from or to such
            person, (iii) providing for the guaranty of any obligation of such person, (iv)
            requiring any payment to such person which will continue beyond the Closing Date, or
            (v) establishing any right or interest of such person in any of the Assets.


            
            5.22         
            No Omissions or Misstatements. None of the
            information included in this Agreement and schedules hereto, or other documents
            furnished or to be furnished by Seller, or any of its representatives, contains any
            untrue statement of a material fact or is misleading in any material respect or omits
            to state any material fact necessary in order to make any of the statements herein or
            therein not misleading in light of the circumstances in which they were made. Copies of
            all documents referred to in any schedule hereto have been delivered or made available
            to Buyer and constitute true, correct and complete copies thereof and include all
            amendments, schedules, appendices, supplements or modifications thereto or waivers
            thereunder.


             


             

            

        

        
        

        
            


            


            
            Article VI COVENANTS OF PARTIES


            
            6.1          
            Conduct of Defined Business. From the date
            hereof to the Closing, except as expressly contemplated by this Agreement or otherwise
            consented to by Buyer in writing, Seller shall:


            
            (a)          
            conduct the Defined Business only in the usual, regular and ordinary
            course in substantially the same manner as heretofore conducted;


            
            (b)          
            maintain in all material respects all of the structures, equipment,
            vehicles and other tangible personal property of the Defined Business in its present
            condition, except for ordinary wear and tear and damage by unavoidable
            casualty;


            
            (c)          
            preserve and maintain all Proprietary Rights used in the Defined
            Business substantially in accordance with current business practices;


            
            (d)          
            keep in full force and effect insurance comparable in amount and scope
            of coverage to insurance now carried with respect to the Defined Business;


            
            (e)          
            perform in all material respects all obligations under Contracts
            relating to or affecting the Defined Business including, but not limited to, making
            timely payments to vendors and suppliers of Seller on a basis consistent with past
            business practices;


            
            (f)           
            maintain the books of account and records of the Defined Business in the
            usual, regular and ordinary manner;


            
            (g)          
            comply in all material respects with all statutes, laws, ordinances,
            rules and regulations applicable to the conduct of the Defined Business;


            
            (h)          
            use commercially reasonable efforts to maintain current relationships
            and preserve goodwill with customers, suppliers, vendors and other Persons having a
            business relationship with Seller relating to the Defined Business;


            
            (i)           
            use commercially reasonable efforts to keep available the resources of
            all employees of Seller;


            
            (j)           
            not enter into any employment agreement or commitment to employees of
            the Defined Business that could be applicable to or binding upon Buyer following the
            Closing;


            
            (k)          
            not create or permit to exist any Encumbrance on the Assets;


            
            (l)           
            not (i) enter into or modify any agreement for indebtedness or any
            Contract obligating Buyer to purchase or sell goods or services following the Closing,
            except PTI Purchase Orders received in the ordinary course of business, (ii) sell,
            lease, license or otherwise dispose of any asset of the Defined Business (other than
            dispositions of inventory and obsolete assets in the ordinary course of the Defined
            Business), (iii) acquire any substantial assets other than replacement assets,
            inventory and supplies to be used in the Defined Business or (iv) incur or commit any
            expenditure that will be binding on Buyer following the Closing;


             


             

            

        

        
        

        
            


            


            
            (m)         
            not modify or terminate any Contract with any customer,


            
            (n)          
            not take any action with respect to, or make any material change in, its
            accounting or Tax policies or procedures;


            
            (o)          
            not make or revoke any Tax election or settle or compromise any Tax
            Liability, or amend any Tax Return;


            
            (p)          
            not make or declare any dividends or any other distributions to equity
            holders of Seller, other than in the ordinary course of business; or


            
            (q)          
            not authorize or enter into any commitment with respect to any of the
            matters described in clauses (j), (k), (l), (m), (n), (o) or (p) above, except in the
            ordinary course of business.


            
            6.2          
            Access to Information; Buyer’s
            Investigation. Between the date of this Agreement and the
            Closing Date, Seller will (i) give Buyer, SWAT and their authorized representatives
            (including lenders, legal counsel and accountants) reasonable access to designated
            employees authorized by Seller, offices and other facilities of Seller’s Business
            and to their books and records, (ii) permit Buyer, SWAT and their authorized
            representatives to make such inspections thereof as it may reasonably require, and
            (iii) furnish Buyer, SWAT and their representatives and advisers with such financial
            and operating data and other information with respect to the business and properties of
            Seller’s Business as Buyer may from time to time reasonably request; provided,
            however, that any such investigation shall be conducted in such a manner as not to
            interfere unreasonably with the operation of Seller’s Business.


            
            6.3          
            Access to Information; Seller’s
            Investigation. Between the date of this Agreement and the
            Closing Date, Buyer and SWAT will (i) give Seller and its authorized representatives
            (including lenders, legal counsel and accountants) reasonable access to designated
            employees authorized by Buyer and SWAT, offices, warehouses and other facilities and
            property of Buyer’s Business and to their books and records, (ii) permit Seller
            and its authorized representatives to make such inspections thereof as Seller may
            reasonably require, and (iii) furnish Seller and its representatives and advisers with
            such financial and operating data and other information with respect to the business
            and properties of Buyer’s Business as Seller may from time to time reasonably
            request; provided, however, that any such investigation shall be conducted in such a
            manner as not to interfere unreasonably with the operation of Buyer’s
            Business.


            
            6.4          
            Uniform Commercial Code. Seller shall
            comply with the bulk sales provisions of the Uniform Commercial Code (including making
            any payment required thereunder), as such shall have been adopted in any applicable
            state, as may reasonably be requested by Buyer in connection with the transactions
            contemplated by this Agreement.


