Document:

ex10-1.htm

 

    
      

    

    Exhibit
10.1

     

    
      

       

      

      
        

        

      

       

       

      SHARE
PURCHASE AGREEMENT

       

      

      among

       

      

      Geoi
Limited

      a private
limited company of England and Wales;

       

      Versar,
Inc.

      a
Delaware corporation;

       

      Professional
Protection Systems Limited

      a private
limited company of England and Wales;

       

      the
Sellers;

      

      and

       

      the
Neil Bruce Copp
Representative

       

      

      

       

      

       

      

       

      ___________________________

       

      Dated as
of January 5, 2010

      ___________________________

       

      
 

      
        

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBITS
AND SCHEDULES

       

      Exhibit
A

       

      Exhibit
B

       

      Exhibit
C

       

      Exhibit
D

       

      Exhibit
E

       

      Exhibit
F

       

      Schedule
6.4

       

      Schedule
8.2(v)

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          	
                  ARTICLE
      1.

                	
                  DESCRIPTION
      OF TRANSACTION

                	
                  1

                
	
                  1.1

                	
                  Purchase
      and Sale of the Shares

                	
                  1

                
	
                  1.2

                	
                  Closing

                	
                  2

                
	
                  1.3

                	
                  At
      Closing the Purchaser shall:

                	
                  2

                
	
                  1.4

                	
                  Estimated
      Balance Sheet and Estimated Closing Indebtedness

                	
                  2

                
	
                  1.5

                	
                  Delivery
      of Seller Notes

                	
                  3

                
	
                  1.6

                	
                  Delivery
      of Versar Common Stock

                	
                  3

                
	
                  1.7

                	
                  Contingent
      Consideration

                	
                  3

                
	
                  1.8

                	
                  Purchase
      Price Adjustment

                	
                  4

                
	
                  1.9

                	
                  Exchange
      Rate Adjustment

                	
                  6

                
	
                  ARTICLE
      2.

                	
                  WARRANTIES
      OF THE COMPANY

                	
                  7

                
	
                  2.1

                	
                  Organization;
      Standing and Power; Subsidiaries

                	
                  7

                
	
                  2.2

                	
                  Company
      Constituent Documents; Records

                	
                  8

                
	
                  2.3

                	
                  Capitalization,
      Etc

                	
                  8

                
	
                  2.4

                	
                  Authority;
      Binding Nature of Agreement

                	
                  9

                
	
                  2.5

                	
                  Non-Contravention;
      Consents

                	
                  10

                
	
                  2.6

                	
                  Financial
      Statements

                	
                  11

                
	
                  2.7

                	
                  Absence
      of Certain Changes

                	
                  12

                
	
                  2.8

                	
                  Title
      to and Sufficiency of Assets

                	
                  14

                
	
                  2.9

                	
                  Bank
      Accounts; Accounts Receivable; Inventory

                	
                  14

                
	
                  2.10

                	
                  Equipment

                	
                  15

                
	
                  2.11

                	
                  Real
      Property

                	
                  15

                
	
                  2.12

                	
                  Intellectual
      Property

                	
                  16

                
	
                  2.13

                	
                  Contracts

                	
                  17

                
	
                  2.14

                	
                  Customers;
      Accounts Payable

                	
                  20

                
	
                  2.15

                	
                  Liabilities

                	
                  21

                
	
                  2.16

                	
                  Data
      Protection

                	
                  21

                
	
                  2.17

                	
                  Compliance
      with Legal Requirements; Governmental Authorizations

                	
                  21

                
	
                  2.18

                	
                  Tax
      Matters

                	
                  22

                
	
                  2.19

                	
                  Benefit
      Plans; Employees and Agents

                	
                  28

                
	
                  2.20

                	
                  Environmental
      Matters

                	
                  30

                
	
                  2.21

                	
                  Defective
      Products and Services

                	
                  31

                

           

          
            
              
              

            

            
              -i-

              
                

              

            

            
              
              

            

          

          	
                  2.22

                	
                  Insurance

                	
                  31

                
	
                  2.23

                	
                  Related
      Party Transactions

                	
                  32

                
	
                  2.24

                	
                  Legal
      Proceedings; Orders

                	
                  32

                
	
                  2.25

                	
                  Insolvency

                	
                  33

                
	
                  2.26

                	
                  Finder’s
      Fee; Transaction Costs

                	
                  33

                
	
                  2.27

                	
                  Shareholder
      Agreements

                	
                  34

                
	
                  2.28

                	
                  Certain
      Payments

                	
                  34

                
	
                  ARTICLE
      3.

                	
                  WARRANTIES
      OF THE SELLERS AND THE NEIL BRUCE COPP SHAREHOLDER

                	
                  34

                
	
                  3.1

                	
                  Authority;
      Binding Nature of Agreement

                	
                  34

                
	
                  3.2

                	
                  Ownership
      and Transfer of the Shares

                	
                  35

                
	
                  3.3

                	
                  Non-Contravention;
      Consents

                	
                  35

                
	
                  3.4

                	
                  No
      Other Agreements

                	
                  36

                
	
                  3.5

                	
                  Litigation

                	
                  36

                
	
                  3.6

                	
                  Finder’s
      Fees

                	
                  36

                
	
                  3.7

                	
                  Securities
      Representations

                	
                  36

                
	
                  ARTICLE
      4.

                	
                  WARRANTIES
      OF PURCHASER AND VERSAR

                	
                  37

                
	
                  4.1

                	
                  Corporate
      Existence and Power

                	
                  37

                
	
                  4.2

                	
                  Authority;
      Binding Nature of Agreement

                	
                  37

                
	
                  4.3

                	
                  Non-Contravention;
      Consents

                	
                  37

                
	
                  4.4

                	
                  Compliance
      with Legal Requirements

                	
                  38

                
	
                  ARTICLE
      5.

                	
                  38

                	 
      
	
                  5.1

                	
                  Guarantee
      of Purchaser Obligations

                	
                  38

                
	
                  ARTICLE
      6.

                	
                  COVENANTS
      OF THE PARTIES

                	
                  39

                
	
                  6.1

                	
                  Confidentiality;
      Non-competition

                	
                  39

                
	
                  6.2

                	
                  Confidentiality

                	
                  40

                
	
                  6.3

                	
                  Public
      Disclosure

                	
                  40

                
	
                  6.4

                	
                  Tax
      Covenant

                	
                  40

                
	
                  ARTICLE
      7.

                	
                  CLOSING
      DELIVERIES

                	
                  41

                
	
                  7.1

                	
                  Conditions
      to Obligations of Purchaser

                	
                  41

                
	
                  7.2

                	
                  Satisfaction
      of Conditions

                	
                  42

                
	
                  ARTICLE
      8.

                	
                  RECOURSE
      FOR DAMAGES

                	
                  42

                
	
                  8.1

                	
                  Survival

                	
                  42

                

           

          
            
              
              

            

            
              -ii-

              
                

              

            

            
              
              

            

          

          	
                  8.2

                	
                  Recovery
      by Purchaser Parties

                	
                  43

                
	
                  8.3

                	
                  Recovery
      by Seller and the Neil Bruce Copp Shareholder

                	
                  44

                
	
                  8.4

                	
                  Basket;
      Limitation on Liability

                	
                  44

                
	
                  8.5

                	
                  Offset
      Against Seller Notes and Contingent Consideration

                	
                  45

                
	
                  8.6

                	
                  Procedure
      for Recovery of Damages

                	
                  46

                
	
                  8.7

                	
                  Third
      Party Claims

                	
                  47

                
	
                  8.8

                	
                  Characterization
      of Recovery

                	
                  49

                
	
                  8.9

                	
                  No
      Contribution

                	
                  49

                
	
                  8.10

                	
                  Obligations
      Regarding Mitigation

                	
                  49

                
	
                  8.11

                	
                  Limitations

                	
                  49

                
	
                  ARTICLE
      9.

                	
                  MISCELLANEOUS
      PROVISIONS

                	
                  50

                
	
                  9.1

                	
                  Further
      Assurances

                	
                  50

                
	
                  9.2

                	
                  Fees
      and Expenses

                	
                  50

                
	
                  9.3

                	
                  Amendment

                	
                  51

                
	
                  9.4

                	
                  Waiver;
      Remedies Cumulative

                	
                  51

                
	
                  9.5

                	
                  Entire
      Agreement

                	
                  51

                
	
                  9.6

                	
                  Execution
      of Agreement; Counterparts; Electronic Signatures

                	
                  51

                
	
                  9.7

                	
                  Governing
      Law and Submission to Jurisdiction; Appointment of Process
      Agent

                	
                  52

                
	
                  9.8

                	
                  Assignment
      and Successors

                	
                  52

                
	
                  9.9

                	
                  Parties
      in Interest

                	
                  52

                
	
                  9.10

                	
                  Notices

                	
                  52

                
	
                  9.11

                	
                  Construction;
      Usage

                	
                  54

                
	
                  9.12

                	
                  Enforcement
      of Agreement

                	
                  54

                
	
                  9.13

                	
                  Severability

                	
                  55

                

        

      

       

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

      SHARE
PURCHASE AGREEMENT

       

      This
Share
Purchase Agreement (this “Agreement”) is made
and entered into as of January 5, 2010 (the “Agreement Date”), by
and among Versar, Inc., a Delaware corporation (“Versar”) and GEOI 1
Limited, a private limited company of England and Wales with company number
07114583 whose registered office is at Protection House, Sherbourne Drive,
Tilbrook, Milton Keynes MK7 8HX (“Purchaser”),
Professional Protection Systems, Ltd., a private limited company of England and
Wales (the “Company”), Stephen
Nobbs (“Nobbs”), Mark
Whitcher (“Whitcher”), Stephen
Kimbell, Peter Holden, Timothy Clark, Jonathan Hambleton, Richard Brown, Simon
Cuthbertson, Oliver Wright and Ingrid Sladden (each a “Seller” and together
the “Sellers”)
and Richard Martin Frimston, Stuart Leaman and Richard Benson in their capacity
as executors of the estate of Neil Bruce Copp, being a deceased shareholder (the
“Neil Bruce Copp
Shareholder”), each of whom is an existing shareholder of the
Company.  Capitalized terms used in this Agreement and not otherwise
defined shall have the meanings set forth in Exhibit A
hereto.

       

      RECITALS

       

      WHEREAS, the Sellers and the
Neil Bruce Copp Shareholder collectively own all of the issued ordinary shares
of GBP£0.01 each in the capital of the Company (the “Shares”);

       

      WHEREAS, in reliance on and
subject to the terms, conditions, warranties, covenants and agreements herein
contained, Purchaser desires to purchase and Sellers and the Neil Bruce Copp
Shareholder desire to sell the Shares to Purchaser;

       

      NOW, THEREFORE, in
consideration of the foregoing and the respective covenants, agreements and
warranties set forth herein, the parties to this Agreement, intending to be
legally bound, agree as follows:

       

      AGREEMENT

       

      ARTICLE
1. 

       

      DESCRIPTION
OF TRANSACTION

      1.1   Purchase and Sale of the
Shares.

       

      (a)   On the
terms and subject to the conditions set forth in this Agreement, at the Closing,
each Seller and the Neil Bruce Copp Shareholder shall, severally and separately
and in respect of themselves only, sell, assign, transfer, convey and deliver to
the Purchaser, free and clear of all Encumbrances, and in the case of each
Seller  (excluding the Neil Bruce Copp Shareholder) severally and
separately and in respect of themselves only, with full title guarantee, and in
the case of the Neil Bruce Copp Shareholder only, with limited title guarantee
(as the Neil Bruce Copp Shareholder is the legal owner but not the beneficial
owner of the NBC Shares), and the Purchaser shall purchase from each Seller and
the Neil Bruce Copp Shareholder, all the Shares owned by such Seller or the Neil
Bruce Copp Shareholder, as the case may be, in consideration of payment of
(collectively, the “Purchase
Price”):

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      (i)     US$5.1 million,
subject to the Holdback and the Exchange Rate Adjustment, payable in cash at
Closing in accordance with Article 1.3 and allocated among the Sellers and the
Neil Bruce Copp Shareholder as set forth in Exhibit
B;

       

      (ii)    amounts to the
Sellers and the Neil Bruce Copp Shareholder, on the dates and under the terms
set forth in the Seller Notes (as defined in Article 1.5,
allocated among the Sellers and the Neil Bruce Copp Shareholders as set forth in
Exhibit B,
and

       

      (iii)   amounts of Contingent
Consideration to Whitcher and Nobbs on the dates and under the terms set forth
in this Agreement, 45.45% of which will be paid to Whitcher and 54.55% of which
will be paid to Nobbs, and

       

      (iv)   the issuance to Whitcher of
shares of Versar common stock with an aggregate value of US$240,000 in
accordance with Article 1.6 below.

       

      1.2   Closing.  Subject
to the terms and conditions of this Agreement, the purchase and sale of the
Shares and the consummation of the other transactions contemplated by this
Agreement (the “Closing”) shall take
place at the offices of EMW Picton Howell, Seebeck House, 1 Seebeck Place
Knowlhill, Milton Keynes, MK5 8FR, on the date hereof (“Closing
Date”).

       

      1.3   At
Closing the Purchaser shall:

       

      (a)   make a
CHAPS transfer of US$4,800,000 in respect of that part of the Purchase Price to
be paid to the Sellers and the Neil Bruce Copp Shareholder at Closing to EMW’s
Client Account;

       

      (b)   make a
CHAPS transfer of US$300,000 in respect of that part of the Purchase Price
referred to in Article 1.8(b) to the Joint Account; and

       

      (c)   deliver
to EMW the Joint Account Instruction Letter duly signed on behalf of the
Purchaser and the Purchaser’s Solicitors.

       

      1.4   Estimated Balance Sheet and
Estimated Closing Indebtedness.  The Company has delivered to
the Purchaser (a) an unaudited balance sheet of the Company, which unaudited
balance sheet reflects balances as of November 30, 2009 (the “Estimated Balance
Sheet”), (b) an itemized schedule of the amount of Closing Indebtedness
(separately listing each item of Indebtedness and the related creditor), (c) an
itemized schedule of the Transaction Costs paid or owed by the Company
(separately listing each Transaction Cost and the related creditor), in each
case as of the Closing Date (the “Schedule of Company
Transaction Costs”), and (d) a certificate of the Company, executed by
Nobbs (the chairman of the Company) and Whitcher (the Managing Director of the
Company), certifying that each of the Estimated Balance Sheet, Closing
Indebtedness and Schedule of Company Transaction Costs were prepared by the
Company in good faith in accordance with this Agreement, and, in the case of the
Estimated Balance Sheet, (save as for the Estimated Balance Sheet does not
contain a tax provision for the financial year to date and other year end
adjustments which are made in the Company Year-End Financial Statements) the
Estimated Balance Sheet has been prepared in accordance with the Company’s
accounting policies and generally accepted accounting practice in the United
Kingdom (“GAAP”) applied in a
manner consistent with the preparation of the Company Year-End Financial
Statements, except as otherwise specifically contemplated by this Agreement (the
“Closing
Certificate”).

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      1.5   Delivery of Seller
Notes.  At the Closing, the Purchaser shall deliver to each
Seller and the Neil Bruce Copp Shareholder a loan note in substantially the form
attached hereto as Exhibit C (the “Seller
Notes”).  The principal amount of each Seller Note is set forth
on Exhibit B
hereto.  The Seller Notes shall be issued by the Purchaser and
guaranteed by Versar as described with particularity in Article 5
hereof.  The principal amount of each Seller Note and any accrued
interest earned thereon shall be subject to reduction to satisfy any setoff
rights of the Purchaser and Versar in accordance with Article 8 of this
Agreement.

       

      1.6   Versar Common
Stock.

       

      (a)   At the
Closing, the Purchaser shall cause to be issued to Whitcher a stock certificate
for shares of Versar common stock with an aggregate value of US$240,000 (“Consideration Shares
Certificate”).  The number of shares the Consideration Shares
Certificate shall represent shall be derived by dividing US$240,000 by the
closing price of Versar’s common stock on the NYSE Amex on the last trading day
prior to Closing, rounded up to the nearest whole share (if
necessary).  The Consideration Shares Certificate shall bear a
restrictive legend indicating that shares are “restricted securities” as defined
by Rule 144 promulgated pursuant to the U.S. Securities Act of 1933, as amended
(the “Securities
Act”). At
Closing, Purchaser shall procure that a copy of the Consideration Shares
Certificate be emailed to Whitcher and send by overnight mail the original
Consideration Shares Certificate to Whitcher.  Whitcher acknowledges
that such shares are restricted securities and may not be sold, transferred or
otherwise disposed of except pursuant to an effective registration statement
filed under the Securities Act or pursuant to an exemption from registration as
set forth in the legend affixed to such certificate.

       

      (b)   Versar
hereby covenants to Whitcher that, subject to Whitcher’s compliance with the
conditions of Rule 144 promulgated pursuant to the Securities Act, Versar shall
provide Whitcher with such reasonable assistance that is required to remove the
restrictive legend from the Consideration Shares Certificate so as to allow
public resale of such shares, including, but not limited to, providing Whitcher
or any nominated transfer agent with their consent (not be unreasonably withheld
or delayed) and/or an opinion letter from Versar’s legal counsel that the
restrictive legend be removed.

       

      1.7   Contingent
Consideration.

       

      (a)   Entitlement to Contingent
Consideration. Whitcher and Nobbs shall be entitled to receive additional
earn-out consideration equal to 50% of the amount by which earnings before
interests, taxes, depreciation or amortization of the Company (“EBITDA”) for the
period commencing January 1, 2010 and concluding January 1, 2011
(“Earn-Out Period”) exceeds £449,893.  45.45% of the earn-out
consideration shall be paid to Whitcher and 54.55% of the earn-out consideration
shall be paid to Nobbs in Pounds Sterling in accordance with this Article 1.7,
in each case, subject to the rights of setoff pursuant to Article 8 of this
Agreement (the “Contingent
Consideration”).

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (b)   Ring Fence
Provisions

       

      (i)   Subject
to applicable law and regulations and to the provisions of this Agreement, the
Purchaser Parties shall use all reasonable endeavours to procure that during the
Earn-Out Period:

       

      (1)   the
business of the Company will be operated in the ordinary and normal course and
Nobbs, Whitcher and Purchaser hereby agree that unless Purchaser receives prior
written approval from Nobbs and Whitcher (such approval not to be unreasonably
delayed) the aggregate administrative expenses and selling and distribution
costs (as such costs have been recorded and categorized historically by the
Company in the profit and loss account of the Company in its fiscal year-end
financial statements) to be incurred by the Company (“Company Costs”) shall
not exceed the following maximum costs at the specified Turnover levels set out
below (“Maximum
Costs”):

       

      
        	
                Turnover

                During the Earn-Out Period

              	
                 

                Maximum Costs

              
	
                GBP
      £2.1 million or less

              	
                46.2%
      of Turnover

              
	
                Greater
      than GBP £2.1 million

              	
                GBP
      £970,200 plus 10% of the amount by which Turnover exceeds GBP £2.1
      million

              

      

       

       and
if the aggregate Company Costs incurred by the Company are in excess of the
Maximum Costs then any such excess as to which prior written approval was not
received (on a GBP £1 for GBP £1 basis) (“Surplus Costs”) shall
be added back to the EBITDA figure for the purposes of calculating the
Contingent Consideration in Article 1.7 (c) below.

       

      (2)   the whole
or substantially the whole of any business and assets of the Company shall not
be transferred PROVIDED that this Article 1.7 (b) (2) shall not restrict the
Purchaser from transferring the issued share capital of the Company;
and

       

      (3)   no action
will be taken the effect of which is artificially to reduce the amount payable
in respect of any Contingent Consideration.

       

      (c)   Calculation of Contingent
Consideration.

       

      (i)   At the
end of each quarterly period during the Earn-Out Period, Purchaser and Whitcher
and Nobbs agree to consult regarding the calculation of the Contingent
Consideration for such quarterly period to facilitate the preparation of the
Earn-Out Statement and final calculation of the Contingent Consideration
pursuant to this Article 1.7.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (ii)   Within
sixty (60) calendar days following the end of the Earn-Out Period, Purchaser
shall prepare or cause to be prepared and delivered to Whitcher and Nobbs, a
statement (the “Earn-Out Statement”)
setting forth their estimation of the Contingent Consideration for the Earn-Out
Period, together with supporting documentation, and a calculation of the
Contingent Consideration payable to Whitcher and Nobbs, if any.

       

      (iii)   In the
event that Whitcher and Nobbs object to Purchaser’s calculation of
Contingent Consideration set forth in such Earn-Out Statement, then within ten
(10) Business Days after their receipt of the Earn-Out Statement (the “Response Period”),
they shall deliver to Purchaser a written notice (an “Objection Notice”)
describing in reasonable detail their objections to Purchaser’s calculation of
such Contingent Consideration.  If Whitcher and Nobbs do not deliver
an Objection Notice to Purchaser during the Response Period, then Purchaser’s
calculation of the amounts set forth in the Earn-Out Statement shall be final,
binding and conclusive on Purchaser and Whitcher and Nobbs and any payments owed
shall be made within ten (10) calendar days thereafter, subject to the
rights of setoff pursuant to Article 8 of this
Agreement.  If Whitcher and Nobbs deliver an Objection Notice
accompanied by a statement setting forth a calculation of Contingent
Consideration to Purchaser during the Response Period, and if Whitcher and Nobbs
and Purchaser are unable to agree upon the calculation of the amounts set forth
in the Earn-Out Statement within thirty (30) calendar days after such Objection
Notice is delivered to Purchaser, the dispute shall be finally settled by Ernst
& Young LLP (the “Accounting
Referee”).  The determination by the Accounting Referee of the
disputed calculation of Contingent Consideration, if any, shall, in the absence
of fraud or manifest error, be final, conclusive and binding on Purchaser and
Whitcher and Nobbs and any payments due by the Purchaser shall be made within
ten (10) calendar days after the date of the Accounting Referee’s
determination. The fees and other expenses of such Accounting Referee shall be
paid by the party whose determination of Contingent Consideration payable most
diverges from the determination of the Accounting Referee.

       

      1.8   Purchase Price
Adjustment.

       

      (a)   Prior to
Closing the Sellers and the Neil Bruce Copp Shareholder shall deliver to
Purchasers’ Solicitors and EMW, the Joint Account Instruction Letter duly signed
by the Sellers and the Neil Bruce Copp Shareholder.

       

      (b)   Subject
to the Sellers, the Neil Bruce Copp and the Purchaser delivering to the
Purchaser’s Solicitors and EMW the Joint Account Instruction Letter, of the cash
purchase price to be paid at Closing pursuant to Article 1.1(a)(i),
US$300,000 shall be placed in the Joint Account (with all fees of such account
to be paid by Sellers and the Neil Bruce Copp Shareholder, collectively, and all
interest accrued on such account to be for the account of Sellers and the Neil
Bruce Copp Shareholder, respectively), as a hold-back (the “Hold-Back”) to secure
any payment obligation of Sellers and the Neil Bruce Copp Shareholder to the
Purchaser upon completion of the Post-Closing Purchase Price Adjustment,
pursuant to Article
1.8(c) below.  EMW and the Purchaser’s Solicitors shall not be
required to take any action with respect to the Joint Account except on the
written instructions of the Parties.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (c)   The
Purchase Price shall be subject to a post-closing adjustment (the “Post-Closing Purchase Price
Adjustment”), which shall be settled as soon as agreed or determined in
accordance with Article 1.8(d) below, based on (1) target Cash Book Balance
of the Company as of December 31, 2009 at 11:59 p.m. Greenwich Mean Time (the
“Closing Adjustment
Date”) of GBP£450,000 (“Target Cash”), (2) a
Warranty Reserve as of the Closing Adjustment Date of GBP£417,120 (the “Target Warranty
Reserve”) and (c) the Net Book Value as at the Closing Adjustment Date
being not lower than £1,754,465 (“Target Net Book Value”).

       

      (i)   Sellers
and the Neil Bruce Copp Shareholder shall make a payment to Purchaser (which
shall be satisfied (i) through retention by Purchaser of all or a portion of the
Hold-Back amount to the extent such Hold-Back is sufficient, (ii) through the
reduction of the outstanding principal amount (and accrued but unpaid interest
thereon) of the Seller Notes (such reduction to be applied to the outstanding
principal amount and accrued but unpaid interest thereon which is next due for
payment), (using the same exchange rate applied at Closing) pro rata to the
proportions which the principal amounts of the respective Seller Notes bear to
one another, to the extent the Hold-Back amount is not sufficient and (iii) only
by a payment of cash if and to the extent the Hold Back amount and the Seller
Notes are insufficient, in which event such payment shall be due from and made
by the Sellers and the Neil Bruce Copp Shareholder pro rata to the proportions
in which the Sellers and the Neil Bruce Copp Shareholder are entitled to the
cash consideration as set forth on Exhibit B), in an
aggregate amount (on a GBP£1 for GBP£1 basis) by which the determined Cash Book
Balance at the Closing Adjustment Date (as determined in accordance with Article
1.8(e)) is less than Target Cash (subject to Article 1.8(d)), the Warranty
Reserve at the Closing Adjustment Date (as determined in accordance with Article
1.8(e)) exceeds the Target Warranty Reserve and the Net Book Value at the
Closing Adjustment Date is less than the Target Net Book Value; provided that
when calculating the Net Book Value at the Closing Adjustment Date any amounts
by which the Cash Book Balance at the Closing Adjustment Date is less than
Target Cash and the Warranty Reserve at the Closing Adjustment Date exceeds the
Target Warranty Reserve then such amounts shall not be taken into account for
purposes of determining the Net Book Value at the Closing Adjustment
Date.

       

      (ii)   Purchaser
shall make an additional cash payment to Sellers and the Neil Bruce Copp
Shareholder in an aggregate amount (on a GBP£1 for GBP£1 basis) by which the
determined Cash Book Balance at the Closing Adjustment Date (as determined in
accordance with Article 1.8(e)) exceeds Target Cash (subject to Article 1.8(d)),
the determined Warranty Reserve at the Closing Adjustment Date is less than the
Target Warranty Reserve (as determined in accordance with Article 1.8(e)) and
the determined Net Book Value at the Closing Adjustment Date (as determined in
accordance with Article 1.8(e)) exceeds the Target Net Book Value; provided that
when calculating the Net Book Value at the Closing Adjustment Date any amounts
by which the Cash Book Balance at the Closing Adjustment Date is greater than
Target Cash and the Warranty Reserve at the Closing Adjustment Date is less than
the Target Warranty Reserve then such amounts shall not be taken into account
for purposes of determining the Net Book Value at the Closing Adjustment Date.
Any portion of the Hold-Back not used to satisfy the Sellers’ and the Neil Bruce
Copp Shareholder’s obligations for the Post-Closing Purchase Price Adjustment
shall be due to and paid to the Sellers and the Neil Bruce Copp Shareholder
within 2 calendar days of the completion of the adjustment process and shall be
allocated between the Sellers and the Neil Bruce Copp Shareholder in the
proportions in which they are entitled to the cash consideration as set forth on
Exhibit
B.  Any Post-Closing Purchase Price Adjustment payment shall be
paid in U.S. Dollars using the same exchange rate applied to the amount paid by
the Purchaser to the Sellers and the Neil Bruce Copp Shareholder at
Closing.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (d)    Notwithstanding
anything in this Article 1.8, the Sellers and the Neil Bruce Copp Shareholder
and the Purchaser hereby agree that if any part of the sum of £120,054.88 (being
a payment to be received by the Company from UK Atomic Energy Authority Dounreay
as reflected on an outstanding invoice which is included as Part 1.8(d) of the
Company Disclosure Schedule) (the “Sum”) is not received by the Company prior to
the Closing Adjustment Date then that part of  the Sum not yet
received by the Company (“Outstanding Sum”)
shall be deemed to have been received by the Company (on a GBP £1 for GBP £1
basis) for the purposes of calculating the Cash Book Balance at the Closing
Adjustment Date if such Outstanding Sum is received within fifteen (15) calendar
days following the Closing Date.  For the avoidance of doubt, in the
event that the Outstanding Sum is not received by the Company within fifteen
(15) calendar days following the Closing Date, then the Outstanding Sum shall
not be included in the Cash Book Balance for the purposes of calculating the
Post-Closing Purchase Price Adjustment.

       

      (e)    Within
sixty (60) calendar days following the Closing, Purchaser shall prepare or cause
to be prepared (using existing personnel of the Company, being personnel of the
Company immediately prior to the Closing, as needed by Purchaser) and delivered
to Sellers and the Neil Bruce Copp Shareholder the calculation of the
Post-Closing Purchase Price Adjustment, together with supporting documentation
(the “Adjustment
Statement”).  Subject to Article 1.8 (d), the
Adjustment Statement shall be prepared in accordance with the Company’s
accounting policies and GAAP applied in a manner consistent with the preparation
of the Company Year-End Financial Statements and in accordance with the
accounting policies set out in Exhibit D and the Adjustment Statement shall be
set out in the form provided at Exhibit E (“Pro Forma Adjustment
Statement”). For the avoidance of doubt in the event that there is a
conflict between the accounting policies then the accounting polices set out in
Exhibit D shall take precedence over the Company’s accounting policies and GAAP
and to the extent that the Company’s accounting polices are not in contravention
of GAAP then the Company’s accounting polices shall take precedence over GAAP.
In calculating the Adjustment Statement the Purchaser shall not take into
account any professional costs, fees, disbursements and expenses (plus any
applicable VAT) and Tax accrued or owing by the Company relating to entering
into the lease amendment required pursuant to Article 7.3 of this
Agreement.

       

      (f)   In the
event that any of the Sellers and/or the Neil Bruce Copp Shareholder objects to
the Purchaser’s calculation of the Post-Closing Purchase Price Adjustment, then
within ten (10) Business Days after their receipt of the Adjustment Statement
(the “Adjustment
Response Period”) they shall deliver to Purchaser a written notice (an
“Adjustment Objection
Notice”) describing in reasonable detail their objections to Purchaser’s
calculation of such Post-Closing Purchase Price Adjustment.  If no
such Adjustment Objection Notice is delivered to Purchaser during the Adjustment
Response Period, then Purchaser’s calculation of the Post-Closing Purchase Price
Adjustment shall be final, binding and conclusive on Purchaser, Sellers and the
Neil Bruce Copp Shareholder and all payments due by any party shall be made
within ten (10) calendar days thereafter.  If Sellers and the
Neil Bruce Copp Shareholder deliver an Adjustment Objection Notice accompanied
by a statement setting forth a calculation of the Post-Closing Purchase Price
Adjustment to Purchaser during the Adjustment Response Period and if Sellers and
Purchaser are unable to agree upon the calculation of the Post-Closing Purchase
Price Adjustment within thirty (30) calendar days after such Adjustment
Objection Notice is delivered to Purchaser, the dispute will be finally settled
by the Accounting Referee.  The determination of the Accounting
Referee, in the absence of fraud or manifest error, of the disputed calculation
of the Post-Closing Purchase Price Adjustment, if any, shall be final,
conclusive and binding on all parties hereto and all payments due by any party
shall be made within ten (10) calendar days after the date of the Accounting
Referee’s determination.  The fees and other expenses of such
Accounting Referee shall be paid by the party whose determination of the
Post-Closing Purchase Price Adjustment most diverges from the determination of
the Accounting Referee.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      1.9   Exchange Rate
Adjustment.  The amount payable at Closing in U.S. dollars,
together with the Hold-Back, shall be fixed at US$5.1 million in the aggregate
unless the exchange rate of U.S. dollars for Pounds Sterling exceeds 1.61 U.S.
Dollars per Pound Sterling (rounded to the nearest US$ cent) or is less than
1.57 U.S. Dollars per Pound Sterling (rounded to the nearest US$ cent) as of
5:30pm Greenwich Mean Time on the last Business Day prior to the Closing (as
reported by www.oanda.com).  In either such case, the amount payable
at Closing shall be adjusted (the “Exchange Rate
Adjustment”) by multiplying GBP£3,207,547.1 by an exchange rate equal to
the average of the daily average ‘Interbank’ currency exchange rates for U.S.
Dollars being converted into Pounds Sterling at the close of business on each of
the forty (40) Business Days prior to the Closing Date as reported by www.oanda.com.

       

      ARTICLE
2.

       

      WARRANTIES
OF THE COMPANY

       

      Except as
set forth on the Company Disclosure Schedule, which shall qualify the warranties
of the Company, Whitcher and Nobbs set forth in this Article 2, the
Company (severally and in respect of itself only), Whitcher and Nobbs (jointly
and severally) warrant, in accordance with Article 8, as of the
date of the Closing Date, to and for the benefit of the Purchaser Parties, as
follows:

       

      2.1   Organization; Standing and
Power; Subsidiaries.

       

      (a)    The
Company is a private limited company duly incorporated and validly existing
under the laws of England and Wales, has all necessary power and authority to
(i) own, lease and use its properties and assets in the manner in which its
properties and assets are currently owned, leased and used; (ii) carry on
its business in the manner in which its business is currently being conducted
and (iii) perform its obligations under all Company Contracts.

       

      (b)    The
Company has not conducted any business under or otherwise used, for any purpose
or in any jurisdiction, any fictitious name, assumed name, trade name or other
name.

       

      (c)    The
Company is not, and within the past two (2) years ending on the
Closing Date has not been, required to be qualified, authorized, registered or
licensed to do business as a foreign corporation in any jurisdiction other than
the jurisdictions identified in Part 2.1(c) of
the Company Disclosure Schedule.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (d)    Part 2.1(d) of
the Company Disclosure Schedule accurately sets forth (i) the names of the
members of the board of directors of the Company (the “Board”),
(ii) the names of the members of each committee of the Board (if any) and
(iii) the names and titles of the employees of the Company.

       

      (e)    The
Company has one Subsidiary, Personal Protection Systems.  The Company
does not own any controlling interest in any other Entity and the Company has
not since January 1, 2005 owned, beneficially or otherwise, any shares or
other securities of, or any direct or indirect equity or other financial
interest in, any other Entity.  The Company has not agreed nor is it
obligated to make any future investment in or capital contribution to any
Entity.  The Company has not since January 1, 2005 guaranteed nor
is it responsible or liable for any obligation of any of the Entities in which
it owns or has owned any equity or other financial interest.  Since
January 1, 2005, neither the Company nor any of its members has approved,
or commenced any proceeding or made any election contemplating, the dissolution
or liquidation of the business or affairs of the Company.  Personal
Protection Systems is a private limited company duly incorporated and validly
existing under the laws of England and Wales.  Personal Protection
Systems is not, and within the past two years ending on the Closing Date has not
been, required to be qualified, authorized, registered or licensed to do
business as a foreign corporation in any jurisdiction.  The Company
owns all outstanding equity of Personal Protection Systems and Personal
Protection Systems is not trading.  Personal Protection Systems does
not conduct any business, has no assets and does not have any direct or indirect
debts, liabilities, claims, losses, damages, deficiencies, costs, expenses or
obligations (whether absolute, accrued, known or unknown, contingent or
otherwise) of any nature whatsoever and has not conducted any business within
the past five years ending on the Closing Date.

       

      2.2   Company Constituent
Documents; Records.  The Company has
delivered to Purchaser accurate and complete copies of (a) the Certificate of
Incorporation of the Company, Memorandum of Association of the Company and the
Articles of Association of the Company, in each case including all amendments
thereto; (b) its statutory registers and (c) the minutes and other
records of the meetings and other proceedings (including any actions taken by
written consent or otherwise without a meeting) of its members in their capacity
as such, the Board and all committees of the Board, in each case since January
8, 2003 (the items described in (a), (b) and (c) above, collectively, the “Company Constituent
Documents”).  The Company has delivered to Purchaser accurate
and complete copies of (a) the Certificate of Incorporation, Memorandum of
Association and the Articles of Association of Personal Protection Systems, in
each case including all amendments thereto; (b) its statutory registers; (c) any
minutes and other records of meetings and other proceedings (including any
actions taken by consent or otherwise without a meeting) of its member in their
capacity as such, its board of directors and all committees of its board of
directors, in each case since January 8, 2003.  There have been
no formal meetings of or actions taken in lieu of a formal meeting by the
Company’s or Personal Protection Systems’ members, the Board or any committee of
the Board or the Board of Directors of Personal Protection Systems or any
committee thereof since January 8, 2003 that are not fully reflected in the
Company Constituent Documents or the constituent documents of Personal
Protection Systems described above.  There has not been any violation
of the Company Constituent Documents, and the Company has not taken any action
that is inconsistent in any material respect with the Company Constituent
Documents.  The books of account, statutory registers (including the
register of members and register of directors and register of charges) and other
records of the Company are accurate, up-to-date and complete in all material
respects, and have been maintained materially in accordance with applicable
Legal Requirements.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      2.3   Capitalization,
Etc.

       

      (a)     The
authorized share capital of the Company consists of GBP£3,361.86 divided into
136,186 A Shares, 100,000 B Shares and 100,000 Deferred Shares, of GBP£0.01 each
(the “Company Ordinary
Shares”), of which 130,000 A Shares and 70,000 B Shares have been issued
as of the date of this Agreement.  None of the issued Company Ordinary
Shares are being held by the Company.  All the issued Company Ordinary
Shares have been duly authorized and validly issued, are fully paid and were not
issued in violation of any preemptive or other similar rights.  All
issued Company Ordinary Shares have been issued in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and
(ii) all requirements set forth in the Company Constituent Documents and
applicable Contracts. The record and beneficial owners of the Shares are set
forth on Part
2.3(a) of the Company Disclosure Schedule.

       

      (b)    As of
Closing, there are no issued warrants, options or other rights whether
exercisable now or at a future date and whether contingent or not to purchase or
convert any security into Company Ordinary Shares.

       

      (c)    Except as
set forth above in this Article 2.3, as of
the date of this Agreement, there is no (i) issued share capital or other
voting securities of the Company; (ii) outstanding securities, instruments
or obligations that are or may become convertible into or exchangeable or
exercisable for any share capital or other securities of the Company;
(iii) outstanding subscriptions, options, calls, warrants or rights
(whether or not currently exercisable) to acquire any share capital or other
securities of the Company; or (iv) commitments or agreements to which the
Company is a party or by which it is bound, obligating the Company to issue,
deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered,
sold, purchased, redeemed or acquired, any share capital or other securities of
the Company, or obligating the Company to enter into any such commitment or
agreement or grant or extend any subscription, option, warrant, call or right to
acquire any share capital of, or any securities that are convertible into or
exchangeable or exercisable for any share capital of, or other securities of the
Company (clauses (i) through (iv) of this Article 2.3(c) above,
collectively “Company
Rights”).  The Company has not issued any debt securities which
grant the holder thereof any right to vote on, or veto, any actions by the
Company (or which are convertible into, or exercisable or exchangeable for,
securities having the right to vote on, or veto, any actions by the
Company).