            
            6.5          
            Enforcement, Defense and Maintenance of Proprietary
            Rights. Prior to Closing, Seller, and after Closing, Buyer
            shall use its commercially reasonable efforts to enforce, defend and maintain the
            Proprietary Rights.


             


             

            

        

        
        

        
            


            


            
            6.6          
            Confidentiality; Public Announcements. If
            the transactions contemplated by this Agreement are not consummated (and in any event
            prior to the Closing Date), Seller, Buyer and SWAT will maintain the confidentiality of
            all information and materials obtained from the other parties; provided, however, that
            Seller, Buyer and SWAT may each provide information obtained from the other party to
            its advisors, agents and employees for the limited purposes of analyzing, negotiating,
            financing, pursuing and consummating the transactions contemplated by this Agreement.
            Upon termination of this Agreement, Seller, Buyer and SWAT (and their respective
            representatives) will return to the other party all materials obtained from such
            parties in connection with the transactions contemplated by this Agreement and all
            copies thereof. The initial press release and associated Current Report on Form 8-K
            with respect to the execution of this Agreement and the closing of the transactions
            contemplated by this Agreement shall be joint press releases reasonably acceptable to
            Seller and SWAT. Seller agrees not to make any additional public disclosures in respect
            of this Agreement and the transactions contemplated hereby without the prior written
            consent of SWAT, in SWAT’s sole discretion as to the content and timing of such
            disclosure.


            
            6.7          
            Efforts to Consummate Transaction. The
            parties shall use their commercially reasonable best efforts to take or cause to be
            taken all such actions required to consummate the transactions contemplated hereby
            including, without limitation, such actions as may be necessary to obtain, prior to the
            Closing, all necessary governmental or other third party approvals and consents
            required to be obtained by Seller, Buyer or SWAT in connection with the consummation of
            the transactions contemplated by this Agreement.


            
            6.8          
            No Solicitation. Until the earlier of (a)
            the termination of this Agreement pursuant to Section 9.1 or (b) July 13, 2007,
            Seller shall not, directly or indirectly through any manager, member, officer,
            employee, agent, affiliate or otherwise, enter into any agreement, agreement in
            principle or other commitment (whether or not legally binding) relating to a Competing
            Transaction or solicit, initiate or encourage the submission of any proposal or offer
            from any person or entity (including Seller’s officers, members, managers,
            employees and agents) relating to any Competing Transaction, nor participate in any
            discussions or negotiations regarding, or furnish to any other person or entity any
            information with respect to, or otherwise cooperate in any way with, or assist or
            participate in, facilitate or encourage, any effort or attempt by any other person or
            entity to effect a Competing Transaction. Seller shall immediately cease any and all
            contacts, discussions and negotiations with third parties regarding any Competing
            Transaction. Seller shall promptly notify Buyer if any proposal regarding a Competing
            Transaction (or any inquiry or contact with any person or entity with respect thereto)
            is made and shall promptly advise Buyer of the contents thereof (and, if in written
            form, provide Buyer with copies thereof).


            
            6.9          
            Product Liability Insurance. For a period
            of six years following Closing, Buyer shall maintain product liability insurance in
            minimum aggregate amount of $2,000,000, unless mutually agreed by the parties to revise
            or cancel, for projectile rounds that may be produced as part of the Defined Business,
            which policy shall name Seller as an “additional insured.”


            
            6.10       
            Manufacturing Agreement between Seller and
            PTI. Seller is party to a Manufacturing Agreement dated as of
            January 24, 2006 with PTI (the “PTI
            Agreement”). Within 24 hours following the Closing,
             Seller shall send to PTI a written


             


             

            

        

        
        

        
            


            
            notice, in form and substance mutually acceptable to Buyer and Seller,
            indicating that Seller has sold the Defined Business  to Buyer. Following the Closing, Buyer shall produce
            and sell to Seller at Seller’s contracted sales price to PTI Spherical
            Projectiles in order to enable Seller to fulfill its obligations for purchase orders
            placed by PTI and accepted by Seller prior to the Closing Date for which Spherical
            Projectiles are not included in Seller’s finished goods inventory at the Closing.
            Any such finished goods at Closing shall be retained by Seller at Closing for sale
            directly to PTI pursuant to the terms of the PTI Agreement. In addition, following the
            Closing and until the earlier of the date on which the PTI Agreement is terminated or
            assigned to Buyer, Buyer shall assist Seller in complying with the terms of the PTI
            Agreement; provided, however, that the fulfillment of any new orders placed by PTI
            following the Closing pursuant to the terms of the PTI Agreement shall be subject to
            Buyer’s prior approval. No royalty will be payable to Seller under the Royalty
            Agreement with respect to Spherical Projectiles sold by Seller to PTI out of
            Seller’s finished goods inventory at the Closing pursuant to the terms of the PTI
            Agreement. Notwithstanding the foregoing, in the event the PTI Agreement is assigned to
            Buyer or Buyer enters into a new manufacturing or supply agreement with PTI following
            the Closing, Seller will be entitled to a royalty under the Royalty Agreement with
            respect to Spherical Projectiles produced and sold by Buyer to PTI. Each of Seller and
            Executive hereby, jointly and severally, represents and warrants that it and he has
            not, and covenants and agrees that it and he will not, share with or disclose or
            provide to (whether in written or verbal form) Buyer, SWAT or any of their respective
            Affiliates, officers, directors, employees, consultants, agents or representatives, any
            proprietary or confidential information of PTI arising from the PTI Agreement or
            otherwise.