       

      (d)    Since
January 1, 2005, the Company has not repurchased, redeemed or otherwise
reacquired any share capital or other securities of the Company other than
pursuant to share purchase agreements or option agreements providing for the
repurchase of such securities at the original issuance price of such
securities.  All securities so reacquired by the Company were
reacquired in compliance with (i) the applicable provisions of the
Companies Act 1985 and all other applicable Legal Requirements, and
(ii) all requirements set forth in applicable subscription and
shareholders’ agreements and other applicable Contracts.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (e)    Since
January 1, 2005, the Company has not given any financial assistance in
contravention of Section 151 of the Companies Act 1985.

       

      2.4   Authority; Binding Nature of
Agreement. The Company has all
right, power and authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to take all other actions required to
be taken by it pursuant to the provisions hereof.  The execution,
delivery and performance of this Agreement to which it is a party and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of the Company, and no other action on the
part of the Company is necessary to authorize the execution, delivery and
performance by the Company of this Agreement and any Related Agreement to which
the Company is a party and to consummate the transactions contemplated hereby
and thereby.  This Agreement has been duly executed and delivered by
the Company.  This Agreement constitutes (assuming due and valid
authorization, execution and delivery hereof by the other parties hereto) the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be limited by any
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting creditors’ rights and remedies generally and by general principles of
equity, regardless of whether enforcement is sought in a proceeding at law or in
equity.

       

      2.5   Non-Contravention;
Consents.  Except as set forth in Part 2.5 of the
Company Disclosure Schedule, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not,
directly or indirectly (with or without notice or lapse of time):

       

      (a)    contravene,
conflict with or result in a violation of any of the terms, conditions or
provisions of the Company Constituent Documents;

       

      (b)    contravene,
conflict with or result in a violation of any Legal Requirement or any Order,
writ, injunction, judgment or decree to which the Company or any of the assets
owned, used or controlled by the Company is subject or, to the Knowledge of the
Company, give any Governmental Body or other Person the right to challenge any
of the transactions contemplated by this Agreement or any of the Related
Agreements or to exercise any remedy or obtain any relief under, any such Legal
Requirement or Order, writ, injunction, judgment or decree to which the Company
or any of the assets owned, used or controlled by the Company is
subject;

       

      (c)    contravene,
conflict with or result in a violation of any of the terms or requirements of
any Governmental Authorization that is held by the Company or that otherwise
relates to the business of the Company or to any of the assets owned, used or
controlled by the Company, including in such a manner as would, pursuant to the
terms of such Governmental Authorization, give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify such Governmental
Authorization;

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      (d)    contravene,
conflict with or result in a violation or breach of, or result in a default
under, any provision of any Material Contract to which the Company or any of the
assets owned, used or controlled by the Company is subject, or give any Person
the right to (i) declare a default or exercise any remedy under any such
Material Contract, (ii) accelerate the maturity or performance of any such
Material Contract or (iii) cancel, terminate or modify any such Material
Contract; or

       

      (e)    result in
the imposition or creation of any Encumbrance upon or with respect to any asset
owned or used by the Company.

       

      The
Company has complied with all applicable Legal Requirements and Orders in
connection with the execution, delivery and performance of this Agreement and
any Related Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby.  No filing with, notice
to or consent from any Person (other than the parties hereto) is required in
connection with the execution, delivery or performance of this Agreement or any
of the Related Agreements by the Company, the consummation of the transactions
contemplated hereby and thereby by the Company or the conduct of the business of
the Company in the same manner immediately after the Closing Date as before the
Closing Date.

       

      2.6   Financial
Statements.

       

      (a)    Part 2.6 of the
Company Disclosure Schedule includes the following financial statements
(collectively, the “Company Financial
Statements”):

       

      (i)   the
unaudited balance sheet of the Company as of June 30, 2009 and 2008 (the
“Balance
Sheet”) and the unaudited related profit and loss account of the Company
for the periods then ended together with the notes thereto (collectively, the
“Company Year-End
Financial Statements”);

       

      (ii)   the
unaudited balance sheets of the Company as of September 30, 2009 (the “Balance Sheet Date”)
and the related profit and loss account of the Company for the period from
July 1, 2009 through the Balance Sheet Date (the “Interim Financial
Statements”);

       

      (iii)    the
unaudited balance sheet of Personal Protection Systems as of June 30, 2009 and
2008 and the related unaudited profit and loss account of Personal Protection
Systems for the periods then ended together with the notes thereto
(collectively, the “Subsidiary Year-End
Financial Statements”); and

       

      (iv)   the
unaudited balance sheets of the Personal Protection Systems as of September 30,
2009 and the related profit and loss account of the Company for the period from
July 1, 2009 through the Balance Sheet Date (the “Subsidiary Interim Financial
Statements”);

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      (b)    The
Company Year-End Financial Statements give a true and fair view of the financial
position of the Company as of the dates thereof and the results of operations
and cash flows of the Company for the periods covered thereby.  The
Company Year-End Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered.  The
Company Year-End Financial Statements were prepared from the books and records
of the Company, which books and records have been maintained in accordance with
all applicable Legal Requirements and reflect all financial transactions of the
Company that are required to be reflected in accordance with
GAAP.  The Interim Financial Statements have been prepared with due
care and attention, on a basis consistent with the Company Year-End Financial
Statements, and give a fair and reasonable view of the assets and liabilities of
the Company as at their date and of the profits and losses for the period in
respect of which they have been prepared, subject to year-end
adjustments.

       

      (c)    The
Subsidiary Year-End Financial Statements give a true and fair view of the
financial position of Personal Protection Systems as of the dates thereof and
the results of operations and cash flows of Personal Protection Systems for the
periods covered thereby.  The Subsidiary Year-End Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered.  The Subsidiary Year-End Financial
Statements were prepared from the books and records of Personal Protection
Systems, which books and records have been maintained in accordance with all
applicable Legal Requirements and reflect all financial transactions of Personal
Protection Systems that are required to be reflected in accordance with
GAAP.  The Subsidiary Interim Financial Statements have been prepared
with due care and attention, on a basis consistent with the Subsidiary Year-End
Financial Statements, and give a fair and reasonable view of the assets and
liabilities of Personal Protection Systems as at their date and of the profits
and losses for the period in respect of which they have been prepared, subject
to year-end adjustments.

       

      (d)    The
Company maintains accurate books and records reflecting its assets and
liabilities and maintains proper and adequate internal accounting controls
(relative to the size of the Company) which provide assurance that
(i) transactions are executed with management’s authorization or pursuant
to authority delegated by management to Company employees;
(ii) transactions are recorded as necessary to permit preparation of the
financial statements of the Company in accordance with GAAP and to maintain
accountability for the Company’s assets; (iii) access to the Company’s
assets is permitted only in accordance with management’s authorization;
(iv) the reporting of the Company’s assets is compared with existing assets
at regular intervals and (v) accounts and other receivables and inventory
are recorded in good faith and reserves established against them based upon
actual prior experience and in accordance with GAAP, and proper procedures are
implemented for the collection thereof on a commercially reasonable basis. The
Company does not have any Knowledge of any significant deficiencies or material
weaknesses in the design or operation of the Company’s internal control
structure and procedures over financial reporting.  The Company has
heretofore made available to Purchaser a true, complete and correct copy of any
disclosure (or, if unwritten, a summary thereof) by any Representative of the
Company to the Company’s independent auditors relating to (A) any significant
deficiencies in the design or operation of internal controls that could
adversely affect the ability of the Company to record, process, summarize and
report financial data and any material weaknesses in internal controls and (B)
any fraud, whether or not material, that involves management or other Employees
who have a significant role in the internal control over financial reporting of
the Company.  The Company possesses books and records which contain
all financial and other information from the date of its incorporation through
the date hereof necessary for the preparation of financial
statements.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      (e)    Save as
for specific provisions that have been made pursuant to the terms of this
Agreement the accounting policies set forth on Exhibit D constitute the
accounting policies currently in use by the Company and do not in any respect
represent a change in accounting policies from those used by the Company in
preparing the Company Financial Statements.

       

      2.7   Absence of Certain
Changes. Except as set forth in
Part 2.7 of the
Company Disclosure Schedule, since the Balance Sheet Date, the Company has
conducted its business only in the ordinary course of business consistent with
past practice.  Except as set forth in Part 2.7 of the
Company Disclosure Schedule, since the Balance Sheet Date:

       

      (a)    there has
not been any Company Material Adverse Effect, and, to the Knowledge of the
Company, no event has occurred that will, or could reasonably be expected to,
have a Company Material Adverse Effect;

       

      (b)    the
Company has not (i) suffered any damage, destruction or loss, or any
interruption in the use of, any of its assets with a value in excess of
US$20,000 in the aggregate (whether or not covered by insurance) or
(ii) suffered any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or services required to conduct its
business;

       

      (c)    the
Company has not declared, accrued, set aside or paid any dividend or made any
other distribution in respect of any capital shares or other equity securities,
and has not repurchased, redeemed or otherwise reacquired any of its capital
shares or other securities;

       

      (d)    the
Company has not sold, issued or authorized the issuance of (i) any of its
capital shares or other securities or (ii) any Company Rights;

       

      (e)    there has
been no amendment to any of the Company Constituent Documents, and the Company
has not effected or been a party to any Acquisition Transaction,
recapitalization, reclassification of shares or similar
transaction;

       

      (f)    the
Company has not formed any Subsidiary or acquired any equity interest or other
interest in any other Entity;

       

      (g)   the
Company has not made any capital expenditure which, when added to all other
capital expenditures made on behalf of the Company since the Balance Sheet Date,
exceeds US$20,000;

       

      (h)    the
Company has not written off as uncollectible, or established any extraordinary
reserve with respect to, any billed or unbilled account receivable or other
indebtedness outside existing reserves;

       

      (i)   the
Company has not incurred any liabilities in excess of US$20,000 in the
aggregate, other than in the ordinary course of business consistent with past
practice, or failed to pay or discharge when due any liabilities of which the
failure to pay or discharge has caused or will cause any material damage or risk
of material loss to it or relating to any of its assets or
properties;

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      (j)   the
Company has not (i) acquired, leased or licensed any right or other asset
from any other Person, (ii) sold, assigned, transferred or otherwise
disposed of, or leased or licensed, any right or other asset to any other Person
or (iii) waived or relinquished any right, except, in each case, for (A)
immaterial rights or other immaterial assets acquired, leased, licensed or
disposed of, (B) non-exclusive licenses of Intellectual Property in connection
with sales of Company Products or services to customers and (C) sales of Company
Products, in each case in the ordinary course of business and consistent with
past practice;

       

      (k)    the
Company has not (i) loaned any sum of money to any Person (other than
pursuant to advances for ordinary and necessary business expenses made to
employees in the ordinary course of business consistent with past practice),
(ii) created, incurred, assumed or guaranteed any indebtedness for money
borrowed or (iii) mortgaged, pledged or otherwise permitted any of its
assets or properties to become subject to any Encumbrance, except for Permitted
Encumbrances made in the ordinary course of business consistent with past
practice;

       

      (l)   the
Company has not (i) made or suffered any amendment or termination of any
Contract to which it is a party or by which it is bound and under which it is
entitled to receive or obligated to pay US$20,000 or more in the aggregate or
(ii) cancelled, modified or waived any debts or claims in excess of
US$20,000 in the aggregate held by it, whether or not in the ordinary course of
business;

       

      (m)   the
Company has not (i) established, adopted or materially amended any employee
benefit plan, (ii) paid or committed to pay any bonus or made any
profit-sharing or similar payment to, or increased the amount of wages, salary
commissions, fringe benefits, pension or welfare benefits, severance benefits,
stock-based benefits or other compensation or remuneration payable to, any of
its current or former directors, consultants, officers or employees, or
(iii) hired any new director, consultant, officer or any other
employee;

       

      (n)    the
Company has not changed any of its methods of accounting or accounting practices
in any respect, except as may be required by GAAP;

       

      (o)    the
Company has not made any Tax election;

       

      (p)    the
Company has not threatened, commenced or settled any Legal
Proceeding;

       

      (q)    the
Company has not entered into any transaction involving US$20,000 or more other
than in the ordinary course of business consistent with past
practice;

       

      (r)   the
Company has not entered into, or agreed to enter into, any agreements granting
any Person a license to any Company Intellectual Property, other than
non-exclusive licenses of Intellectual Property in connection with sales of
Company Products or services to customers in the ordinary course of business and
consistent with past practice;

       

      (s)    the
Company has not terminated the employment of any Employees;

       

      
        
          
          

        

        
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      (t)   the
Company has not agreed to take, or committed to take, any of the actions
referred to in clauses (c) through (s) above.

       

      2.8   Title to and Sufficiency of
Assets.

       

      (a)    Except as
set forth in Part
2.8(a) of the Company Disclosure Schedule and save for any Real Property,
the Company is the sole legal and beneficial owner of all the assets and rights
that it purports to own, including, without limitation, all assets and rights
reflected in the Company’s books and records as being owned by the
Company.  All such assets and rights are owned by the Company free and
clear of any Encumbrances and there are no agreements or commitments to create
Encumbrances, and no person has claimed to be entitled to create such an
Encumbrance, except for (A) Permitted Encumbrances and (B) Encumbrances
specifically described in the notes to the Company Year-End Financial
Statements.

       

      (b)   The assets
of the Company constitute all the assets used in or necessary to carry on its
business as such business is being conducted as of immediately prior to the
Closing.

       

      (c)    Except
for this Agreement, the Company does not have any Contract, absolute or
contingent, (i) to effect any Acquisition Transaction or (ii) to sell
or otherwise transfer any assets of the Company, except for sales of Company
Products or services to be made in the ordinary course of business consistent
with past practice.

       

      2.9   Bank Accounts; Accounts
Receivable; Inventory.

       

      (a)    Part 2.9(a) of
the Company Disclosure Schedule provides accurate information with respect to
each account maintained by or for the benefit of the Company at any bank or
other financial institution, including the name of the bank or financial
institution, the account number, the balance as of the close of business on the
day before the Closing and the names of all individuals authorized to draw on or
make withdrawals from such accounts.

       

      (b)    Part 2.9(b) of
the Company Disclosure Schedule provides an accurate and complete breakdown and
aging of all billed and unbilled accounts receivable and other receivables of
the Company as of the Balance Sheet Date.  All existing accounts
receivable of the Company (including those accounts receivable that have not yet
been billed or that have not yet been collected and those accounts receivable
that have arisen since the Balance Sheet Date and have not yet been collected)
are (i) valid, genuine and subsisting obligations of customers of the Company,
arising from bona fide sales and deliveries of goods, performance of services or
other business transactions in the ordinary course of business and (ii) to the
Knowledge of the Company (without having made enquiries of third parties) are
fully collectible (except to the extent reserved against in the Company
Financial Statements, which such reserves have been determined based upon actual
prior experience and are consistent with GAAP, consistently applied) and are not
presently to the Knowledge of the Company, other than as set forth in Part 2.9(b) of the
Company Disclosure Schedule, subject to defences, set-offs or
counterclaims.

       

      (c)    Part 2.9(c) of the
Company Disclosure Schedule sets forth a true, correct and complete list of all
of the inventory of the Company.  All of the inventory of the Company
(i) was acquired for the operation of its business in the ordinary course
consistent with past practice, (ii) is of a quality and quantity usable or
saleable in the ordinary course of business (except as reserved against in the
Company Financial Statements), and (iii) is valued on the books and records of
the Company at the lower of cost or market value with the cost determined under
the first-in-first-out inventory valuation method consistent with past
practice.

       

      
        
          
          

        

        
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      2.10        
Equipment.  Part 2.10 of the
Company Disclosure Schedule sets forth a true, correct and complete list of all
equipment and other tangible assets owned by the Company having an original cost
in excess of US$10,000 and regularly or
customarily used by the Company in the operation of its business.  All
equipment and other tangible assets that are owned, leased or used by the
Company (i) are free of material defects and deficiencies and in good operating
condition and repair, subject to normal wear and tear and continued repair and
replacement in accordance with past practice, and (ii) comply in all material
respects with, and are being operated and otherwise used in material compliance
with, all applicable Legal Requirements.  During the past twelve (12)
months, there has not been any significant interruption of the operations of the
Company due to inadequate maintenance of such assets.

       

      2.11   
  Real
Property.  The Company does not own, nor has it ever owned, any
real property or any interest in any real property, except for the Protection
House Lease identified in Part 2.13(a)(viii)
of the Company Disclosure Schedule and no other real property is leased,
subleased or licensed by the Company (the “
Real
Property”).  No material damage or destruction has occurred
with respect to any of the Real Property for which the Company may be
liable.  The premises leased pursuant to the Protection House Lease
are supplied with utilities and other services necessary for the operation of
the premises.  All rights as lessee to the Real Property are legally
and beneficially vested in the Company and the Company is in sole and undisputed
occupation. 

       

      2.12     Intellectual
Property.

       

      (a)   Part 2.12(a) of the
Company Disclosure Schedule sets forth a complete and accurate list of all
Registered IP owned, in whole or in part, by, under an obligation to be assigned
to, or filed in the name of the Company.

       

      (b)   Part 2.12(b) of the
Company Disclosure Schedule sets forth all Intellectual Property (including
software programs and domain names) and Intellectual Property Rights (other than
Registered IP) owned, in whole or in part, by or under an obligation to be
assigned to the Company that are material to the conduct of its business as
presently being conducted.

       

      (c)   Part 2.12(c) of the
Company Disclosure Schedule sets forth all In-Licenses, other
than software that is generally commercially available for a cost of not more
than US$5,000 for a perpetual license for a single user or work station (or
US$25,000 in the aggregate for all users and work stations), and excluding “open
source” materials. 

       

      (d)    Part 2.12(d) of the
Company Disclosure Schedule sets forth all Out-Licenses, other than
non-exclusive licenses and related agreements of Company Products granted to end
user customers in the ordinary course of business pursuant to the standard form
of end user license agreement used by the Company.

       

      
        
          
          

        

        
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      (e)    Except as
set forth in Part
2.12(e) of the Company Disclosure Schedule, the Company exclusively
owns all Company Intellectual Property and all Company Intellectual Property is
free and clear of any Encumbrances other than Permitted Encumbrances and
nonexclusive licenses granted to end user customers in the ordinary course of
business.  The Intellectual Property and the Intellectual Property
Rights owned or used by the Company are not subject to any restriction or
limitation of any kind (including geographic restrictions or limitations) that
would materially adversely affect the right by the Company to use or exploit
thereof, or the right to manufacture, market, distribute, or sell any Company
Products currently being developed, offered, manufactured, distributed or sold
by the Company.

       

      (f)    The
Company owns or otherwise has sufficient rights to all Intellectual Property and
Intellectual Property Rights necessary to conduct its businesses as currently
conducted.

       

      (g)    The
Company does not jointly own any Intellectual Property or Intellectual Property
Rights with any of its directors, officers, employees, consultants or any other
Person pursuant to any non-disclosure, collaboration, license or other agreement
or otherwise.

       

      (h)    The
Registered IP owned by the Company (i) has not been adjudged invalid or
unenforceable, (ii) to the Knowledge of the Company, is valid, subsisting,
and enforceable, (iii) the Company has not received written notification of
any pending and, to the Knowledge of the Company, there is no threatened
proceeding in which the scope, validity, or enforceability of any Registered IP
is being or has been contested or challenged and (iv) is in compliance with
all applicable Legal Requirements, and all filings, payments, and other actions
required to be made or taken to maintain such Registered IP in full force and
effect have been made by the applicable deadline.

       

      (i)    The
Company has not, within the past five years ending on the Closing Date,
infringed, misappropriated, or otherwise violated the Intellectual Property
Rights of any third party that could reasonably be expected to result in a
Company Material Adverse Effect.  There are no pending or, to the
Knowledge of the Company, threatened infringement, misappropriation, or similar
claims or proceedings against the Company.  The Company has not
received any written notice or other written communication of any alleged
infringement or misappropriation of any third party’s Intellectual Property
Rights by the Company.