            
            6.11       
            Delivery of Financial Statements. Until the
            Closing Date, Seller shall deliver to Buyer, as soon as is reasonably practical (but in
            no event later than 30 days following each month-end), unaudited balance sheets and the
            related statements of operations for each month-end period since December 31,
            2006. Until the Closing Date, SWAT shall deliver to Seller, as soon as is reasonably
            practical (but in no event later than 30 days following each month-end), unaudited
            balance sheets and the related statements of operations for each month-end since the
            date of the SWAT Financial Statements.


            
            Article VII CLOSING CONDITIONS


            
            7.1          
            Obligation of Seller to Close. The
            obligation of Seller to close the transactions contemplated hereby shall be subject to
            the fulfillment and satisfaction, prior to or at the Closing, of the following
            conditions, or the written waiver thereof by Seller.


            
            (a)          
            Representations, Warranties and Covenants.
            The representations and warranties of Buyer and SWAT contained in this Agreement shall
            be true and correct in all material respects on and as of the Closing Date with the
            same force and effect as though made on and as of the Closing Date. Buyer and SWAT
            shall have performed and complied in all material respects with all covenants and
            agreements required by this Agreement to be performed or complied with by Buyer and
            SWAT on or prior to the Closing Date.


            
            (b)          
            No Injunction. No injunction or restraining
            order shall be in effect which forbids or enjoins the consummation of the transactions
            contemplated by this Agreement, no proceedings for such purpose shall be pending, and
            no federal, state, local or foreign statute, rule


             


             

            

        

        
        

        
            


            or
            regulation shall have been enacted which prohibits, restricts or delays the
            consummation of the transactions contemplated hereby.


            
            (c)          
            Approvals. All material governmental and
            third party approvals, consents, permits or waivers necessary for the consummation of
            the transactions contemplated by this Agreement shall have been obtained.


            
            (d)          
            Material Adverse Effect. No change having,
            individually or in the aggregate, a Material Adverse Effect on the Buyer’s
            Business since December 31, 2006 shall have occurred.


            
            (e)          
            Deliveries. Buyer shall have delivered to
            Seller executed copies of the following documents: (a) Assignment and Assumption
            Agreement; (b) Royalty Agreement, (c) License Agreement, (d) Facilities Agreement, (e)
            Registration Rights Agreement, (f) Consulting Agreement and (g) Opinion of
            Buyer’s Counsel, and such other documents as Seller or its counsel may reasonably
            request to evidence the transactions contemplated hereby.


            
            7.2         
            Obligation of Buyer to Close. The
            obligation of Buyer to close the transactions contemplated hereby shall be subject to
            the fulfillment and satisfaction, prior to or at the Closing, of the following
            conditions, or the written waiver thereof by Buyer:


            
            (a)          
            Representations, Warranties and Covenants.
            The representations and warranties of Seller contained in this Agreement shall be true
            and correct in all material respects on and as of the Closing Date with the same force
            and effect as though made on and as of the Closing Date. Seller shall have performed
            and complied in all material respects with all covenants and agreements required by
            this Agreement to be performed or complied with by Seller on or prior to the Closing
            Date.


            
            (b)          
            No Injunction. No injunction or restraining
            order shall be in effect which forbids or enjoins the consummation of the transactions
            contemplated by this Agreement, no proceedings for such purpose shall be pending, and
            no federal, state, local or foreign statute, rule or regulation shall have been enacted
            which prohibits, restricts or delays such consummation.


            
            (c)          
            Approvals. All board of directors, material
            governmental and third party approvals, consents, permits or waivers necessary for the
            consummation of the transactions contemplated by this Agreement or deemed necessary by
            Buyer in its sole discretion shall have been obtained.


            
            (d)          
            Material Adverse Effect. No change having,
            individually or in the aggregate, a Material Adverse Effect on the Defined Business or
            the Assets since December 31, 2006 shall have occurred.


            
            (e)          
            Due Diligence. Buyer shall be satisfied
            with the results of its legal, accounting, tax, business, Proprietary Rights,
            regulatory, personnel and environmental due diligence investigations in its sole
            discretion.


            
            (f)          
            Liens. All Encumbrances on the Assets shall
            have been released.


             


             

            

        

        
        

        
            


            
            (g)          
            Audited Financial Statements. Seller shall
            deliver to Buyer audited balance sheets and statements of income, operations and cash
            flows for the fiscal years ended December 31, 2005 and December 31, 2006 (and any
            required interim periods) in accordance with Buyer’s disclosure requirements
            under Form 8-K of the Exchange Act and in form and substance reasonably satisfactory to
            Buyer.


            
            (h)          
            Deliveries. Seller shall have delivered to
            Buyer executed copies of the following documents: (a) Assignment and Assumption
            Agreement; (b) Bill of Sale; (c) Royalty Agreement, (d) License Agreement, (e)
            Facilities Agreement, (f) Registration Rights Agreement, (g) Seller Key Management
            Non-Compete Agreements, (h) Consulting Agreement and (i) Opinion of Seller’s
            Counsel, and such other documents as Seller or its counsel may reasonably request to
            evidence the transactions contemplated hereby.


            
            Article VIII INDEMNIFICATION


            
            8.1        
            Indemnification.


            
            (a)          
            By Buyer. Buyer and SWAT, jointly and
            severally, shall indemnify, defend, and hold harmless Seller, and its manager, members,
            employees, Affiliates and agents, at all times from and after the Closing Date, against
            and in respect of Loss arising from: (i) any breach of any of the representations or
            warranties made by Buyer and SWAT in this Agreement (without regard to any materiality
            qualification contained in any such representation or warranty); and (ii) any breach of
            the covenants and agreements made by Buyer and SWAT in this Agreement or any of the
            Buyer Disclosure Schedules or Exhibits hereto delivered by Buyer in connection with the
            Closing.