       

      (j)    To the
Knowledge of the Company, no person or entity is infringing, misappropriating,
or otherwise violating any Intellectual Property Rights owned by the
Company.

       

      (k)    The
Company has taken all reasonable steps to maintain the confidentiality of or
otherwise protect and enforce its rights in its confidential information, in
particular the trade secrets owned by the Company.

       

      (l)   Part
2.12(l) of the Company Disclosure Schedule lists any Company Software, or any
Company Product that contains any software, that is subject to an open source or
general public license, such as the GNU Public License, Lesser GNU Public
License, or Mozilla Public License that (i) would require, or would
condition the use or distribution of any Company Product or, the disclosure,
licensing, or distribution of any source code for any portion of such Company
Product, or (ii) would otherwise impose any material limitation,
restriction, or condition on the right or ability of the Company to use or
distribute any Company Product, a description of such Company Software and
Company Product and such open source or general public license applicable to
such Company Software or Company Product.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      (m)    All
Employees of the Company who have created or developed any Intellectual Property
or Intellectual Property Rights for the Company have signed written agreements
that are valid and enforceable, containing a confidentiality provision
protecting the Company’s confidential information and assigning to the Company
his or her Intellectual Property Rights developed within the scope of his or her
employment or engagement (as applicable) with the Company.

       

      (n)    Other
than IP Contracts with third parties set forth in Part 2.12(c) and
Part 2.12(d) of
the Company Disclosure Schedule and agreements with the Company’s customers
entered into in the ordinary course of business, the Company is not bound by any
agreement to indemnify any other person or entity for intellectual property
infringement, misappropriation, or similar claims.

       

      (o)    neither
the execution, delivery, or performance of this Agreement (or any of the Related
Agreements) nor the consummation by the Company of any of the transactions
contemplated by this Agreement (or any of the Related Agreements) will, with or
without notice or lapse of time, result in (i) a loss of, or encumbrance or
restriction on any Intellectual Property or Intellectual Property Rights owned
by or used by the Company that are material to the conduct of its business as
presently being conducted, (ii) a breach of any In-License, or
(iii) the grant, assignment, or transfer to any third party of any license
or other right or interest under, to, or in any of the Company Intellectual
Property.

       

      2.13        
Contracts.

       

      (a)    Except as
set forth in Part
2.13(a) of the Company Disclosure Schedule, the Company is not a party to
nor is it presently bound by any written or oral:

       

      (i)   Contract
with any present or former shareholder, partner, member other equity holder,
director, officer, employee or consultant or for the employment of, performance
of services by or payment of commissions to any Person, including any
consultant;

       

      (ii)    Contract
with any labor union or other representative of employees;

       

      (iii)   Contract
relating to the acquisition, transfer, use, development, sharing or license of
any Company Intellectual Property other than (A) licenses of Intellectual
Property in connection with the sales of Company Products or services in the
ordinary course of business consistent with past practice, (B) end user software
licenses that are generally available on standard terms for less than US$5,000;
and (C) contracts relating to technology and proprietary assets immaterial to
the Company’s business as presently conducted;

       

      
        
          
          

        

        
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      (iv)   Contract
relating to any material acquisition, issuance or transfer of any
securities;

       

      (v)    Contract
for the purchase of, or payment for, supplies, products or services (A) from a
Related Party or (B) involving (1) in any one case, US$20,000 or more or
(2) in the aggregate, US$50,000 or more;

       

      (vi)   Contract
to sell or supply products or to perform services, (A) to or for a Related Party
or (B) involving (1) in any one case, US$20,000 or more or (2) in the
aggregate, US$50,000 or more;

       

      (vii)        
Contract
creating or involving any agency relationship, distribution arrangement or
franchise relationship;

       

      (viii)        Contract
relating to the lease of or license to enter any Real Property;

       

      (ix)   Contract
relating to the lease of any manufacturing equipment used by the
Company;

       

      (x)    note,
debenture, bond, conditional sale agreement, equipment trust agreement, loan
agreement or other contract or commitment for the borrowing or lending of money
(including, without limitation, loans to or from present or former shareholders,
partners, members, other equity holders, officers, directors, employees or any
member of their immediate families);

       

      (xi)    Contract
relating to the creation of an Encumbrance (other than a Permitted Encumbrance)
with respect to any asset of the Company or involving or incorporating any
indemnity or surety arrangement, guaranty, security agreement, pledge,
performance or completion bond or pursuant to which the Company otherwise
undertakes the indebtedness of any other Person;

       

      (xii)   Contract
creating or relating to any partnership or joint venture or any sharing of
revenues, profits, losses, costs or liabilities;

       

      (xiii)        
Contract
involving Tax sharing;

       

      (xiv)        
Contract
relating to a charitable or political contribution;

       

      (xv)         
Contract
for any individual capital expenditure in excess of US$20,000, or US$50,000 in
the aggregate, entered into since June 30, 2009;

       

      (xvi)        
Contract
imposing any restriction on the Company’s right or ability (A) to compete with
any other Person, (B) to acquire any product or other assets or any services
from any other Person, to sell any amount of product or other assets to, or
perform any services for any other Person, or (C) to develop or distribute any
technology, nor, to the Knowledge of the Company, is any officer or employee of
the Company subject to any such Contract, other than with the
Company;

       

      
        
          
          

        

        
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      (xvii)       
Contract
not made in the ordinary course of business; or

       

      (xviii)   Contract
not otherwise listed in Part 2.13(a) of
the Company Disclosure Schedule that (A) continues over a period of more than
twelve (12) months from the date hereof, (B) exceeds US$20,000 in value and (C)
may not be terminated by the Company (without penalty) within 30 days after the
delivery of a termination notice by the Company.

       

      Contracts
in the respective categories described in clauses (i) through (xviii) of
this Article
2.13 are referred to in this Agreement as “Material
Contracts”.

       

      (b)    The
Company has provided Purchaser with true, correct and complete copies of all
written Material Contracts.  Part 2.13(b) of the
Company Disclosure Schedule provides an accurate description of the terms of
each Material Contract that is not in written form. Each Material Contract is
valid and in full force and effect and is enforceable in accordance with its
terms.

       

      (c)    Except as
set forth in Part 2.13(c) of
the Company Disclosure Schedule:

       

      (i)    The
Company has not violated or breached, or committed any default under, any
provision of any Material Contract, and, to the Knowledge of the Company, no
other Person has violated or breached, or committed any default under, any
provision of any Material Contract;

       

      (ii)    No event
has occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or could reasonably be expected to, (A) to
the Knowledge of the Company, result in a violation or breach of any provision
of any Material Contract, (B) give any Person the right to declare a
default or exercise any remedy under any Material Contract, (C) give any
Person the right to accelerate the maturity or performance of any Material
Contract, or (D) give any Person the right to cancel, terminate or modify any
Material Contract that could reasonably be expected to result in a Company
Material Adverse Effect;

       

      (iii)    The
Company has not received any notice or other communication regarding any actual
or possible violation or breach of, or default under, any Material Contract that
has not been resolved; and

       

      (iv)   The
Company has not waived any of its rights under any Material
Contract.

       

      (d)    No Person
is renegotiating, or has a right (absent any default or breach of a Material
Contract) pursuant to the terms of any Material Contract to renegotiate, any
amount paid or payable to the Company under any Material Contract or any other
material term or provision of any Material Contract.

       

      (e)    The
Company Contracts collectively constitute all of the Contracts necessary to
enable the Company to conduct its business substantially in the manner in which
its business is being conducted as of immediately prior to the
Closing.

       

      
        
          
          

        

        
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      (f)    Except as
disclosed in Part 2.13(f) of
the Company Disclosure Schedule, with respect to each Material Contract, the
Material Contract will continue to be valid, binding, enforceable, and in full
force and effect on identical terms immediately following the consummation of
the transactions contemplated by this Agreement and the Related Agreements, and
the consummation of the transactions contemplated hereby and thereby shall not
result in any payment or payments becoming due from the Company to any Person or
give any Person the right to terminate or alter the provisions of such Material
Contract. To the Knowledge of the Company (without having made enquiries of
third parties) the consummation of the transactions described herein will not
affect any of the Material Contracts in a manner that could reasonably be
expected to result in a Company Material Adverse Effect.

       

      2.14  Customers; Accounts
Receivables and Payable.

       

      (a)    Part 2.14(a) of the
Company Disclosure Schedule identifies each Person that has committed since the
Balance Sheet Date (whether oral or written and whether pursuant to an agreement
or purchase order or otherwise) to purchase products or services with a dollar
value of US$20,000 or more from the Company pursuant to an invoiced order, and
sets forth for each such Person the quantities or amounts of such products or
services that such Person has committed to purchase (the “Purchase
Commitments”) and whether such commitment is oral or
written.  The Company has provided to Purchaser true and complete
copies of all material documents evidencing such Purchase
Commitments.  All such Purchase Commitments are in full force and
effect, have not been withdrawn, amended, modified or terminated and, if
accepted and performed by the Company prior to any such withdrawal, amendment,
modification or termination, are enforceable by the Company and, upon
consummation of the Transactions, will be enforceable by Purchaser, against the
other party to such Purchase Commitments.  No fact, condition or
circumstance exists that would give any party the right to withdraw, amend,
modify or terminate any Purchase Commitment and no Person has given any notice
to the Company, and the Company has no Knowledge, that any Person intends to
withdraw, amend, modify or terminate any Purchase Commitment.

       

      (b)    Part 2.14(b) of the
Company Disclosure Schedule provides an accurate and complete breakdown and
aging of the Company’s accounts payable as of the Balance Sheet
Date.  Part
2.14(b) of the Company Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the amounts paid to, each
supplier or other Person (other than Employees) that received more than $75,000
from the Company during 2008 or 2009.

       

      2.15  
   Liabilities.  Except
(i) as not required in accordance with GAAP to be reflected or reserved against
in the Company Financial Statements, (ii) as and to the extent reflected or
reserved against in the Company Financial Statements (including the notes
thereto), (iii) as set forth in Part 2.15 of the
Company Disclosure Schedule or (iv) as incurred in the ordinary course of
business since the Balance Sheet Date, to the Knowledge of the Company, the
Company does not have any material direct or indirect debts, liabilities,
claims, losses, damages, deficiencies, costs, expenses or obligations (whether
absolute, accrued, contingent or otherwise) of any nature whatsoever (including,
without limitation, obligations under capital leases or any unfunded obligations
as required for funding on an ongoing basis under any Plan or arrangement or any
uninsured liabilities resulting from failure to comply with any applicable Legal
Requirement).  The
Company does not have any off-balance sheet liabilities.

       

      
        
          
          

        

        
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      2.16   
  Data
Protection.

       

      (a)    The
Company has not received any written notice from any party of non-compliance and
has in place all necessary notifications to comply in all material respects with
the Data Protection Act 1998.

       

      (b)    The
Company has notified registrable particulars under the Data Protection Act 1998
of all personal data held by it and has (i) renewed such notifications and has
notified any changes occurring in between such notifications as required by the
Act, (ii) has paid all fees payable in respect of such notifications, and (iii)
there has been no unauthorized disclosure of personal data outside the terms of
such notification.

       

      (c)    The
Company has (i) complied in all material respects with the Data Protection Act
1984 and the Data Protection Act 1998, (ii) established the procedures necessary
to ensure continued compliance with such legislation and (iii) has not received
any notice or complaint under the Data Protection Act 1998 alleging
non-compliance with that Act.

       

      2.17        
Compliance with Legal
Requirements; Governmental Authorizations.

       

      (a)    To the
Knowledge of the Company, the Company is, and since January 8, 2003 has been, in
material compliance with all applicable Legal Requirements.  The
Company has not received any written notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any material Legal Requirement.

       

      (b)    Part 2.17(b) of
the Company Disclosure Schedule identifies each Governmental Authorization held
by the Company and the Company has delivered to Purchaser accurate and complete
copies of all Governmental Authorizations identified in Part 2.17(b) of
the Company Disclosure Schedule.  To the Knowledge of the Company, the
Governmental Authorizations identified in Part 2.17(b) of
the Company Disclosure Schedule are valid and in full force and effect,
collectively constitute all Governmental Authorizations necessary to enable the
Company to conduct its business in the manner in which its business is currently
being conducted and will continue in full force and effect immediately following
the Closing.  To the Knowledge of the Company, the Company is in
substantial compliance with the terms and requirements of the respective
Governmental Authorizations identified in Part 2.17(b) of
the Company Disclosure Schedule.  The Company has not received any
notice or other communication from any Governmental Body regarding (i) any
actual or possible violation of or failure to comply with any material term or
requirement of any Governmental Authorization or (ii) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any material Governmental Authorization.

       

      2.18  
  Tax
Matters.

       

      (a)    General.

       

      (i)    All
notices, returns (including any land transaction returns), reports, accounts,
computations, statements, assessments and registrations and any other necessary
information submitted by the Company to any Taxation Authority for the purpose
of Taxation have been made on a proper basis, were submitted within applicable
time limits, were accurate and complete in all material respects when supplied
and remain accurate and complete in all material respects. None of the above is,
or, to the Knowledge of the Company, is likely to be, the subject of any
material dispute with any Taxation Authority.

       

      
        
          
          

        

        
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      (ii)    All
Taxation (whether of the UK or elsewhere), for which the Company has been liable
or is liable to account for, has been duly paid (insofar as such Taxation ought
to have been paid).

       

      (iii)    The
Company has, within applicable time limits, maintained all records in relation
to Taxation as they are required by law to maintain and in order to enable the
tax liabilities of the Company to be calculated in accordance with applicable
Legal Requirements.

       

      (iv)         
The
Company has complied within applicable time limits with all notices served on
them and any other requirements lawfully made of them by any Taxation
Authority.

       

      (v)    The
Company has not made any payments representing installments of corporation tax
pursuant to the Corporation Tax (Installment Payments) Regulations 1998 in
respect of any current or preceding accounting periods and is not under any
obligation to do so.

       

      (vi)         
The
Company has not paid, within the past five years ending on the Closing Date, any
penalty, fine, surcharge or interest charged by virtue of the TMA 1970 or any
other Tax Statute.

       

      (vii)        
All
Taxation and national insurance deductible and payable under the Pay-As-You-Earn
system and/or any other Taxation Statute has, so far as is required to be
deducted, been deducted from all payments made (or treated as made) by the
Company. All amounts due to be paid to the relevant Taxation Authority prior to
the date of this Agreement have been so paid, including without limitation all
Tax chargeable on benefits provided for directors, employees or former employees
of the Company or any persons required to be treated as such.

       

      (viii)        
The
Company is not involved in any dispute with any Taxation Authority and has not,
within the past 12 months, been subject to any visit, audit, investigation,
discovery or access order by any Taxation Authority.  The Company is
not aware of any circumstances existing which make it likely that a non-routine
visit, audit, investigation, discovery or access order will be made in the next
12 months.

       

      (ix)    The
Company Disclosure Schedule contains details of any concession, agreement or
other formal or informal arrangement (that is, an arrangement which is not based
on a strict interpretation of all relevant Taxation Statutes, published
extra-statutory concessions and published statements of practice) with any
Taxation Authority.

       

      
        
          
          

        

        
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      (x)    The
Company Disclosure Schedule contains details of all transactions, schemes or
arrangements in respect of which the Company has been a party or has otherwise
been involved for which a statutory clearance application was made. The Company
Disclosure Schedule also contains copies of all relevant applications for
clearances and copies of all clearances obtained in connection with such
transactions, schemes or arrangements. All such clearances have been obtained on
the basis of full and accurate disclosure of all material facts and
considerations relating thereto. All such transactions, schemes or arrangements
have been implemented strictly in accordance with the terms of such
clearances.

       

      (xi)    The
Company is not liable to make to any Person (including any Taxation Authority)
any payment in respect of any liability to Taxation which is primarily or
directly chargeable against, or attributable to, any other Person (other than
the Company).

       

      (xii)   The
Company Financial Statements make full provision or reserve within GAAP for any
period ended on or before the date to which they were drawn up for all Taxation
assessed or liable to be assessed on the Company, or for which the Company is
accountable at that date, whether or not the Company has (or may have) any right
of reimbursement against any other person. Proper provision has been made and
shown in the Company Financial Statements for deferred taxation in accordance
with GAAP.

       

      (xiii)        
The
Company has not entered into a Managed Payment Plan within the provisions of
Section 111 of the Finance Act 2009 nor into any arrangement with HM Revenue
& Customs for the deferred payment of any liability to
Taxation.

       

      (xiv)        
The
Company is not a qualifying company within the meaning of Schedule 46 to the
Finance Act 2009.

       

      (b)    Chargeable
Gains.  The book value shown in, or adopted for the purposes
of, the Company Financial Statements as the aggregate value of the assets of the
Company, on the disposal of which a chargeable gain or allowable loss could
arise, does not exceed the amount which on a disposal of the assets at the date
of this Agreement would be deductible, in each case, disregarding any statutory
right to claim any allowance or relief other than amounts deductible under
Section 38 of TCGA 1992.

       

      (c)    Capital
Allowances.

       

      (i)   If the
assets of the Company were disposed of at the Closing Date for their book value
as shown in, or adopted for the purpose of, the Company Financial Statements, or
for the value of consideration actually given for them on their acquisition (if
such assets were acquired since the Balance Sheet Date), a balancing charge of
no more than US$5,000 under CAA 2001.

       

      (d)    Distributions and Other
Payments.

       

      (i)   Since
June 30, 2009, no distribution or deemed distribution, within the meaning of
Sections 209, 210 or 211 of ICTA 1988, has been made (or will be deemed to have
been made) by the Company, except dividends shown in the Company Year-End
Financial Statements, and the Company is not bound to make any such
distribution.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      (ii)    No rents,
interest, annual payments or other sums of an income nature, paid or payable by
the Company or which the Company is under an existing obligation to pay in the
future, are or will be wholly or partially disallowable as deductions,
management expenses or charges in computing taxable profits for Taxation
purposes.

       

      (iii)    The
Company has not, within the period of five years preceding the Closing Date,
been engaged in, or been a party to, any of the transactions set out in Sections
213 to 218 (inclusive) of ICTA 1988, nor has it made or received a chargeable
payment as defined in Section 218(1) of ICTA 1988.

       

      (e)    Loan
Relationships.

       

      (i)            
All
interests, discounts and premiums payable by the Company in respect of its loan
relationships (within the meaning of Section 302 of the Corporation Tax Act 2009
("CTA 2009"), formerly Section 81 of the Finance Act 1996) are eligible to be
brought into account by the Company as a debit for the purposes of Part 5 of the
CTA 2009 (formerly Chapter II of Part IV of the Finance Act 1996) at the time,
and to the extent that such debits are recognized in the statutory accounts of
the Company.

       

      (ii)    The
Company is not a party to a debtor relationship (within the meaning of Section
302(6) of the CTA 2009, formerly Section 103 of the Finance Act 1996) to which
Chapter 8 of Part 5 of the CTA 2009 (formerly paragraph 2 of Schedule 9 to the
Finance Act 1996) applies or may apply.

       

      (iii)          
The
Company is not a party to a loan relationship made other than on arm’s length
terms. There are no circumstances in which Section 445 or 447 of the CTA 2009
(formerly paragraphs 11 and 11A of Schedule 9 to the Finance Act 1996) could
apply to require an adjustment of debits and/or credits brought into account by
the Company.