            
            (b)          
            (i) Buyer and SWAT, jointly and severally, shall also indemnify, defend
            and hold harmless Seller, and its manager, members, employees, Affiliates and agents,
            at all times from and after the Closing Date, against and in respect of Losses arising
            from any claim or action by PTI regarding (A) Buyer’s purchase of the Assets from
            Seller, (B) the Product’s infringement upon any patent, copyright, trade secret,
            trademark, mask work right or other proprietary right of PTI; and (C) Seller’s
            production of projectiles for FN Herstal, S.A. and their infringement upon any patent,
            copyright, trade secret, trademark, mask work right or other right of PTI.


            
            (ii) Notwithstanding the foregoing, in the event that PTI prevails on
            the merits in litigation against Seller regarding Seller’s production of
            projectiles for FN Herstal, S.A. and their infringement upon any patent, copyright,
            trade secret, trademark, mask work right or other right of PTI; then in that event,
            Seller and not Buyer or SWAT shall be solely responsible for any damage awards payable
            to PTI in connection with the FN Herstal projectiles.


            
            (c)          
            By Seller. Seller shall indemnify and hold
            harmless Buyer, SWAT and their respective officers, employees, Affiliates and agents,
            at all times from and after the Closing Date, against and in respect of Losses arising
            from or relating to: (i) any breach of any of the representations or warranties made by
            Seller in this Agreement (without regard to any materiality qualification contained in
            any such representation or warranty); (ii) any breach of the covenants and agreements
            made by Seller in this Agreement or any of the Disclosure Schedules or
            Exhibits


             


             

            

        

        
        

        
            


            
            hereto delivered by Seller in connection with the Closing;
            (iii) except as set forth in Section 8.1(b), the operation of the
            Seller’s Business or the ownership of the Asset prior to the Closing Date; and
            (iv) any Excluded Assets and Liabilities.


            
            8.2          
            Limitations of Indemnity. Notwithstanding
            the foregoing, (a) no amounts shall be payable under Sections 8.1(a), 8.1(b) or 8.1(c)
            of this Agreement unless and until the aggregate amount otherwise payable in the
            absence of this clause exceeds $50,000, in which event all such amounts in excess of
            such $50,000 shall be due and payable, (b) neither Buyer, on the one hand, nor Seller
            or SWAT, collectively and on the other hand, shall be liable for payments of
            indemnification under Sections 8.1(a), 8.1(b) or 8.1(c) in an aggregate amount greater
            than $1,000,000, and (c) no claim for indemnification under Sections 8.1(a) or 8.1(c)
            shall first be asserted later than 12 months after the Closing Date; provided, however,
            that, notwithstanding anything contained herein to the contrary, the limitations on the
            indemnification obligations of the parties hereto contained in this Section 8.2 shall
            not apply with respect to Losses arising under (i) fraud or fraud in the inducement,
            (ii) the intentional breach of any representation, warranty, covenant or agreement
            contained herein or (iii) any breach of the representations, warranties and covenants
            contained in Section 8.1(b)(ii) (damage awards payable by Seller to PTI).


            
            8.3          
            Indemnification Procedures - Third Party
            Claims.


            
            (a)          
            The rights and obligations of a party claiming a right of
            indemnification hereunder (each an
            “Indemnitee”) from a
            party to this Agreement (each an
            “Indemnitor”) in any way
            relating to a third party claim shall be governed by the following provisions of this
            Section 8.3:


            
            (i)           
            The Indemnitee shall give prompt written notice to the Indemnitor of the
            commencement of any claim, action suit or proceeding, or any threat thereof, or any
            state of facts which Indemnitee determines will give rise to a claim by the Indemnitee
            against the Indemnitor based on the indemnity agreements contained in this Agreement
            setting forth, in reasonable detail, the nature and basis of the claim and the amount
            thereof, to the extent known, and any other relevant information in the possession of
            the Indemnitee (a “Notice of
            Claim”). The Notice of Claim shall be accompanied by
            any relevant documents in the possession of the Indemnitee relating to the claim (such
            as copies of any summons, complaint or pleading which may have been served and, or any
            written demand or document evidencing the same). No failure to give a Notice of Claim
            shall affect, limit or reduce the indemnification obligations of an Indemnitor
            hereunder, except to the extent such failure actually prejudices such
            Indemnitor’s ability successfully to defend the claim, action, suit or proceeding
            giving rise to the indemnification claim.


            
            (ii)          
            In the event that an Indemnitee furnishes an Indemnitor with a Notice of
            Claim, then upon the written acknowledgment by the Indemnitor given to the Indemnitee
            within 30 days of receipt of the Notice of Claim, stating that the Indemnitor is
            undertaking and will prosecute the defense of the claim under such indemnity agreements
            and confirming that as between the Indemnitor and the Indemnitee, the claim covered by
            the Notice of Claim is subject to this Article VIII and that the Indemnitor will be
            able to pay the full amount of potential liability in connection with any such claim
            (including, without limitation, any action,


             


             

            

        

        
        

        
            