       

      (iv)    The
Company has not been a party to a loan relationship which had an unallowable
purpose (within the meaning of Section 442 of the CTA 2009, formerly paragraph
13 of Schedule 9 to the Finance Act 1996).

       

      (f)   Close
Companies.  The Company is not, nor has it ever been a close
company within the meaning of Sections 414 and 415 of ICTA 1988.

       

      (g)    Intangible
Assets.  For the purposes of this paragraph (g), references to
intangible
fixed assets means
intangible fixed assets and goodwill within the meaning of Part 8 of CTA 2009
(formerly Schedule 29 to the Finance Act 2002) to which that Schedule applies.
References to an intangible
fixed asset shall
be construed accordingly.

       

      (i)   Part 2.18(g)(i) of
the Company Disclosure Schedule sets out the amount of expenditure on each of
the intangible fixed assets of the Company and provides the basis on which any
debit relating to that expenditure has been taken into account in the Company
Financial Statements.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      (ii)    No claims
or elections have been made by the Company under Chapter 7 of Part 8 of the CTA
2009 (formerly Part 7 of Schedule 29 to the Finance Act 2002) or Section 827 of
the CTA 2009 (formerly paragraph 86 of Schedule 29 to the Finance Act 2002) in
respect of any intangible fixed asset of the Company.

       

      (iii)         
Since the
Balance Sheet Date:

       

      (1)    the
Company has not owned an asset which has ceased to be a chargeable intangible
asset in the circumstances described in Section 859 of the CTA 2009 (formerly
paragraph 108 of Schedule 29 to the Finance Act 2002);

       

      (1)    the
Company has not realized or acquired an intangible fixed asset for the purposes
of Part 8 of the CTA 2009 (formerly Schedule 29 to the Finance Act 2002);
and

       

      (2)    no
circumstances have arisen which have required, or will require, a credit to be
brought into account by the Company on a revaluation of an intangible fixed
asset.

       

      (h)    Company Residence, Treasury
Consents and Overseas Interests.

       

      (i)   The
Company has, throughout the past five years ending on the Closing Date, been
resident in the UK for corporation tax purposes and has not at any time in the
past seven years ending on the Closing Date, been treated as resident in any
other jurisdiction for the purposes of any double taxation arrangements having
effect under Section 18 of the CTA 2009 (formerly Section 249 of the Finance Act
1994) and Section 788 of ICTA 1988 or for any other tax purpose.

       

      (ii)    The
Company has not caused, permitted or entered into any of the transactions
specified in Section 765 of ICTA 1988 (migration of companies) or, in relation
to transactions occurring on or after 1 July 2009, as set out in Section 37 of
and Schedule 17 to the Finance Act 2009 without the prior written consent of HM
Treasury, or without having duly provided the required information to HM Revenue
& Customs (as appropriate).

       

      (iii)    The
Company does not hold shares in a company which is not resident in the UK and
which would be a close company if it were resident in the UK in circumstances
such that a chargeable gain accruing to the company not resident in the UK could
be apportioned to the Company pursuant to Section 13 of TCGA 1992.

       

      (iv)   The
Company is not holding, or has not held in the past five years ending on the
Closing Date, any interest in a controlled foreign company within Section 747 of
ICTA 1988. The Company does not have any material interest in an offshore fund
as defined in Section 759 of ICTA 1988 or in Part 1 of Schedule 22 to the
Finance Act 2009.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      (v)    The
Company has not had, nor within the last five years ending on the Closing Date
has it had, a permanent establishment outside the UK.

       

      (vi)   The
Company is not an agent or permanent establishment of another company, Person,
business or enterprise for the purpose of assessing the company, Person,
business or enterprise to Taxation in the country of residence of the
Company.

       

      (i)    Anti-Avoidance.

       

      (i)    All
transactions or arrangements made by the Company have been made on fully arms
length terms. There are no circumstances in which Section 770A of, or Schedule
28AA to, ICTA 1988 or any other rule or provision could apply allowing any
Taxation Authority to make an adjustment to the terms on which such transaction
or arrangement is treated as being made for Taxation purposes, and no notice or
enquiry has been made by any Taxation Authority in connection with any such
transactions or arrangements.

       

      (ii)    The
Company has not been a party to, nor has been otherwise involved in, any
transaction, scheme or arrangement designed wholly or mainly or containing steps
or stages having no commercial purpose and designed wholly or mainly for the
purpose of avoiding or deferring Taxation or reducing a liability to Taxation or
amounts to be accounted for under PAYE.

       

      (iii)    The
Company has not entered into any notifiable arrangements for the purposes of
Part 7 of the Finance Act 2004 any notifiable contribution arrangement for the
purpose of the National Insurance Contribution (Application of Part 7 of the
Finance Act 2004) Regulations 2007 (SI 2007/785) or any
notifiable schemes for the purposes of Schedule 11A to the VATA
1994.

       

      (j)    Inheritance
Tax.

       

      (i)    The
Company has not:

       

      (1)    made any
transfer of value within Sections 94 and 202 of IHTA 1984; or

       

      (2)    received
any value such that liability might arise under Section 199 of IHTA 1984;
or

       

      (3)    been a
party to associated operations in relation to a transfer of value as defined by
Section 268 of IHTA 1984.

       

      (ii)    There is
no unsatisfied liability to inheritance tax attached to, or attributable to, the
Shares or any asset of the Company. None of them are subject to any HM Revenue
& Customs charge as mentioned in Section 237 and 238 of IHTA
1984.

       

      (iii)    No asset
owned by the Company, nor the Shares, are liable to be subject to any sale,
mortgage or charge by virtue of Section 212(1) of IHTA 1984.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      (k)    Value Added
Tax.

       

      (i)    The
Company is a taxable Person and is registered for the purposes of
VAT.  The Company is not, nor has it been in the period of five years
ending on the Closing Date, a member of a group of companies for VAT
purposes.

       

      (ii)    The
Company is registered, for the purposes of VAT, with monthly prescribed
accounting periods.  Such registration, as is referred to this Section
2.18(k)(ii) is not subject to any conditions imposed by or agreed with HM
Revenue & Customs. The Company is not (nor are there any circumstances by
virtue of which it may become) under a duty to make monthly payments on account
under the Value Added Tax (Payments on Account) Order 1993. The Company has
complied with all statutory provisions, rules, regulations, orders and
directions in respect of VAT.

       

      (iii)    All
supplies made by the Company are taxable supplies. The Company has not been,
nor, to the Company’s Knowledge, will it be, denied full credit for all input
tax paid or suffered by it. All VAT paid or payable by the Company is input tax
as defined in Section 24 of the VATA 1994 and regulations made under
it.

       

      (iv)    No act or
transaction has been effected in consequence of which the Company is liable for
any VAT arising from supplies made by another company. No direction has been
given by HM Revenue & Customs under Schedule 9A to the VATA 1994 as a result
of which the Company would be treated for the purposes of VAT as a member of a
group.

       

      (v)    The
Company does not own, or has at any time within the period of five years
preceding the Closing Date owned, any assets which are capital items subject to
the capital goods scheme under Part XV of the VAT Regulations 1995.

       

      (vi)    The
Company has not made any claim for any bad debt relief under Section36 of the
VATA 1994.

       

      (l)    Stamp Duty, Stamp Duty Land
Tax and Stamp Duty Reserve Tax.

       

      (i)    Any
document that is necessary in proving the title of the Company to any asset
which is owned by the Company at the Closing Date, and each document to which
the Company is a party and which the Company may wish to enforce or produce in
evidence is, so far as required by law, duly stamped for stamp duty purposes. No
such documents which are outside the UK would attract stamp duty if they were
brought into the UK.

       

      (ii)     Neither
entering into this Agreement nor Closing will result in the withdrawal of any
stamp duty or stamp duty land tax relief granted on or before Closing Date which
will affect the Company.

       

      (iii)    Part
2.18(l)(iii) of the Company Disclosure Schedule sets out full and accurate
details of any chargeable interest (as defined under Section 48 of the Finance
Act 2003) acquired or held by the Company before the Closing Date in respect of
which, to the Knowledge of the Company, an additional land transaction return
will be required to be filed with a Taxation Authority and/or a payment of stamp
duty land tax made on or after the Closing Date.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      (iv)    The
Company has complied in all material respects with the provisions of Part IV of
Finance Act 1986 (Stamp Duty Reserve Tax) and any regulations made under such
legislation.

       

      (m)    Tax
Sharing.  The Company is not bound by or party to any Taxation
indemnity, Taxation sharing or any Taxation allocation agreement in respect of
which claims against the Company would not be time barred.

       

      (n)    Capital Losses. No
capital loss has accrued to the Company that is a loss within the meaning of
Section 8 or 16A of the Taxation of Capital Gain Act 1992.

       

      (o)    Employees and
Pensions.

       

      (i)    The
Company has not made, or agreed to make, any payment to, or provided or agreed
to provide any benefit for, any director or former director, officer or employee
of the Company, whether as compensation for loss of office, termination of
employment or otherwise, which is not allowable as a deduction in calculating
the profits of the Company for Taxation purposes, whether up to or after the
Balance Sheet Date.

       

      (ii)    The
Company does not have (nor has ever had) any employee that subscribed for or
acquired any Shares for the purposes of Part 7 of Income Tax (Earnings and
Pensions) Act 2003 ("ITEPA") that had not entered into elections with the
Company under Section 425 and/or Section 431 of ITEPA within 14 days after such
subscription or acquisition of Shares.

       

      (iii)    The
Company does not participate in a scheme under Section 713 of ITEPA
2003.

       

      (iv)   The
Company does not participate in a HM Revenue & Customs approved share
scheme.

       

      2.19        
Benefit Plans; Employees and
Agents.

       

      (a)    Part 2.19(a) of
the Company Disclosure Schedule identifies each employee benefit plan and all
salary, bonus, deferred compensation, incentive scheme, stock purchase, stock
option, restricted stock, severance pay, termination pay, hospitalization,
medical, life or other insurance, supplemental unemployment benefits, welfare,
profit-sharing, pension or retirement plan, program or agreement (whether
qualified or non-qualified, currently effective or terminated, written or
unwritten) (collectively, the “Plans”) currently
sponsored, maintained, contributed to or required to be contributed to by the
Company for the benefit of any current or former employee, director or
consultant of the Company.

       

      (b)    Since the
Balance Sheet Date, no material changes have been made or promised to the terms
of employment, benefits or conditions of service of any current employee,
director or consultant to the Company (collectively, “Employee”) or to
benefits provided to any person engaged to any extent in the Company’s business
(now or in the past) or any dependants of such person or to the terms of any
agreement or arrangement (whether written or unwritten and whether binding or
not) with any trade union, employee representative or body of employees or their
representatives.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      (c)    No person
is employed or engaged in the Company’s business (whether temporarily or
permanently and whether under a contract of service or contract for services)
other than the Employees, and the Employees are all employed by the Company and
work wholly or mainly in the Company’s business.

       

      (d)    The
Company has disclosed accurate particulars of the current terms of employment or
engagement and benefits of all Employees whether or not recorded in writing, or
implied by custom or practice or otherwise; and details of all remuneration and
benefits which the Employees or their dependants receive or are entitled to
receive (now or in the future).

       

      (e)    In
respect of each of the Employees and any former Employees, the Company has:
materially performed all obligations and duties required to be performed by it,
whether arising under contract, statute, at common law or in equity; maintained
adequate, suitable and up to date records relating to the Employees; and paid to
HM Revenue & Customs and any other appropriate authority all taxes, National
Insurance contributions and other levies due in respect of the Employees and
former Employees on account of their employment by the Company up to and
including the Closing Date.

       

      (f)    All
contracts of service or for services with any of the Employees or agents of the
Company are terminable by the Company at any time on three months’ notice or
less without compensation (other than for unfair dismissal or a statutory
redundancy payment).  To the Knowledge of the Company, the Company has
no liability other than for salary, wages, commission or pension to or for the
benefit of any person who is an Employee or agent of the Company.

 

       

      (g)    There are
no terms under which the Employees are employed and, to the Knowledge of the
Company, no event has occurred and no condition or circumstance exists that
could give rise to any claim for unlawful discrimination or unequal
pay.

       

      (h)    No
Employee: has given or received notice to terminate employment or engagement
and, to the Knowledge of the Company, no Employee is entitled or intends or is
likely to terminate such employment or engagement as a result of the parties
entering into this Agreement or the consummation of the transactions
contemplated by this Agreement; has been off sick for a period of 21 working
days or more in any six-month period within the three years ending on the date
of this Agreement (whether or not consecutive), or is receiving or is due to
receive payment under any sickness or disability or permanent health insurance
scheme and, so far as the Company is aware, there are no such claims pending or
threatened; is on secondment, maternity or other statutory leave or otherwise
absent from work other than on normal annual leave or continuous sickness or
incapacity absence of less than 21 working days; or is subject to a current
disciplinary warning or procedure.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      (i)    The
Company is not a
party to any arrangements or promise to make or in the habit of making ex gratia
or voluntary payments on redundancies or payments by way of bonus, pension,
allowance or similar payments to any such persons.

       

      (j)    The
Company does not contribute to and is not bound to contribute either now or in
the future to any schemes, arrangements, customs or practices (whether legally
enforceable or not) for payment of pension, disability, or death benefit or
similar schemes or arrangements in operation or contemplated in respect of any
of the Employees or their dependants, or persons formerly employed or engaged in
the Company’s business or their dependants, under which the Purchaser or any of
the owners for the time being of the Company’s business or the assets or any
part of them may become liable to make payments or to provide equivalent
benefits.

       

      (k)    The
Company is not engaged or involved in any dispute, claim or legal proceedings
(whether arising under contract, common law, statute or in equity) with any of
the Employees or any other person currently or previously employed by or engaged
in the Company’s business or their dependants and, to the Knowledge of the
Company, there is no event which could give rise to such dispute, claim or
proceeding.

       

      (l)   The
Company has not recognized any trade union or any other organization of
employees or their representatives in respect of any of the
Employees.

       

      (m)    No offer
of employment or engagement has been made by the Company that has not yet been
accepted, or which  has been accepted but employment or engagement has
not yet commenced.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      2.20        
Environmental
Matters.  Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, (i)
the Company is in compliance with all applicable Environmental Laws, which
compliance includes the possession by the Company of all permits and other
Governmental Authorizations required under applicable Environmental Laws and
compliance with the terms and conditions thereof and (ii) there are no written
claims pursuant to any Environmental Law pending or, to the Knowledge of the
Company, threatened, against the Company.  All Governmental
Authorizations currently held by the Company pursuant to Environmental Laws are
identified in Part 2.20 of the
Company Disclosure Schedule.  All applications required to have been
filed by the Company for the renewal or transfer of the Governmental
Authorizations identified or required to be identified in Part 2.20 of the
Company Disclosure Schedule have been duly filed on a timely basis with the
appropriate Governmental Bodies, and each other notice or filing required to
have been given or made with respect to such Governmental Authorizations has
been duly given or made on a timely basis with the appropriate Governmental
Body.  No Materials of Environmental Concern are or have been used,
manufactured, generated, sold, handled, treated, transported, stored or disposed
by the Company, in breach of applicable Environmental Laws.  To the
Knowledge of the Company, no underground storage tanks, above-ground storage
tanks, asbestos-containing materials, landfills or disposal areas are present on
any of the Company’s property.

       

      2.21        
Defective
Products and Services 

       

      (a)    The
Company has not manufactured or sold any products which were, at the time they
were manufactured or sold, materially faulty or materially defective or, to the
Knowledge of the Company, did not comply with (i) warranties or representations
expressly made or implied by or on behalf of the Company; or (ii) all laws,
regulations, standards and requirements (including SBS certificates) applicable
to the products.

       

      (b)    Save for
the claim described on Part 2.21 of the
Company Disclosure Schedule, no proceedings have been started, the Company has
not received written notification of any pending or, to the Knowledge of the
Company, have been threatened against the Company in which it is claimed that
any products manufactured or sold by the Company are materially defective, not
appropriate for their intended use or have caused bodily injury or material
damages to any person or property when applied or used as intended.

       

      (c)    No
proceedings have been started and there are no outstanding liabilities or claims
pending or threatened against the Company in respect of any services supplied by
the Company for which the Company is or may become liable and no material
dispute exists between the Company and any of its customers or
clients.

       

      For the
purpose of this Article 2.21, “material” shall mean the Company shall incur a
cost of more than US$2,000 to rectify any such product at any one
time.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      2.22        
Insurance.

       

      (a)    Part 2.22(a) of
the Company Disclosure Schedule identifies all insurance contracts or policies
maintained by, at the expense of or for the benefit of the Company, including
the name of the insurer and the types and amounts of coverage (collectively, the
“Policies”),
and the Company has delivered to Purchaser accurate and complete copies of the
Policies identified or required to be identified on Part 2.22(a) of
the Company Disclosure Schedule.  All the Policies are in full force
and effect, all premiums with respect thereto covering all periods up to the
Closing Date have been paid or accrued, and the Company has not received any
notice or other communication regarding any actual or possible
(i) cancellation, invalidation or termination of any Policy or
(ii) material adjustment in the amount of premiums payable with respect to
any Policy.  The coverage provided by the Policies complies with
(i) applicable Legal Requirements and (ii) the requirements that the
Company maintain insurance under all Material Contracts.  The Company
has not breached or otherwise failed to perform in any material respect its
obligations under any of the Policies nor has the Company received any adverse
notice from any of the insurers party to the Policies with respect to any
alleged breach or failure in connection with any of the Policies which remains
outstanding at Closing.  Since January 1, 2007, the Company has
not been refused any insurance with respect to its assets or operations, nor has
coverage ever been limited by any insurance carrier to which the Company has
applied for any Policy or with which the Company has carried a
Policy.  The Company is, and has at all times been, in compliance with
all surety bond requirements of Governmental Authorizations held by the Company
or otherwise set forth in applicable Legal Requirements or
Contracts.

       

      (b)    Set forth
in Part 2.22(b) of
the Company Disclosure Schedule is a list of all claims which have been made by
the Company since January 1, 2008 under any worker’s compensation, general
liability, property or other insurance policy applicable to the Company or any
of its properties.  Such claim information includes the following
information with respect to each accident, loss or other
event:  (i) the identity of the claimant; (ii) the date of
the occurrence; (iii) the status as of the date hereof and (iv) the
amounts paid or recovered to date.  Except as set forth in Part 2.22(b) of
the Company Disclosure Schedule, the Company has not received written
notification of pending and, to the Knowledge of the Company, there are no
threatened claims under any insurance policy, and the Company has not received
any notice or other communication regarding any actual or possible rejection of
any pending claim under any insurance policy.

       

      2.23        
Related Party
Transactions.  Save for the Protection House Lease described in
Part 2.23
of the Company Disclosure Schedule, no Related Party has, and no Related Party
has had at any time since January 1, 2006, any direct or indirect interest
in any material asset used in or otherwise relating to the business of the
Company.  No Related Party is indebted to the
Company.  Since January 1, 2006, no Related Party has entered
into, or has had any direct or indirect financial interest in, any Material
Contract, transaction or business dealing involving the Company.  To
the Knowledge of the Company, no Related Party is competing, or has competed at
any time since January 1, 2007, directly or indirectly, with the
Company.  No Related Party has any claim or right against the Company
(other than rights to receive compensation for services performed as an
Employee).

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      2.24        
Legal Proceedings;
Orders.

       

      (a)    Except as
set forth in Part 2.24(a) of
the Company Disclosure Schedule,  (i) the Company has not received
written notification of pending Legal Proceeding, and to the Knowledge of the
Company, no Person has threatened to commence any Legal Proceeding
(A) against, affecting or which involves the Company or any of the assets
owned by the Company, any Person whose liability the Company has or may have
retained or assumed, either contractually or by operation of law or any of the
directors, officers, employees or equity holders of the Company with respect to
their activities as such, any Plan or the assets of any Plan; or (B) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Transactions or (ii) the Company has not
received written notification of pending and, to the Knowledge of the Company,
there are no threatened Legal Proceeding against, affecting or which involves
any assets used or controlled by the Company.  To the Knowledge of the
Company, no event has occurred and no claim or dispute exists that will, or that
would reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.

       

      (b)    Except as
set forth in Part
2.24(a) of the Company Disclosure Schedule, no Legal Proceeding since
January 8, 2003, have been commenced by or has the Company since January 8, 2003
received written notification of any pending Legal Proceeding against the
Company that has not been fully adjudicated or settled prior to the date of this
Agreement without liability to the Company that is likely to be incurred after
the date of this Agreement.  The Company has delivered to Purchaser
accurate and complete copies of all pleadings, correspondence and other written
materials to which the Company has access and that relate to any Legal
Proceeding identified in the Company Disclosure Schedule.

       

      (c)    There is
no Order to which the Company, or any of the assets owned or used by it, is
subject.  To the Knowledge of the Company, no officer or other
employee of the Company is subject to any Order that prohibits such officer or
other employee from engaging in or continuing any conduct, activity or practice
relating to the Company’s business.  To the Knowledge of the Company,
there is no proposed Order that, if issued or otherwise put into effect,
(i) could have a Company Material Adverse Effect or (ii) could have
the effect of preventing, delaying, making illegal or otherwise interfering with
the Transactions.

       

      2.25         Insolvency.  Neither
the Company nor Personal Protection Systems:

       

      (a)    (i) is
insolvent or unable to pay its debts within the meaning of the Insolvency Act
1986 or any other insolvency legislation applicable to the company concerned;
and (ii) has stopped paying its debts as they fall due.

       

      (b)    No step
has been taken to initiate any process by or under which:  (i) the
ability of the creditors of the Company or Personal Protection Systems to take
any action to enforce their debts is suspended, restricted or prevented, or (ii)
some or all of the creditors of the Company or Personal Protection Systems
accept, by agreement or in pursuance of a court order, an amount less than the
sums owing to them in satisfaction of those sums with a view to preventing the
dissolution of the Company or Personal Protection Systems, or (iii) a person is
appointed to manage the affairs, business and assets of the Company or Personal
Protection Systems on behalf of the Company’s or Personal Protection Systems’
creditors, or (iv) the holder of a charge over the Company’s assets or over any
of Personal Protection Systems’ assets is appointed to control the business and
assets of the Company or Personal Protection Systems.

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      (c)    In
relation to the Company and Personal Protection Systems:  (i) no
administrator has been appointed, (ii) no documents have been filed with the
court for the appointment of an administrator, and (iii) no notice of an
intention  to appoint an administrator has been given by the relevant
company, its directors or by a qualifying floating charge holder (as defined in
paragraph 14 of Schedule B1 to the Insolvency Act 1986).

       

      (d)    No
process has been initiated which could lead to the Company or Personal
Protection Systems being dissolved and its assets being distributed among the
relevant company’s creditors, shareholders or other contributors.

       

      (e)     No distress,
execution or other process has been levied on an asset of the Company or
Personal Protection Systems.

       

      2.26 
   Finder’s Fee; Transaction
Costs.  Other than as set forth in Part 2.26 of the
Company Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company or any
of the Sellers or the Neil Bruce Copp Shareholder.

       

      2.27 
   Shareholder
Agreements.  There is no actual or contingent liability of the
Company arising directly or indirectly out of the Shareholders Agreement dated
January 8, 2003 entered into between Stephen Nobbs, Mark Whitcher, Kimbells
LLP, Neil Bruce Copp and the Company or any documents entered into in connection
with that transaction, including, without limitation, the Debentures, Investor
Loan Agreement, Mr. Nobbs Loan Agreement or Acquisition Documentation (as
defined therein).

       

      2.28 
   Certain
Payments.  Neither the Company, nor, to the Company’s
Knowledge, any Representative or other Person associated with or acting for or
on behalf of the Company, has at any time, directly or indirectly:

       

      (a)    used any
corporate funds (i) to make any unlawful political contribution or gift or
for any other unlawful purpose relating to any political activity, (ii) to
make any unlawful payment to any governmental official or employee or
(iii) to establish or maintain any unlawful or unrecorded fund or account
of any nature;

       

      (b)    made any
false or fictitious entry, or failed to make any entry that should have been
made, in any of the books of account or other records of the
Company;

       

      (c)    made any
unlawful payoff, influence payment, bribe, rebate, kickback or unlawful payment
to any Person;

       

      (d)    performed
any favor or used corporate funds in giving any gift which was not deductible
for income tax purposes;

       

      (e)    made any
payment (whether or not lawful) to any Person, or provided (whether lawfully or
unlawfully) any favor or anything of value (whether in the form of property or
services, or in any other form) to any Person, for the purpose of obtaining or
paying for (i) favorable treatment in securing business, or (ii) any
other special concession; or

       

      
        
          
          

        

        
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      (f)    agreed,
committed, offered or attempted to take any of the actions described in clauses
(a) through (e) of this Article
2.28.

       

      ARTICLE
3.

       

      WARRANTIES
OF THE SELLERS AND THE NEIL BRUCE COPP SHAREHOLDER

       

      Each
Seller and the Neil Bruce Copp Shareholder, severally and separately and in
respect of their own acts and omissions only (and not those of any other party),
warrants on its own behalf only, as of the Closing Date, to and for the benefit
of the Purchaser, as follows (save that Whitcher is the only Seller that is
providing the warranty in Article 3.7 and the Kimbells Shareholders are not
giving the warranty in Article 3.6):

       

      3.1   Authority; Binding Nature of
Agreement. Such Seller or the Neil
Bruce Copp Shareholder, as the case may be, has all requisite power and
authority and the capacity to execute and deliver (or procure the delivery of)
this Agreement and any Related Agreement to which it is a party, to consummate
the transactions contemplated hereby and thereby and to take all other actions
required to be taken by it pursuant to the provisions hereof and
thereof.  The execution, delivery and performance of this Agreement
and any Related Agreement to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate or other action on the part of  such
Seller  or the Neil Bruce Copp Shareholder, as the case may be, and no
other action on the part of the Seller or the Neil Bruce Copp Shareholder, as
the case may be, is necessary to authorize the execution, delivery and
performance by  such Seller or the Neil Bruce Copp Shareholder, as the
case may be, of this Agreement and any Related Agreement  or to
consummate the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by  such Seller  or the
Neil Bruce Copp Shareholder as the case may be.  This Agreement and
any Related Agreement to which  such Seller or the Neil Bruce Copp
Shareholder, as the case may be, is a party constitutes (assuming due and valid
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, if any) the valid and binding obligation of  such
Seller or the Neil Bruce Copp Shareholder, as the case may be, enforceable
against  such Seller or the Neil Bruce Copp Shareholder, as the case
may be, in accordance with their respective terms, except as such enforcement
may be limited by any bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors’ rights and
remedies generally and by general principles of equity, regardless of whether
enforcement is sought in a proceeding at law or in equity.

       

      3.2   Ownership and Transfer of
the Shares.  Such Seller  or the Neil Bruce Copp
Shareholder, as the case may be, is, in respect of the Shares as set forth
opposite their name on Part 2.3(a) of the
Company Disclosure Schedule, (a) the legal and beneficial owner of those Shares
with full authority to transfer the legal and beneficial interest in the Shares
or (b) the beneficial owner of those Shares and has the power to procure the
transfer of those Shares by the legal owner or (c) in the case of the Neil Bruce
Copp Shareholder is the legal owner of those Shares with full authority to
transfer legal title to those Shares of, in each case, free and clear of any and
all Encumbrances.   Such Seller  or the Neil Bruce Copp
Shareholder, as the case may be, has the power, authority and capacity to sell,
transfer, assign and deliver (or to procure such sale, transfer, assignment and
delivery of) such Shares as provided in this Agreement, and such delivery will
convey to Purchaser title to such Shares, free and clear of any and all
Encumbrances.  The assignments, endorsements, powers and other
instruments of transfer delivered by each of Seller and the Neil Bruce Copp
Shareholder (or their respective authorized agents) at the Closing will be
sufficient to transfer to the Purchaser such Seller’s or the Neil Bruce Copp
Shareholder’s entire right, title and interest, legal and beneficial, in such
Shares. No Seller or the Neil Bruce Copp Shareholder is a resident or citizen of
the United States.

       

      
        
          
          

        

        
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      3.3   Non-Contravention;
Consents.  The execution, delivery and performance of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby do not, directly or indirectly (with or without
notice or lapse of time):

       

      (a)    contravene,
conflict with or result in a material violation of any Legal Requirement or any
Order, writ, injunction, judgment or decree to which such Seller or the Neil
Bruce Copp Shareholder, as the case may be, or any of the assets owned, used or
controlled by such Seller or the Neil Bruce Copp Shareholder, as the case may
be, (including the Shares) is subject.

       

      (b)    such
Seller or the Neil Bruce Copp Shareholder, as the case may be, is not required
to obtain the Consent of, make any filing with or provide any notification to,
any Person or Governmental Body in connection with the execution and delivery by
such Seller or the Neil Bruce Copp Shareholder, as the case may be, of this
Agreement, the performance by such Seller or the Neil Bruce Copp Shareholder, as
the case may be, of its covenants and agreements under this Agreement and the
consummation by such Seller or the Neil Bruce Copp Shareholder, as the case may
be, of the transactions contemplated hereby.

       

      3.4   No Other
Agreements.  Such Seller or the Neil Bruce Copp Shareholder, as
the case may be, does not have any legal obligation, absolute or contingent, to
any other Person to sell or otherwise transfer Shares (other than pursuant to
this Agreement) and is not subject to any voting agreement with respect to a
change of control of the Company or a right of first refusal related to the
Shares.

       

      3.5   Litigation. Each of
the Sellers and the Neil Bruce Copp Shareholder have not received any written
notification of any action, claim, suit, proceeding or investigation pending
and, to such Seller’s or the Neil Bruce Copp Shareholder’s, as the case may be,
Knowledge, there is no such matter threatened against or affecting such Seller
or the Neil Bruce Copp Shareholder, as the case may be, or the Shares, in each
case before any court or Governmental Body, that would reasonably be expected to
affect the ability of such Seller or the Neil Bruce Copp Shareholder, as the
case may be, to sell and transfer the Shares set forth opposite their name on
Part 2.3(a) of
the Company Disclosure Schedule or otherwise to consummate the transactions
contemplated by this Agreement at the Closing.

       

      3.6   Finder’s
Fees.  No arrangement has been made by or on behalf of such
Seller or the Neil Bruce Copp Shareholder (as the case may be) entitling any
broker, finder, or investment banker to any brokerage, finder’s or other fee or
commission in connection with the Transactions except as set forth in the
Schedule of Company Transaction Costs.

       

      
        
          
          

        

        
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      3.7   Securities
Representations.  Whitcher hereby warrants that he is acquiring
shares of Versar common stock as a portion of the Purchase Price for his own
account for investment and not with a view to resell or in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same.  He has carefully reviewed the publicly available
information regarding Versar made available to him, has made detailed inquiry
concerning Versar and its business, and has received any and all written
information which he has requested and has received answers to his satisfaction
of all inquiries made by him.  He has sufficient knowledge and
experience in finance and business that he is capable of evaluating the risks
and merits of his investments in Versar and is able to financially bear the
risks thereof.  He acknowledges and agrees that the shares of Versar
common stock issuable as a portion of the Purchase Price are “restricted
securities” as defined in Rule 144 promulgated under the Securities Act as
in effect from time to time and must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available.  He has been advised or is aware of the
provisions of Rule 144 which permit limited resales of shares purchased in
a private placement subject to satisfaction of certain conditions, including,
among other things, the availability of certain current public information about
the Company, the resales occurring following the required holding period under
Rule 144 and the number of shares being sold during any three-month period
not exceeding specified limitations.

       

      ARTICLE
4.

       

      WARRANTIES
OF PURCHASER AND VERSAR

       

      Purchaser
and Versar, jointly and severally, warrant to the Company and each of the
Sellers and the Neil Bruce Copp Shareholder, as of the Closing Date, as
follows:

       

      4.1   Corporate Existence and
Power.  Purchaser is a private limited company duly organized
and validly existing under the laws of England and Wales.  Versar is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.  Each of Purchaser and Versar has all
necessary power and authority to carry on its business in the manner in which
its business is currently being conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on Purchaser’s or Versar’s ability to complete the
Transactions.

       

      4.2   Authority; Binding Nature of
Agreement.  Each of Purchaser and Versar has all right, power
and authority to execute and deliver this Agreement and any Related Agreements
to which it is a party, to consummate the transactions contemplated hereby and
thereby and to take all other actions required to be taken by it pursuant to the
provisions hereof and thereof.  The execution, delivery and
performance by each of Purchaser and Versar of this Agreement and each Related
Agreement to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Purchaser and Versar, as applicable, and no other action
on the part of Purchaser or Versar is necessary to authorize the execution,
delivery and performance by Purchaser or Versar of this Agreement or any Related
Agreement to which it is a party and to consummate the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by each
of Purchaser and Versar.  This Agreement constitutes and, upon
execution and delivery thereof by Purchaser and Versar, each Related Agreement
to which either or both or them is a party will constitute (assuming due and
valid authorization, execution and delivery hereof and thereof by the other
parties hereto and thereto, if any) the legal, valid and binding obligation of
Purchaser and/or Versar, as applicable, enforceable against Purchaser and/or
Versar, as applicable, in accordance with its terms, except as such enforcement
may be limited by any bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors’ rights and
remedies generally and by general principles of equity, regardless of whether
enforcement is sought in a proceeding at law or in equity.

       

      
        
          
          

        

        
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      4.3   Non-Contravention;
Consents.  The execution, delivery and performance by Purchaser
and Versar of this Agreement and of each Related Agreement to which either is a
party or both of them are parties and the consummation of the transactions
contemplated hereby and thereby by Purchaser and Versar do not, directly or
indirectly (without notice or lapse of time):

       

      (a)   contravene,
conflict with or result in a violation of any of the terms, conditions or
provisions of their respective organizational documents; or

       

      (b)   contravene,
conflict with or result in a violation of any Order, writ, injunction, judgment
or decree to which Purchaser or any of the assets owned, used or controlled by
Purchaser or Versar is subject or, to the Knowledge of Purchaser and/or Versar,
as applicable, give any Governmental Body or other Person the right to challenge
any of the transactions contemplated by this Agreement or any of the Related
Agreements or to exercise any remedy or obtain any relief under, any Legal
Requirement.

       

      4.4   Compliance with Legal
Requirements.  Purchaser and Versar each has complied with all
applicable Legal Requirements and Orders in connection with the execution,
delivery and performance of this Agreement and any Related Agreements to which
it is a party and the consummation of the transactions contemplated hereby and
thereby.  No filing with, notice to or consent from any Person (other
than the parties hereto) is required in connection with the execution, delivery
or performance of this Agreement or any of the Related Agreements by Purchaser
and Versar or either of them or the consummation of the transactions
contemplated hereby and thereby by Purchaser and Versar or either of
them.

       

      ARTICLE
5.

       

      VERSAR
GUARANTEE OF PURCHASER OBLIGATIONS

       

      5.1   Guarantee of Purchaser
Obligations.  Purchaser is a direct subsidiary of Versar, and
Versar acknowledges that it will derive substantial benefit from the
Transactions. As consideration for the Sellers and the Neil Bruce Copp
Shareholder entering into this Agreement and the Related Agreements and for the
Sellers and the Neil Bruce Copp Shareholder consummation of the Transactions,
Versar irrevocably and  unconditionally guarantees the due and
punctual payment as, when and if due, of all sums payable at Closing and under
(a) the Seller Notes, on the terms and subject to the conditions set forth in
Article 1.4
hereof, (b) the Contingent Consideration, on the terms and subject to the
conditions set forth in Article 1.6 hereof,
(c) the purchase price adjustment provisions in Article 1.8 and (d)
the performance of Purchaser’s obligations pursuant to this Agreement
(collectively, the “Guaranteed
Obligations”); provided, that the
holders of the Seller Notes and recipients of the Contingent Consideration to
whose benefit the guarantee pursuant to this Article 5.1 inures
(each, a “Guaranteed
Party”) shall only if the Guaranteed Obligations are not satisfied by the
Purchaser within ten (10) Business Days demand payment of or assert a claim
against Versar under this Article 5.1. The
guarantee set forth in this Article 5.1 may only
be enforced on the terms set forth herein and nothing set forth in this Article 5.1 shall
confer or give or shall be construed to confer or give to any Person other than
the Guaranteed Parties any rights or remedies against any Person other than the
rights of the Guaranteed Parties against Versar as expressly set forth herein.
Subject to the terms of Article 8.5, to the extent any Guaranteed Obligations,
as to which no dispute as to entitlement or amount exists pursuant to the terms
of this Agreement, are not paid within three (3) Business Days of demand by the
Guaranteed Party pursuant to this Article 5.1, such
Guaranteed Obligations shall bear penalty interest at a rate of 5.0% above
LIBOR.

       

      
        
          
          

        

        
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      ARTICLE
6.

       

      COVENANTS
OF THE PARTIES

       

      6.1   Confidentiality;
Non-competition

       

      (a)    Each
Seller (excluding the Kimbells Shareholders) and the Neil Bruce Copp
Shareholder, severally and in respect of themselves only covenant, that each of
them shall hold in confidence at all times following the date hereof all
Confidential Information and shall not disclose, publish or make use of
Confidential Information at any time following the date hereof without the prior
written consent of the Purchaser; provided, however, that each
Seller and the Neil Bruce Copp Shareholder may furnish such portion (and only
such portion) of the Confidential Information as such Seller or the Neil Bruce
Copp Shareholder reasonably determines it is legally obligated to disclose
if:  (i) it receives a request to disclose all or any part of the
Confidential Information due to a Legal Requirement; (ii) to the extent not
inconsistent with such request, it notifies the Purchaser of the existence,
terms and circumstances surrounding such request and will provide any
information within its possession to enable the Purchaser to take steps
available under applicable law to resist or narrow such request; (iii)
disclosure of such Confidential Information is required to prevent such Seller
or the Neil Bruce Copp Shareholder from being held in contempt or becoming
subject to any other penalty under applicable law.

       

      (b)    Each
Seller (excluding the Kimbells Shareholders) severally and in respect of
themselves only, hereby acknowledges that (A) the Company conducts its
Business and/or has current plans to expand its Business throughout the
Territory, (B) to protect adequately the interest of the Purchaser in the
business and goodwill of the Company, it is essential that any noncompetition
covenant with respect thereto cover all of the Business currently conducted by
the Company and the entire Territory and (C) the consideration paid to such
Seller takes into account and adequately compensates such Seller for the
restrictions and restraints imposed by this Article 6.1.  Each Seller
(excluding the Kimbells Shareholders) severally and in respect of themselves
only agrees, that they shall not, for a period of three years following the
Closing (the “Noncompete Period”),
in any manner, either directly, indirectly, individually, in partnership,
jointly or in conjunction with any Person, (A) engage in the Business
currently conducted by the Company within the Territory, or (B) have an
equity or profit interest in, advise or render services (of an executive,
marketing, manufacturing, research and development, administrative, financial,
consulting or other nature) or lend money to any Person that engages in such
Business within the Territory.