            
            suit or proceeding and all proceedings on appeal or other review which
            counsel for the Indemnitee may reasonably consider appropriate) (an
            “Indemnification
            Acknowledgment”), then the claim covered by the Notice
            of Claim may be defended by the Indemnitor, at the sole cost and expense of the
            Indemnitor; provided, however, that the Indemnitee is authorized to file any motion,
            answer or other pleading that may be reasonably necessary or appropriate to protect its
            interests during such 30-day period. The delivery of an Indemnification Acknowledgment
            shall not preclude Indemnitor’s subsequent right to deny indemnification and
            Indemnitor’s right to reimbursement of all costs of any nature incurred, if it is
            ultimately determined that such claim was not indemnifiable by Indemnitor. However, in
            the event the Indemnitor does not furnish an Indemnification Acknowledgment to the
            Indemnitee or does not offer reasonable assurances to the Indemnitee as to
            Indemnitor’s financial capacity to satisfy any final judgment or settlement, the
            Indemnitee may, upon written notice to the Indemnitor, assume the defense (with legal
            counsel chosen by the Indemnitee) and dispose of the claim, at the sole cost and
            expense of the Indemnitor. Notwithstanding receipt of an Indemnification
            Acknowledgment, the Indemnitee shall have the right to employ its own counsel in
            respect of any such claim, action, suit or proceeding, but the fees and expenses of
            such counsel shall be at the Indemnitee’s own cost and expense, unless (A) the
            employment of such counsel and the payment of such fees and expenses shall have been
            specifically authorized by the Indemnitor in connection with the defense of such claim,
            action, suit or proceeding, or (B) the Indemnitee shall have reasonably concluded based
            upon a written opinion of counsel that there may be specific defenses available to the
            Indemnitee which are different from or in addition to those available to the Indemnitor
            in which case the costs and expenses incurred by the Indemnitee shall be borne by the
            Indemnitor.


            
            (iii)        
            The Indemnitee or the Indemnitor, as the case may be, who is controlling
            the defense of the claim, action, suit or proceeding, shall keep the other fully
            informed of such claim, action, suit or proceeding at all stages thereof, whether or
            not such party is represented by counsel. The parties hereto agree to render to each
            other such assistance as they may reasonably require of each other in order to ensure
            the proper and adequate defense of any such claim, action, suit or proceeding. Subject
            to the Indemnitor furnishing the Indemnitee with an Indemnification Acknowledgment in
            accordance with Section 8.3(a)(ii), the Indemnitee shall cooperate with the Indemnitor
            and provide such assistance, at the sole cost and expense of the Indemnitor, as the
            Indemnitor may reasonably request in connection with the defense of any such claim,
            action, suit or proceeding, including, but not limited to, providing the Indemnitor
            with access to and use of all relevant corporate records and making available its
            officers and employees for depositions, pre-trial discovery and as witnesses at trial,
            if required. In requesting any such cooperation, the Indemnitor shall have due regard
            for, and attempt to not be disruptive of, the business and day-to-day operations of the
            Indemnitee and shall follow the requests of the Indemnitee regarding any documents or
            instruments which the Indemnitee believes should be given confidential
            treatment.


            
            (b)          
            The Indemnitor shall not make or enter into any settlement of any claim,
            action, suit or proceeding which Indemnitor has undertaken to defend, without the
            Indemnitee’s prior written consent (which consent shall not be unreasonably
            withheld or delayed)), unless there is no obligation, directly or indirectly, on the
            part of the Indemnitee to contribute to any portion of the payment for any of the
            Losses, the Indemnitee receives a general and unconditional release with respect to the
            claim (in form, substance and scope reasonably acceptable to the Indemnitee), there is
            no finding or admission of any violation of law by, or


             


             

            

        

        
        

        
            


            
            effect on any other claim that may be made against the Indemnitee and,
            in the reasonable judgment of the Indemnitee, the relief granted in connection
            therewith is not likely to have a Material Adverse Effect on the Indemnitee or the
            Indemnitee’s reputation or prospects.


            
            (c)          
            Any claim for indemnification that may be made under more than one
            subsection under Section 8.1 may be made under the subsection that the claiming
            party may elect in its sole discretion, notwithstanding that such claim may be made
            under more than one subsection.


            
                	
                             

                        	
                            
                            8.4

                        	
                            
                            Indemnification Procedures - Other Claims,
                            Indemnification Generally.

                        


            


            
            (a)          
            A claim for indemnification for any matter not relating to a Third Party
            Claim may be asserted by giving reasonable notice directly by the Indemnitee to the
            Indemnitor. The Indemnitee shall afford the Indemnitor access to all relevant corporate
            records and other information in its possession relating thereto.


            
            (b)          
            If any a party becomes obligated to indemnify another party with respect
            to any claim for indemnification hereunder and the amount of liability with respect
            thereto shall have been finally determined in accordance with this Article VIII, the
            Indemnitor shall pay such amount to the Indemnitee in immediately available funds
            within ten days following written demand by the Indemnitee. The Indemnitor shall not be
            obligated to pay any amount under this Article VIII until such final
            determination.


            
            8.5          
            Exclusive Remedy. The provisions for
            indemnification set forth in this Article VIII are the exclusive remedies of
            Seller, Buyer and SWAT arising out of or in connection with this Agreement, and shall
            be in lieu of any rights under contract, tort, equity or otherwise (other than claims
            based on actual fraud or intentional breach of this Agreement).


            
            Article IX MISCELLANEOUS


            
            9.1          
            Termination. Anything herein to the
            contrary notwithstanding, this Agreement may be terminated at any time prior to the
            Closing Date (a) by mutual written consent of Seller and Buyer, (b) by Seller or Buyer
            if for any reason the Closing shall not have occurred on or before 14 days following
            Buyer’s receipt of the audited financial statements required to be delivered by
            Seller pursuant to Section 7.2(g), (c) by Buyer in the event it is not satisfied with
            the results of its due diligence investigations, in its sole discretion, or (d) by
            Seller or Buyer in the event that a condition to the terminating party’s
            obligations to close the transactions contemplated by this Agreement shall become
            incapable of satisfaction; provided, however, that no party shall be entitled to
            terminate this Agreement in the event that the failure of the Closing to occur or any
            condition to Closing to be satisfied shall be attributable to such party’s
            willful breach of this Agreement.