       

      
        
          
          

        

        
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      (c)    Each
Seller (excluding the Kimbells Shareholders) severally and in respect of
themselves only agrees, that they shall not, during the Noncompete Period, in
any manner, directly, indirectly, individually, in partnership, jointly or in
conjunction with any Person: (i) (A) recruit or solicit or attempt to
recruit or solicit, on any of their behalves or on behalf of any other Person,
any employee of the Company thereof, (B) encourage any Person (other than the
Purchaser or the Purchaser Party) to recruit or solicit any employee of the
Company, or (C) otherwise encourage any employee of the Company thereof to
discontinue his or her employment by the Company, (ii) solicit any customer of
the Company who is or has been a customer on or prior to the Closing Date for
the purpose of providing, distributing or selling products or services similar
to those sold or provided by the Company; or (iii) persuade or attempt to
persuade any customer or supplier of the Company to terminate or modify such
customer’s or supplier’s relationship with the Company.

       

      (d)    In the
event a judicial or arbitral determination is made that any provision of this
Article 6.4 constitutes an unreasonable or otherwise unenforceable restriction
against the Sellers, the provisions of this Article 6.1 shall be rendered void
only to the extent that such judicial or arbitral determination finds such
provisions to be unreasonable or otherwise unenforceable with respect to the
Sellers.  In this regard, any judicial authority construing this
Agreement shall be empowered to sever any portion of the Territory, any
prohibited business activity or any time period from the coverage of this
Article 6.1 and to apply the provisions of this Article 6.1 to the remaining
portion of the Territory, the remaining business activities and the remaining
time period not so severed by such judicial or arbitral
authority.  Moreover, notwithstanding the fact that any provision of
this Article 6.1 is determined not to be specifically enforceable, the Purchaser
shall nevertheless be entitled to recover monetary damages as a result of the
breach of such provision by any Seller.  The time period during which
the prohibitions set forth in this Article 6.1 shall apply shall be tolled and
suspended for a period equal to the aggregate time during which a Seller
violates such prohibitions in any respect.

       

      (e)    Any
remedy at law for any breach of the provisions contained in this Article 6.1
shall be inadequate and the Purchaser shall be entitled to injunctive relief in
addition to any other remedy the Purchaser might have hereunder.

       

      6.2   Confidentiality.  The
parties acknowledge that the Company and the Purchaser have previously executed
a confidentiality agreement, dated July 21, 2009 (the “Confidentiality
Agreement”), which Confidentiality Agreement is hereby incorporated
herein by reference and shall continue in full force and effect in accordance
with its terms.

       

      6.3   Public
Disclosure.  Save as for the Neil Bruce Copp Shareholder
disclosing the facts and terms of the Transaction to the beneficiaries of the
Neil Bruce Copp’s estate and unless otherwise permitted by this Agreement, the
Company, the Sellers and the Neil Bruce Copp Shareholder shall consult with the
Purchaser before issuing any press release or otherwise making any public
statement or making any other public (or non-confidential) disclosure (whether
or not in response to an inquiry) regarding the terms of this Agreement and the
Transactions, and neither the Company, Sellers nor the Neil Bruce Copp
Shareholder shall issue any such press release or make any such statement or
disclosure without the prior approval of the Purchaser (which approval shall not
be unreasonably withheld or delayed), except as may be required by law or by any
regulatory or governmental body to which a party is subject, including but not
limited to the London Stock Exchange, the Takeover Panel or the UK Listing
Authority.

       

      
        
          
          

        

        
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      6.4   Tax
Covenant.  The provisions of Schedule 6.4 (Tax
Covenant) apply to and are incorporated by reference into this Agreement.

       

      6.5   Covenant Regarding
Costs.  To the extent that Whitcher has Knowledge that the
incurrence of any cost by the Company during the Earn-Out Period would cause the
aggregate administrative and selling and distribution costs of the Company to
exceed the Maximum Costs, Whitcher shall promptly notify Purchaser and shall
seek Purchaser’s prior written consent to incur such cost.

       

      ARTICLE
7.

       

      CLOSING
AND POST CLOSING DELIVERIES

       

      7.1   Conditions to Obligations of
Purchaser.  The obligations of Purchaser to effect the
Transactions are subject to the following conditions:

       

      (a)    Officer’s
Certificate.  Purchaser shall have received a certificate,
executed by the Chief Executive Officer of the Company, which shall (i) certify
to and attach a copy of the then-current Certificate of Incorporation of the
Company, issued by the Registrar of Companies for England and Wales and
certified by a director of the Company, (ii) certify to and attach a copy of the
resolutions of the Board and/or the members of the Company, as applicable,
evidencing the adoption and approval of this Agreement and the Transactions,
(iii) certify to and attach a copy of the then-current Memorandum of Association
of the Company, (iv) certify to and attach a copy of the then-current Articles
of Association of the Company, and (v) attach a certificate of good standing
issued by the Registrar of Companies for England and Wales as of a date not more
than five calendar days prior to the Closing Date.

       

      (b)    Closing
Documentation.  Purchaser shall have received (i) the Estimated
Balance Sheet, (ii) the Closing Indebtedness, (iii) the Schedule of Company
Transaction Costs and (iv) the Closing Certificate.

       

      (c)    Shareholder
List.  The Company shall have delivered to Purchaser for review
a detailed spreadsheet, in such form as may be reasonably requested by the
Purchaser, setting forth (i) the name and address of each Seller and the
Neil Bruce Copp Shareholder, as well as the number of Company Ordinary Shares
held of record by each such Seller and the Neil Bruce Copp Shareholder, as of
immediately prior to the Closing Date, and (ii) wire transfer instructions
or other means and address of payment for each Seller and the Neil Bruce Copp
Shareholder.

       

      
        
          
          

        

        
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      (d)    Director and Officer
Resignations.  Purchaser shall have received a written
resignation from each director and officer of the Company, in a form reasonably
acceptable to the Purchaser, effective as of the Closing Date.

       

      (e)    Absence of
Liabilities.  Purchaser shall have received evidence that all
Closing Indebtedness and Transaction Costs shall have been satisfied in full (or
payment has been provided for in the Adjustment Statement) and the Company shall
have no further liability or obligation for any such Closing Indebtedness or
Transaction Costs, except as so provided.

       

      (f)    Receipt Share Transfer Forms
and Certificates. Purchaser shall have received duly executed stock
transfer forms, in such form as is reasonably satisfactory to the Purchaser,
transferring ownership in the Shares to the Purchaser and certificates for the
shares (or indemnitees in respect thereof in the agreed form).

       

      (g)    Required Corporation
Action.  Purchasers shall have received evidence that all
necessary corporate and other action of the Sellers, the Neil Bruce Copp
Shareholder and the Company (including action by the Board of Directors of the
Company and shareholders of the Company, as required) shall have been
taken.

       

      (h)    Company
Books.  Purchaser shall have received statutory registers,
minute books, share certificate books, account records and all other books (all
duly written up to but not including the Closing Date) of the Company and
Personal Protection Systems.

       

      7.2   Satisfaction of
Conditions.  The Purchaser hereby agrees that by executing this
Agreement they have accepted that the Sellers and the Neil Bruce Copp have fully
satisfied all the closing conditions set out in Article 7.1.

       

      7.3   Post Closing
Obligations Whitcher and Nobbs shall procure that following Closing
Wolanski & Co Trustees Ltd enter into the Lease Deed of Variation in the
form agreed immediately prior to Closing.

       

      ARTICLE
8.

       

      RECOURSE
FOR DAMAGES

       

      8.1   Survival.  All
of the warranties (including those warranties set forth in Article 2, Article 3 and Article 4) and
covenants contained herein or in any instrument or document delivered or to be
delivered pursuant to this Agreement, and the rights of the Sellers, the Neil
Bruce Copp Shareholder, the Company and the Purchaser to recover for damages
incurred by them, as set forth in this Article 8, shall
survive the execution of this Agreement and the Closing Date notwithstanding any
investigation heretofore or hereafter made by or on behalf of any party hereto
or any Knowledge of facts determined or determinable by any party hereto and
shall continue until, and all claims with respect thereto shall be made on or
prior to September 4, 2011, except for (a) the warranties set forth in
(i) Article
2.3 (Capitalization), Article 3.1
(Authority and Binding Nature of Agreement) and Article 3.2
(Ownership and Transfer of Shares), Article 4 (Warranties
of Purchaser and Versar) and Article 5 (Versar
Guarantee of Purchaser Obligations) which shall survive indefinitely, (ii) the
Tax Warranties and the Tax Covenant, which shall survive until the seventh
anniversary of the Closing Date; (b) warranties, covenants and other
matters for which notice of a claim for recovery has been given in accordance
with this Agreement as of the end of the applicable period referred to above, in
which event such warranties, covenants and other matters that serve as the basis
for such claim shall survive until the final disposition of such claim;
(c) covenants to be performed after the Closing Date, which shall survive
until performed in accordance with their respective terms and (d) claims
relating to fraud, which shall survive indefinitely.

       

      
        
          
          

        

        
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                 For
the avoidance of doubt there shall be no inference that by the Company giving
warranties under this Agreement such warranties are deemed to given by any
shareholder, employee, officer, agent, representative or advisor of the
Company.

       

      8.2   Recovery by Purchaser
Parties.

       

      (a)    In the
event a Purchaser Party suffers or incurs or otherwise becomes subject to any
Damages which arise from or as a result of:

       

      (i)   any
inaccuracy in or breach of any warranty of the Company and such warranty being
given by Nobbs and Whitcher set forth in Article 2 of this
Agreement;

       

      (ii)    any
breach of any covenant given by the Company (in each case as to which Nobbs and
Whitcher shall have responsibility) in Article 6 of this Agreement;

       

      (iii)    any
unpaid Transaction Costs and other Closing Indebtedness, without duplication,
that was not paid prior to the Closing Date, unless it has been provided for in
the Adjustment Statement;

       

      (iv)   any
liability or obligation of the Company pursuant to the Tax Covenant in
accordance with the provisions thereof;

       

      (v)    Damages
related to the matters described on Schedule 8.2(v)
hereof, which is incorporated herein by reference;

       

      (vi)   all
demands, assessments, judgments, costs and reasonable legal and other expenses
arising from, or in connection with, any action, suit, proceeding or claim
incident to any of the foregoing,

       

      subject to the provisions of this
Article 8, such Purchaser Party shall be fully indemnified, defended and held
harmless by Whitcher and Nobbs, jointly and severally, from, against, and in
respect of any and all such Damages, on a GBP£1 for GBP£1 basis, and the
Purchaser and Versar shall have the right to set off the amount of any such
Damages to the extent such setoff satisfies the amount of Damages owed pursuant
to Article 8.5,
and shall be entitled to additional payment from Whitcher and Nobbs with respect
to any excess of such Damages (but subject always to the limitations set forth
in this Article
8).

       

      (b)    In the
event a Purchaser Party suffers or incurs or otherwise becomes subject to any
Damages which arise from or as a result of:

       

      
        
          
          

        

        
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      (i)   any
inaccuracy in or breach of any warranty of a Seller or the Neil Bruce Copp
Shareholder, as the case may be, set forth in Article 3 of this
Agreement

       

      (ii)    any
breach of the covenant given by each Seller or the Neil Bruce Copp Shareholder,
as the case may be, contained in Article 6 of this Agreement,

       

      subject to this Article 8, such
Purchaser Party shall be indemnified, defended and held harmless from, against,
and in respect of, any and all such Damages, on a GBP£1 for GBP£1 basis, by the
Seller or the Neil Bruce Copp Shareholder who provided such inaccuracy or
breached such warranty, covenant or obligation, and the Purchaser and Versar
shall have the right to setoff the amount of any such Damages to the extent such
setoff satisfies the amount of Damages owed pursuant to Article 8.5, and
shall be entitled to additional payment from such Seller or the Neil Bruce Copp
Shareholder with respect to any excess of such Damages (but subject always to
the limitations set forth in this Article
8).

       

      8.3   Recovery by Seller and the
Neil Bruce Copp Shareholder.  In the event a Seller or the Neil
Bruce Copp Shareholder suffers or incurs or otherwise become subject to any
Damages which arise from or as a result of:

       

      (i)   any
inaccuracy or breach of any warranty of the Purchaser or Versar set forth in
Article 4
of this Agreement; and

       

      (ii)    any
breach of any covenant or obligation of Purchaser or Versar contained in this
Agreement,

       

      such Seller or the Neil Bruce Copp
Shareholder shall be indemnified, defended and held harmless from, against, and
in respect of, any and all such Damages, on a GBP£1 for GBP£1 basis, by the
Purchaser and Versar (but subject always to the limitations set forth in this
Article 8).

       

      8.4   Basket; Limitation on
Liability.

       

      (a)    The
Purchaser Parties shall not be entitled to recovery for Damages arising under
Sections 8.2(a)(i),
(ii), (iv), (v) and (vi) or Sections 8.2(b)(i) and
(ii), until the aggregate amount of all Damages suffered by the Purchaser
Parties, exceeds GBP£65,000 (the “Basket”), in which
case the Purchaser Parties shall be entitled to recover for the aggregate amount
of all Damages suffered. From and after such time as the amount of the Basket
has been exceeded, the Purchaser Parties shall be entitled to recover additional
Damages to the extent such Damages equal at least GBP£15,000 in the aggregate.
For the avoidance of doubt, Damages suffered by the Purchaser Parties pursuant
to Sections
8.2(a)(iii) relating to a breach of the Title Warranties shall not be
subject to the Basket or any limitation on the size of individual claims, and
the Purchaser Parties shall be entitled to recover for the aggregate amount of
such Damages.

       

      
        
          
          

        

        
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      (b)    Notwithstanding
anything contained in this Agreement to the contrary, the aggregate maximum
amount that the Purchaser Parties shall be entitled to recover (including by
offset) in respect of Damages under this Agreement (including this Article 8), the
Related Agreements and under all other theories of liability (including all
costs and interest), shall not exceed in the case of any Damages which arise
from or as a result of or are, directly or indirectly, related to or in
connection with Sections 8.2(a)(i),
(ii), (iv), (v) and (vi) or Sections 8.2(b)(i) and
(ii) (excluding any inaccuracy in or breach of a warranty set forth in
the Title Warranties, as to which such the maximum amount the Purchaser Parties
shall be entitled to recover (including by offset) shall not exceed 100% of the
consideration payable to such Seller or the Neil Bruce Copp Shareholder, as the
case may be, who breached such warranty, or situations of fraud, as to which
there shall be no limit), an aggregate amount from each Seller or the Neil Bruce
Copp Shareholder, as the case may be, making payment for such indemnification
not to exceed 33% of the consideration payable to such Seller or the Neil Bruce
Copp Shareholder, as the case may be, giving the indemnity and
warranty.

       

      8.5   Offset Against Seller Notes
and Contingent Consideration.

       

      (a)    In the
event the Purchaser or Versar shall suffer any Damages for which such Purchaser
Party is entitled to recovery under this Article 8, such
Purchaser Party shall, subject to compliance with the procedures set forth in
Article 8.6 and
Article 8.7,
set off an amount equal to such Damages first by offsetting an amount equal to
the aggregate amount of such Damages (converted into U.S. dollars as set forth
below) against the total principal and accrued interest outstanding under the
Claim Recipient’s Seller Notes only (such reduction to be applied to the
outstanding principal amount and accrued but unpaid interest thereon which is
next due for payment),, and, second, subject to Article 8.5(b), to the extent
such Purchaser Party is entitled to recovery for such Damages from Whitcher and
Nobbs, from any Contingent Consideration that becomes payable pursuant to Article
1.7.  Purchaser Party shall not be entitled to set off more
than once for the same Damages. To the extent the Purchaser Party’s right to
recover arises pursuant to the terms of this agreement, any such offset shall be
made solely from the principal and accrued interest outstanding under the Seller
Note held by the Seller or the Neil Bruce Copp Shareholder whose breach gave
rise to such recovery, as applicable. Damages to be offset against the
outstanding balances under the Claim Recipient’s Seller Notes shall be converted
into U.S. dollars, if necessary, using the same exchange rate applied to the
amount paid by the Purchaser to the Sellers and the Neil Bruce Copp Shareholder
at Closing. To the extent that the above rights of set off are not sufficient to
satisfy the Purchaser’s or Versar’s claim for Damages, such Purchaser Party
shall be entitled to recover for such Damages directly from the Seller or the
Neil Bruce Copp Shareholder giving such indemnification.

       

      (b)    Notwithstanding
anything herein or in the Seller Notes to the contrary, if there is a Claimed
Amount or a Contested Amount on the date on which final payment of the principal
amount and accrued interest under the Seller Notes is due or Whitcher and Nobbs
are entitled to payment of any Contingent Consideration pursuant to Article 1.7
(the “Repayment Date”), the Purchaser shall be entitled to withhold an amount
equal to 100% of any Claimed Amount or Contested Amount, as applicable
(converted into U.S. dollars, if necessary, using the same exchange rate applied
to the amount paid by the Purchaser to the Sellers and the Neil Bruce Copp
Shareholder at Closing), in accordance with Article 8.5(a) hereof
from the payments due to the Claim Recipient (the “Withheld Amount”);
provided that within one (1) Business Day after the Redemption Date, 100% of the
Withheld Amount shall be deposited by the Purchaser in the Joint Account until
the  Claimed Amount or Contested Amount, as applicable, is finally
determined in accordance with the terms set forth in this Agreement, at which
time the whole or part (as applicable) of the Withheld Amount shall within five
(5) Business Days of such determination be either returned to the Purchaser or
paid to the Claim Recipient from whom the amount was withheld or, in the case of
the Contingent Consideration, paid only to Whitcher and Nobbs, together with any
accrued interest thereon less any setoff that the Purchaser is entitled to make
after such determination in accordance with Article 8.5(a) of
this Agreement.

       

      
        
          
          

        

        
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      8.6   Procedure for Recovery of
Damages.

       

      (a)    If a
party hereunder has or claims to have incurred or suffered Damages for which it
is or may be entitled to recovery under this Agreement, such party (the “Claiming Party”)
shall promptly (and no later than 2 Business Days following the Claiming Party
having Knowledge of such claim) deliver a written claim notice (a “Claim Notice”) to the
party or parties hereto from whom recovery is demanded (the “Claim
Recipient”).  Each Claim Notice shall state (i) that such party
believes that there is or has been a breach of a warranty or covenant contained
in this Agreement or that such party is otherwise entitled to recovery of
Damages pursuant to this Article 8, (ii) a
reasonably detailed description of the circumstances supporting the basis for
such party’s belief that there is or has been such a breach or the basis for
which such party is so entitled to recovery of Damages under this Article 8, and (iii)
the estimated amount of Damages such party claims to have so incurred or
suffered (the “Claimed
Amount”).

       

      (b)    Within thirty (30)
days after receipt of a Claim Notice, the Claim Recipient may deliver to the
Claiming Party a written response (the “Response Notice”) in
which the Claim Recipient:  (i) agrees that the Claiming Party is
entitled to the full Claimed Amount; (ii) agrees that the Claiming Party is
entitled to an amount equal to part, but not all, of the Claimed Amount (the
“Agreed
Amount”); or (iii) objects to the full Claimed
Amount.  Any part of the Claimed Amount that is not agreed to pursuant
to the Response Notice shall be the “Contested
Amount.”  If a Response Notice is not received by the Claiming
Party within such 30-day period, then the Claim Recipient shall be conclusively
deemed to have agreed that an amount equal to the full Claimed Amount is due and
payable pursuant to this Article 8.

       

      (c)    Following
the receipt of a Claim Notice the Claiming Party shall give the Claim Recipient
a right to remedy such breach of the Agreement which is capable of remedy within
twenty five (25) days after receipt of a Claim Notice, but any such cure shall
not relieve the Claim Recipient of its obligations to indemnify the Claiming
Party for any Damages that are not recovered as a result of such
cure.