            
            9.2          
            Entire Agreement. This Agreement and the
            Disclosure Schedules and Exhibits delivered in connection herewith constitute the
            entire agreement of the parties with respect to the subject matter hereof, and
            supersedes all other agreements between the parties. The representations, warranties,
            covenants and agreements set forth in this Agreement and in any of the Disclosure
            Schedules or Exhibits delivered pursuant hereto constitute all the representations,
            warranties, covenants and agreements of the parties hereto and upon which the parties
            have


             


             

            

        

        
        

        
            


            
            relied, and except as specifically provided herein, no change,
            modification, amendment, addition or termination of this Agreement or any part thereof
            shall be valid unless in writing and signed by or on behalf of the party to be charged
            therewith.


            
            9.3          
            Notices. Any and all notices or other
            communications or deliveries required or permitted to be given or made pursuant to any
            of the provisions of this Agreement shall be deemed to have been duly given or made for
            all purposes if (i) hand delivered, (ii) sent by a nationally recognized overnight
            courier for next business day delivery or (iii) sent by telephone facsimile
            transmission (with prompt oral confirmation of receipt) as follows:


            
            If to Seller:


            
             


            
            Perfect Circle Projectiles, LLC


            
            28101 Ballard Drive, Unit C


            
            Lake Forest, Illinois 60045


            
            Attention: Gary E. Gibson


            
            Fax No.: (847) 367-8980


            
             


            
            with a copy to:


            
             


            
            Shadle & Associates, Ltd.


            
            1019 W. Wise Road, Suite 200


            
            Schaumburg, Illinois 60193


            
            Attention: Ronald E. Shadle


            
            Fax No.: (847) 891-3176


            
             


            
            If to Buyer or SWAT:


            
             


            
            PCP Acquisition, Inc. / Security With Advanced Technology,
            Inc.


            
            10855 Dover Street, Suite 1100


            
            Westminster, Colorado 80021


            
            Attention: Scott Sutton


            
            Fax No.: (303) 439-0414


            
             


            
            with a copy to:


            
             


            
            Brownstein Hyatt & Farber, P.C.


            
            410 Seventeenth Street, 22nd Floor


            
            Denver, Colorado 80202


            
            Attention: Adam J. Agron


            
            Fax No.: (303) 223-1111


             


            or at
            such other address as any party may specify by notice given to the other party in
            accordance with this Section 9.3. The date of giving of any such notice shall be the
            date of hand delivery, the business day sent by telephone facsimile, and the day after
            delivery to the overnight courier service.


             


             

            

        

        
        

        
            


            


            
            9.4          
            Waivers and Amendments. This Agreement may
            be amended, superseded, canceled, renewed or extended and the terms hereof may be
            waived only by a written instrument signed by the parties or, in the case of a waiver,
            by the party waiving compliance.


            
            9.5          
            Counterparts. This Agreement may be
            executed by the parties hereto in separate counterparts, each of which when so executed
            and delivered shall be an original, but all such counterparts shall together constitute
            one and the same instrument.


            
            9.6          
            Choice of Law. This Agreement shall be
            governed by, and construed in accordance with the internal laws of the State of
            Delaware, without reference to the choice of law or conflicts of law principles
            thereof.


            
            9.7          
            WAIVER OF JURY TRIAL. EACH PARTY HEREBY
            IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
            (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
            AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
            AND ENFORCEMENT HEREOF.


            
            9.8          
            Assignment. This Agreement shall be binding
            upon, and inure to the benefit of, the parties and their respective heirs,
            administrators, successors and permitted assigns. Neither this Agreement nor any rights
            or obligations hereunder shall be assignable by any party hereto; provided, however,
            that Buyer may assign this Agreement and its rights hereunder to an Affiliate of Buyer
            prior to the Closing and to any successor to Buyer’s Business (whether by sale,
            merger, operation of law or otherwise) following the Closing.


            
            9.9          
            Negotiated Agreement. The parties hereby
            acknowledge that the terms and language of this Agreement were the result of
            negotiations among the parties and, as a result, there shall be no presumption that any
            ambiguities in this Agreement shall be resolved against any particular party. Any
            controversy over construction of this Agreement shall be decided without regard to
            events of authorship or negotiation.


            
            9.10       
            Further Assurances. From time to time after
            the Closing, each party will timely execute and deliver to the other such instruments
            of sale, transfer, conveyance, assignment and delivery, and such consents, assurances,
            powers of attorney and other instruments as may be reasonably requested by such party
            or its counsel in order to vest in Seller all right, title and interest in SWAT Common
            Stock and otherwise in order to carry out the purpose and intent of this
            Agreement.


            
            9.11       
            Expenses. Each of Seller, Buyer and SWAT
            shall bear all of its own expenses in connection with the execution, delivery and
            performance of this Agreement and the transactions contemplated hereby, including
            without limitation all fees and expenses of its agents, brokers, representatives,
            counsel and accountants; provided, however, that (a) Buyer shall pay the costs
            associated with the completion of the audit of Seller’s financial statements and
            (b) if the transactions contemplated by this Agreement are not consummated, the costs
            associated with the completion of the audit of Seller’s financial statements
            shall be split equally between Seller and Buyer.


             


             

            

        

        
        

        
            


            
            9.12      Arbitration
            .


            
            (a)          
            All disputes and controversies of every kind and nature between the
            parties hereto arising out of or in connection with this Agreement or any of the
            related agreements including but not limited to those attached hereto as Exhibits, as
            to the existence, construction, validity, interpretation or meaning, performance,
            non-performance, enforcement, operation, breach, continuance, or termination thereof
            shall be submitted to arbitration pursuant to the following procedure:


            
             


            
                	
                            
                             

                        	
                            
                            (i)

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

                        


            


            
             


            
                	
                            
                             

                        	
                            
                            (ii)

                        	
                            
                            Each party shall bear its own arbitration costs and
                            expenses.

                        


            


            
             


            
                	
                            
                             

                        	
                            
                            (iii)

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

                        


            


            
             


            
                	
                            
                             

                        	
                            
                            (iv)

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

                        


            


            
             


            
                	
                            
                            b)

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

                        


            


            
             


            
                	
                            
                            c)

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

                        


            


            
             


            
                	
                            
                            d)

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

                        


            


            
             


            * * *
            * * * * *


             


             


             

            

        

        
        

        
            


            
            IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
            of the date first above written.


             


            
            SELLER:


            
             


            
            PERFECT CIRCLE PROJECTILES, LLC


            
             


            
                	
                            
                             

                        	
                            
                            By:

                        	
                            
                            /s/ Gary E. Gibson    

                        


            


            
            Gary E. Gibson


            
            Manager


            
             


            
            EXECUTIVE:


            
             


            
             


            
/s/ Gary E. Gibson    
Gary E. Gibson 


            
             


            
            BUYER:


            
             


            
            PCP ACQUISITION, INC.


            
             


            
                	
                            
                             

                        	
                            
                            By:

                        	
                            
/s/ Jeffrey G. McGonegal      

                        


            


            
            Jeffrey G. McGonegal


            
            Chief Financial Officer


            
             


            
            SWAT:


            
             


            
            SECURITY WITH ADVANCED TECHNOLOGY, INC.


            
             


            
                	
                            
                             

                        	
                            
                            By:

                        	
                            
/s/ Jeffrey G. McGonegal     

                        


            


            
            Jeffrey G. McGonegal


            
            Chief Financial Officer


            
             


             


             

            

        

        
        

        
            


            
            SCHEDULE A


             


            BUYER
            DISCLOSURE SCHEDULES


             


            
                	
                            
                             

                        	
                            
                            1.

                        	
                            
                            Section 4.3 – Capitalization of SWAT:

                        


            


            
             


            
                	
                            
                            Preferred stock, no par value, 5,000,000 shares
                            authorized;

                        
	
                            
                            2,709,151 Series A shares issued and outstanding
                            (Includes Convertible Notes)

                        
	
                            
                            Common stock, no par value, 30,000,000 shares
                            authorized;

                        
	
                            
                            5,582,820 shares issued and outstanding

                        
	
                            
                            Common stock purchase options and warrants
                            outstanding from Employee  Options  and  Rights


                                         
                            from  Offerings for a total of approximately 13,456,000 shares
                            issuable at an

                                         
                            average  of  $6.38.

                        
	
                            
                                     

                        


            


            
             


            
                	
                            
                             

                        	
                            
                            2.

                        	
                            
                            Section 4.4 – Litigation – SWAT and its
                            subsidiaries are involved with the following litigation or threatened
                            litigation:

                        


            


            
                	
                            
                             

                        	
                            
                            a.

                        	
                            
                            PepperBall Technologies, Inc. has filed suit against
                            SWAT and its subsidiaries as is disclosed in SWAT’s public
                            filings with the Securities and Exchange Commission.

                        


            


            
                	
                            
                             

                        	
                            
                            b.

                        	
                            
                            In connection with certain ShiftWatch products purchased
                            from a Canadian manufacturer, SWAT experienced significant product
                            failures, a majority of which have been determined to be caused by the
                            manufacturer’s hardware issues. SWAT has sent demand letters to
                            the manufacturer for refunds of the purchase price paid and a credit
                            for all unpaid amounts, among other demands. The manufacturer has
                            responded with threats of suing for non-payment among other
                            demands.

                        


            


            
                	
                            
                             

                        	
                            
                            3.

                        	
                            
                            Section 4.6 –SWAT has determined and disclosed on
                            a Form 8-K, filed on June 29, 2007, that as a result of certain
                            adjustments made in connection with the year end audit, SWAT’s
                            Forms 10-QSB for the periods ended June 30, 2006 and September 30, 2006
                            will be revised to report the results on a consistent basis with the
                            amounts as finalized and previously reported for the year ended
                            December 31, 2006.

                        


            


             


             


             

            

        

        
        

        
            
                
                    

                


                
                SCHEDULE B


                
                 


                
                SELLER DISCLOSURE SCHEDULES


                
                 


                
                1.            
                Capitalization of Seller: Gary Gibson (80%); Roy Urban (5%); Ron
                Urban (5%); and Thomas G. Kotsiopoulos (10%).


                
                 


                
                2.            
                Contracts: Contract and outstanding purchase orders with PTI to
                manufacture goods.


                
                 


                
                3.            
                Litigation: Suit pending between PTI and SWAT including claims of
                patent infringement.


                
                 


                
                4.            
                Affiliate Interests: PC IP GROUP, LLC, an Affiliate of Seller, owns
                patents and rights related to the Defined Business (all of which patents and rights
                are being assigned to Buyer pursuant to the terms of the Assignment and Assumption
                Agreement). The members of PC IP GROUP, LLC are the same as those for the
                Seller.


                
                 


                
                 


                
                 


                
                 


                
                    

                

            

        

        
        

        
            


            
            SCHEDULE C


             


            
            SELLER FINANCIAL STATEMENTS


             


            See
            attached.


             


             


             

            

        

        
        

        
            
                
                    

                


                
                SCHEDULE D


                
                 


                
                ASSETS


                
                 


                
                Patents


                
                 


                
                    	
                                
                                US Patent

                            	
                                
                                5,254,379

                            	
                                
                                PC IP Group, LLC

                            


                


                
                    	
                                
                                US Patent

                            	
                                
                                5,639,526

                            	
                                
                                PC IP Group, LLC

                            


                


                
                 


                
                    	
                                
                                France

                            	
                                
                                0609298

                            	
                                
                                Perfect Circle Projectiles, LLC

                            


                


                
                    	
                                
                                Germany

                            	
                                
                                69212332.6

                            	
                                
                                Perfect Circle Projectiles, LLC

                            


                


                
                    	
                                
                                Great Britain

                            	
                                
                                0609298

                            	
                                
                                Perfect Circle Projectiles, LLC

                            


                


                
                    	
                                
                                Hong Kong

                            	
                                
                                1015867

                            	
                                
                                Perfect Circle Projectiles, LLC

                            


                


                
                    	
                                
                                Japan

                            	
                                
                                35-79065

                            	
                                
                                Perfect Circle Projectiles, LLC

                            


                


                
                 


                
                Defined Assets - Product Rights


                
                 


                
                Product Rights  


                
                 


                The
                product rights (“Products”) being acquired by SWAT shall include any
                “Spherical Projectile” filled with any substance on an exclusive basis
                intended for “Tactical Use” and on a non-exclusive basis intended for
                “Animal Deterrent Use”, each such use as defined below. Excluded in all
                cases shall be any spherical projectiles, whose rights PCP has granted to FNH and
                as those rights are defined in such FNH agreement, for so long as such right
                remains committed. Such FNH excluded rights are spherical projectiles that
                are both; of a size between .65
                to .70 inches in diameter (caliber) and with a weight in excess of 6
                grams.


                
                 


                
                SWAT’s end users are expected to include, but are not limited
                to, government and municipal organizations, military, public or private law
                enforcement, patrol and/or guard services, private citizens and individual security
                personnel. SWAT’s territory rights to market products are worldwide, for such
                users.


                
                 


                
                Non-competing Products


                
                 


                If
                PCP intends to sell any spherical projectile into any new market (not listed
                below), PCP will notify SWAT of its intentions as early as possible, but prior to
                entering into any agreements to distribute, or any direct offers to sell to the end
                users. At the time of notification, PCP and SWAT will establish if the new product
                falls under the description of SWAT’s product rights. If the two parties can
                not come to an agreement as to whether the new projectile and or application should
                fall under the product rights that SWAT has purchased, then the dispute shall go to
                binding arbitration for a final decision. If it is decided that it does not fall
                under SWAT’s existing product rights, then SWAT will have an opportunity to
                make the case that the new application and/or projectile should be added to
                SWAT’s product rights. PCP shall make the final decision if this new product
                should be distributed by SWAT. Should PCP decide that it wishes SWAT to distribute
                this new application and/or projectile, the details would be negotiated on a
                case-by-case basis.


                
                 


                
                 


                
                    

                

            

        

        
        

        
            


            


            Spherical
            projectiles currently manufactured or under development by PCP that do not compete with
            the product rights being transferred to SWAT include, but are not limited to, the
            following:


             


            
                	
                            
                             

                        	
                            
                            1.

                        	
                            
                            Movie and TV special effects projectiles.

                        


            


            
                	
                            
                             

                        	
                            
                            2.

                        	
                            
                            Rodent and insect control.

                        


            


            
                	
                            
                             

                        	
                            
                            3.

                        	
                            
                            Fire retardants.

                        


            


            
                	
                            
                             

                        	
                            
                            4.

                        	
                            
                            Educational displays.

                        


            


            
                	
                            
                             

                        	
                            
                            5.

                        	
                            
                            Animal marking.

                        


            


            
                	
                            
                             

                        	
                            
                            6.

                        	
                            
                            Animal contraceptives.

                        


            


            
                	
                            
                             

                        	
                            
                            7.

                        	
                            
                            Animal repellent (except as provided for
                            above).

                        


            


            
                	
                            
                             

                        	
                            
                            8.

                        	
                            
                            Animal scents.

                        


            


            
                	
                            
                             

                        	
                            
                            9.

                        	
                            
                            Tree marking, both covert and overt.

                        


            


            
                	
                            
                             

                        	
                            
                            10.

                        	
                            
                            Recreational paintball applications.

                        


            


             


            
            Definitions


             


            
            “Tactical Use” means an attempt to change, influence or
            monitor the behavior of a hostile or potentially hostile person or group. To discourage
            a hostile or potentially hostile person or group from starting, or continuing
            undesirable activities. An attempt to restrict access of a person or group to or from
            an area. Included would be training and preparations for conflict, actual conflicts, or
            deterrent engagements.


            
             


            
            “Animal Deterrent Use” means self-protection by a user of
            the product against an animal or as protection of an animal against another animal by a
            pet-owner.


            
             


            
            “Spherical Projectile” means a projectile substantially in
            the shape of a sphere.


            
             


            
            Equipment Being Acquired


             


            Equipment
            and accessories being acquired by SWAT are generally described and pictured below. No
            additional equipment or assets being acquired, except as specifically listed
            herein.


            
             


             


             

            

        

        
        

        
            


            


            
            

            


             


            Two
            highly customized Bantom injection molding machines SN# M1056 and M1057.


             


            
            

            


             


            One fully
            automated machine that fills and seals the spherical powder filled projectiles,
            including all accessories, components and spare parts specifically for this
            machine.


             


             


            
            Note: This list of Equipment specifically
            does not include all air compression systems, chillers and other components that are
            used by and shared with other equipment.


             


             


             

            

        

        
        

        
            


            
            SCHEDULE E


             


            
            ALLOCATION OF PURCHASE PRICE


             


             


             


            
                	
                            
                             

                        	
                            
                            A. Proceeds allocated to equipment and
                            accessories:

                        	
                            
                            $65,000

                        


            


            
                	
                            
                             

                        	
                            
                            B. Proceeds allocated to patents and intangible
                            assets:

                        	
                            
                            Balance of Purchase Price