       

      (d)    If the
Claim Recipient delivers a Response Notice agreeing to the full Claimed Amount
or an Agreed Amount, such Claimed Amount or Agreed Amount shall be satisfied in
full within ten (10) Business Days of the date of such Response Notice,
including, to the extent applicable and permitted pursuant to this Agreement, by
off set against the outstanding balance under the Seller Notes or any Contingent
Consideration payable.

       

      (e)    If the
Claim Recipient delivers a Response Notice indicating that there is a Contested
Amount, the Claim Recipient and the Claiming Party shall attempt in good faith
to resolve the dispute related to the Contested Amount.  If the
Claiming Party and the Claim Recipient resolve such dispute, such resolution
shall be binding on the Claim Recipient and such Claiming Party, and the amount
determined pursuant such resolution shall be paid to the Claiming Party within
ten (10) Business Days of resolution to such dispute.

       

      
        
          
          

        

        
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      (f)    If the
Claim Recipient and the Claiming Party are unable to resolve the dispute related
to the Contested Amount within thirty (30) days after delivery of the Response
Notice, either the Claim Recipient or the Claiming Party may demand arbitration
of the matter unless the amount of the Damages is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration.  In the
event such dispute is submitted to arbitration as provided above, then such
dispute shall be settled by arbitration conducted by one arbitrator mutually
agreeable to the Claim Recipient and the Claiming Party.  In the event
that, within thirty (30) days after submission of any dispute related to a
Contested Amount to arbitration, the Claim Recipient and the Claiming Party
cannot mutually agree on one arbitrator, then, within fifteen (15) days after
the end of such thirty (30) day period, the Claim Recipient, on the one hand,
and the Claiming Party, on the other hand, shall each select one
arbitrator.  The two arbitrators so selected shall select a third
arbitrator.  Any such arbitration shall be conducted in the English
language and held in London, England, under the rules then in effect of the
Chartered Institute of Arbitrators.

       

      (g)    The
arbitrators shall (i) determine how all expenses relating to the arbitration
shall be paid, including without limitation, the fees of each arbitrator and the
administrative fee of the Chartered Institute of Arbitrators, (ii) set a limited
time period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity (adequate in the sole
judgment of the arbitrator) to discover relevant information about the subject
matter of the dispute, (iii) rule upon motions to compel or limit discovery, and
(iv) have the authority to impose sanctions, including attorneys’ fees and
costs, to the same extent as a competent court of law or equity, should the
arbitrator determine that discovery was sought without substantial justification
or that discovery was refused or objected to without substantial
justification.  The decision of the arbitrators as to whether the
Contested Amount is payable by the Claim Recipient and any other matter
determined by the arbitrators shall be final, binding, and conclusive. Such
amount shall be treated as of the full Claimed Amount and shall be satisfied as
set forth above.

       

      
        
          
          

        

        
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      8.7   Third Party
Claims.  Except as otherwise provided in this Agreement, the
following procedures shall be applicable with respect to recovery for claims
made by third parties (“Third Party
Claims”).  After receipt by a Claiming Party of notice of the
commencement of any action or the assertion of any Legal Proceeding, liability
or obligation by a third party (whether by legal process or otherwise), against
which Legal Proceeding, liability or obligation the Claiming Party is entitled
to recover from one or more parties under this Agreement, the Claiming Party
will promptly (and no later than 2 Business Days following the Claiming Party
having Knowledge of such claim) notify the Purchaser, the Sellers or the Neil
Bruce Copp Shareholder against whom recovery is sought (the “Indemnifying Party”)
in writing of the commencement or assertion thereof and provide a copy of such
Third Party Claim, process and all legal pleadings; provided, however, that any
failure by the Claiming Party to so notify the Indemnifying Party shall not
limit any of the Claiming Party’s rights to recover Damages under this Article 8 (except to
the extent such failure actually prejudices the defence of such Third Party
Claim).  The Indemnifying Party shall have the right, exercisable upon
written notice within 10 Business Days after receipt of such notice, to assume
the defence of such action with counsel of reputable standing unless in such
action injunctive or equitable remedies have been sought therein in respect of
the Claiming Party, the Purchaser or the Company.  The Indemnifying
Party and the Claiming Party shall reasonably cooperate in the defence of such
claims.  If the Indemnifying Party shall assume or participate in the
defence of such Third Party Claim as provided herein, the Claiming Party shall
make available to the Indemnifying Party all relevant records and take such
other action and sign such documents as are necessary to defend such Third Party
Claim in a timely manner. If the Claiming Party shall be required by judgment or
a settlement agreement to pay any amount in respect of any obligation or
liability against which the Claiming Party is entitled to recover under this
Agreement, such amount, net of any insurance proceeds actually recovered (less
any amounts reasonably incurred by the claiming parties in order to secure such
recoveries, including any applicable insurance deductibles), shall be paid by
the Indemnifying Party, including by offset against the outstanding balance
under the Indemnifying Parties’ Seller Notes or any Indemnifying Parties’
Contingent Consideration payable, if applicable.  No Indemnifying
Party, in the defence of any such Third Party Claim, shall, except with the
written consent of the Claiming Party (which consent shall not be unreasonably
withheld or delayed), consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Claiming Party of a release from all liability
with respect to such claim or litigation. In the event that the Indemnifying
Party does not assume the defence of any matter for which it is entitled to
assume such defence as provided above, the Claiming Party shall have the full
right to defend against any such claim or demand, and shall be entitled to in
good faith settle or agree to pay in full such claim or demand, in its sole
discretion; provided, that the
Claiming Party may, at its or their option, seek the consent of the Indemnifying
Party to such settlement or payment (which consent shall not be unreasonably
withheld or delayed), and, if such consent is given, such settlement shall be
finally determined to have been made by the Claiming Party in good
faith.

       

      
        
          
          

        

        
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      If the
Indemnifying Party shall have assumed the defence of an action pursuant to this
Article 8.7, a
Claiming Party shall have the right to participate in the defence of such action
with its own counsel, but the fees and expenses of such counsel shall be at the
expense of the Claiming Party unless (a) the employment of such counsel
shall have been authorized in writing by the Indemnifying Party in connection
with the defence of such action or claim, (b) the Indemnifying Party shall
not have employed counsel in the defence of such action or claim, or
(c) such Claiming Party shall have reasonably concluded on the advice of
its counsel that there may be defences available to it which are contrary to, or
inconsistent with, those available to the Indemnifying Party, thus preventing
the Indemnifying Party’s counsel from adequately representing the Indemnifying
Party and the Claiming Party, in any of which events such fees and expenses of
not more than one additional counsel for the Claiming Party shall be borne by
the Indemnifying Party.

       

      8.8   Characterization of
Recovery.  The parties agree to treat any recovery of Damages
received by the Purchaser Parties under this Agreement as an adjustment to the
purchase price for Tax purposes, unless otherwise required by applicable
law.

       

      8.9   No
Contribution.  No Indemnifying Party shall have and shall not
exercise or assert (or attempt to exercise or assert), any right of
contribution, right of recovery or other right or remedy against the Company or
any of its officers or directors in connection with any reimbursement obligation
or any other liability to which such Indemnifying Party may become subject under
or in connection with this Agreement.

       

      8.10         
Obligations Regarding
Mitigation.  The Purchaser Parties shall attempt to mitigate
the amount of Damages to which they shall be entitled pursuant to this Article 8 by seeking
recourse for a reasonable period of time against any third party from which the
Company is entitled to payment with respect to such Damages, in whole or in
part, and by seeking insurance coverage for any such Damages to the extent that
Versar or Purchaser has maintained insurance relating to such matter and if any
sum is so recovered then either the amount then payable by the Sellers and the
Neil Bruce Copp Shareholder (as applicable) in respect of those Damages shall be
reduced by an amount equal to the sum so recovered or (if any amount shall
already have been paid by any of the Sellers and the Neil Bruce Copp Shareholder
(as applicable) in respect of those Damages) there shall be repaid to the
Sellers and the Neil Bruce Copp Shareholder (as applicable) an amount equal to
the amount so recovered or (if less) the amount of such payment (to the extent
not previously repaid by the Purchaser.

       

      8.11         
If the
Purchaser Parties make a Claim Saving, then either the amount then payable by
the Sellers and the Neil Bruce Copp Shareholder (as applicable) in respect of
any Damages pursuant to this Agreement shall be reduced by an amount equal to
the Claim Saving Amount or (if any amount shall already have been paid by any of
the Sellers and the Neil Bruce Copp Shareholder (as applicable) in respect of
any Damages claimed under this Agreement) there shall be repaid to the Sellers
and the Neil Bruce Copp Shareholder (as applicable) an amount equal to the Claim
Saving Amount or (if less) the amount of such payment (to the extent not
previously repaid by the Purchaser Parties).

       

      
        
          
          

        

        
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      8.12 
        Limitations.  Notwithstanding
anything in this Article 8 to the
contrary, the Sellers and Neil Bruce Copp Shareholder shall have no liability
(or such liability shall be reduced) in respect of any Damages under this
Agreement:

       

      (a)    to the
extent that Damages are expressly excluded or limited under the provisions of
this Article 8; or

       

      (b)    the
Purchaser Parties are compensated for any such matter under any other provision
of this Agreement; or

       

      (c)    a
provision or reserve in respect thereof is made in the Company Financial
Statements or in the statements produced as part of the Post-Closing Purchase
Price Adjustment; or

       

      (d)    such
Damages arise or is increased as a result of a change in the law or published
administrative or revenue practice or interpretation announced and coming into
force on or after Closing (or any Taxation legislation not in force at the date
of this Agreement) which takes effect retrospectively or the withdrawal after
the date of this Agreement of any published concession or published general
practice previously made by HM Revenue and Customs or other taxing authority;
or

       

      (e)    if and to
the extent that such Damages occur or are increased as a result of any increase
in the rate of Taxation in force at the date of this Agreement; or

       

      (f)    it would
not have arisen but for a change after Closing in the accounting bases upon
which the Company values its assets (other than a change made in order to comply
with GAAP or any applicable Tax Statute); or

       

      (g)    if and to
the extent that such Damages occur as a result of or is otherwise attributable
to the Purchaser Parties disclaiming after Closing any part of the benefit of
capital or other allowances against Taxation claimed by the Company on or before
the date of this Agreement and disclosed in the Company Disclosure Schedule;
or

       

      (h)    if and to
the extent that such Damages are attributable to any voluntary act or omission
of or transaction or arrangement carried out by the Purchaser Party after the
date of Closing otherwise than:

       

      (i)   in the
ordinary course of business (and, for the avoidance of doubt, any action taken
by the Purchaser Party after Closing with the Knowledge that such action would
cause loss to the Purchaser Party and be recoverable under Article 8.2 of this
Agreement shall not be considered to have been made “in the ordinary course of
business”); or

       

      
        
          
          

        

        
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      (ii)    pursuant
to a legally binding obligation entered into by the Company prior to Closing;
or

       

      (i)   if and to
the extent that such Damages relate to a liability for Taxation which would not
have arisen but for any winding up or cessation after the Closing Date of any
trade or business carried on by the Company; or

       

      (j)   such
Damages arise or are increased as a result of a failure or omission of the
Company or Purchaser to make any claim, election, surrender or disclaimer or
give any notice or consent after Closing the making, giving, or doing of which
was taken into account or assumed in the provision or reserve for Tax or
deferred Tax in the Company Financial Statements; or

       

      (k)    if and to
the extent that there has been a Windfall (to the extent not previously used in
respect of any claim under the Tax Covenant).

       

      8.13        
For the
avoidance of doubt the Purchaser Party shall not be entitled to recover Damages
to the extent it has already made recovery in respect of the same loss or damage
under this Agreement.

       

      ARTICLE
9.

       

      MISCELLANEOUS
PROVISIONS

       

      9.1    Further
Assurances.  Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (on or
after the Closing Date) for the purpose of carrying out or evidencing any of the
transactions contemplated by this Agreement, any of the Related Agreements or
any of the other documents, certificates, etc. executed or delivered in
connection therewith.

       

      9.2    Fees and
Expenses.  Each party to this Agreement shall bear and pay all
fees, costs and expenses (including legal fees and accounting fees) that have
been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Purchaser and its Representatives with
respect to the Company’s business (and the furnishing of information to
Purchaser and its Representatives in connection with such investigation and
review), (b) the negotiation, preparation and review of this Agreement
(including the Company Disclosure Schedule), the Related Agreements and all
agreements, certificates, opinions and other instruments and documents delivered
or to be delivered in connection with the transactions contemplated by this
Agreement or the Related Agreements, (c) the preparation and submission of
any filing or notice required to be made or given in connection with any of the
transactions contemplated by this Agreement or the Related Agreements, and the
obtaining of any Consent required to be obtained in connection with any of such
transactions, and (d) the consummation of the Transactions.

       

      
        
          
          

        

        
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      9.3    Amendment.  This
Agreement may be amended only by an instrument in writing signed by the Company,
Purchaser and the Sellers and the Neil Bruce Copp Shareholder at any
time.

       

      9.4    Waiver; Remedies
Cumulative.  The rights and remedies of the parties to this
Agreement are cumulative and not alternative.  Neither any failure nor
any delay by any party in exercising any right, power or privilege under this
Agreement, any of the Related Agreements or any of the documents referred to in
this Agreement will operate as a waiver of such right, power or privilege and no
single or partial exercise of any such right, power or privilege will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege.  To the maximum extent
permitted by applicable Legal Requirements, (i) no claim or right arising
out of this Agreement, any of the Related Agreements or any of the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (ii) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and
(iii) no notice to or demand on one party will be deemed to be a waiver of
any obligation of that party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.

       

      9.5    Entire
Agreement.  This Agreement and the Related Agreements
constitute the entire agreement among the parties to this Agreement and
supersedes all other prior agreements and understandings, both written and oral,
among or between any of the parties with respect to the subject matter hereof
and thereof. This Article 9.5 shall not exclude any representations made
fraudulently.

       

      9.6    Execution of Agreement;
Counterparts; Electronic Signatures.

       

      (a)    This
Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same instrument, and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties; it being understood that all parties need
not sign the same counterparts.

       

      9.7    Governing Law and Submission
to Jurisdiction; Appointment of Process Agent:

       

      (a)    This
Agreement shall be governed by and construed in accordance with the laws of
England and Wales.

       

      (b)    The
parties irrevocably agree that the courts of England are to have exclusive
jurisdiction to settle any dispute that may arise out of or in connection with
this Agreement and that any proceedings arising out of or in connection with
this Agreement shall be brought in such courts. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction (both subject matter and
personal jurisdiction) of such courts and waives any objection to proceedings in
any such court on the ground of venue or on the ground that proceedings have
been brought in an inconvenient forum.

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

      

      (c)    The
Purchaser hereby irrevocably appoints the Company, Sherborne Drive, Tilbrook,
Milton Keynes, United Kingdom, MK7 8HX, UK, as its agent to accept service of
process in England in any legal action or proceedings arising out of this
Agreement following the Closing, service upon whom shall be deemed completed
whether or not forwarded to or received by the Purchaser.

       

      (d)    If such
process agent ceases to be able to act as such or to have an address in England,
each party irrevocably agrees to appoint a new process agent in England
acceptable to the other party and to deliver to the other party within 14 days a
copy of a written acceptance of appointment by the process agent.

       

      9.8    Assignment and
Successors.  No party may assign any of its rights or delegate
any of its obligations under this Agreement without the prior written consent of
the other parties, except that Purchaser may assign any of its rights and
delegate any of its obligations under this Agreement to any Purchaser Party (it
being agreed and acknowledged that Versar will continue to guarantee the
performance of such Purchaser Party pursuant to the terms of Article 5, provided
that if such assignee ceases to be a member of the Purchaser’s Group, this
Agreement and the benefits arising under it shall be deemed automatically by
that fact to have been transferred to the Purchaser immediately before the
assignee ceases to be a member of the Purchaser’s Group).  Subject to
the preceding, this Agreement will apply to, be binding in all respects upon and
inure to the benefit of the successors and permitted assigns of the
parties.

       

      9.9    Parties in
Interest.  Except as set forth in Article 8, none of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties hereto and their respective successors and
assigns (if any).

       

      9.10   Notices.  All
notices and other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given (a) upon actual
receipt, when delivered by hand, (b) upon receipt of transmission
confirmation, when sent by facsimile, (c) three Business Days after mailing
by prepaid registered or certified mail within the United States, (d) one
Business Day after sending by overnight courier (with postage prepaid and
confirmation requested) within the United States or (e) two Business Days
after sending by international courier (with postage prepaid and confirmation
requested):

       

      if to
Purchaser:

      

      Versar,
Inc.

      6850
Versar Center

      Springfield,
VA 22151

      Fax
No.:  (703) 642-6850

      Attention:  James
C. Dobbs, General Counsel

      

      
        
          
          

        

        
          55

          
            

          

        

        
          
          

        

      

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

      

      Paul,
Hastings, Janofsky & Walker LLP

      600
Peachtree Street, N.E.

      Suite
2400

      Atlanta,
GA 30308

      Attention:  Elizabeth
H. Noe

      Fax
No.:  (404) 685-5287

      

      if to the
Company:

      

      Professional
Protection Systems Limited

      Sherborne
Drive, Tilbrook

      Milton
Keynes

      United
Kingdom

      MK7
8HX

      Fax:
__________________

      Attention:
Mark Whitcher

      

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

      

      Stephen
Nobbs

      Pinehurst
23

      Prospect
Lane

      Harpenden

      Hertfordshire

      AL5
2PL

      Fax:
__________________

      

      

      If to one
or more Sellers or the Neil Bruce Copp Shareholder individually, to the address
set forth for such Seller or the Neil Bruce Copp Shareholder on the signature
page hereto.

       

      9.11       
Construction;
Usage.

       

      (a)    Interpretation.  In
this Agreement, unless a clear contrary intention appears:

       

      (i)    the
singular number includes the plural number and vice versa;

       

      
        
          
          

        

        
          56

          
            

          

        

        
          
          

        

      

      (ii)    reference
to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are not prohibited by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any other
capacity or individually;

       

      (iii)    reference
to any gender includes each other gender;

       

      (iv)   reference
to any agreement, document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof;

       

      (v)    reference
to any Legal Requirement means such Legal Requirement as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect from time to
time, including rules and regulations promulgated thereunder, and reference to
any section or other provision of any Legal Requirement means that provision of
such Legal Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment of
such section or other provision; provided that the effect of any such amendment,
modification, codification, replacement or reenactment shall not create any
additional liability upon any party to this Agreement;

       

      (vi)    “hereunder,”
“hereof,” “hereto,” and words of similar import shall be deemed references to
this Agreement as a whole and not to any particular Article or other provision
hereof;

       

      (vii)   “including”
means including without limiting the generality of any description preceding
such term; and

       

      (viii)        
references
to documents, instruments or agreements shall be deemed to refer as well to all
addenda, exhibits, schedules or amendments thereto.

       

      (b)    Legal Representation of the
Parties.  This Agreement was negotiated by the parties with the
benefit of legal representation.

       

      (c)   Headings.  The
headings contained in this Agreement are for the convenience of reference only,
shall not be deemed to be a part of this Agreement and shall not be referred to
in connection with the construction or interpretation of this
Agreement.

       

      9.12        
Enforcement of
Agreement. The parties acknowledge
and agree that each of them would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with their specific
terms and that any breach of this Agreement could not be adequately compensated
in all cases by monetary damages alone.  Accordingly, in addition to
any other right or remedy to which any party may be entitled, at law or in
equity, it shall be entitled to enforce any provision of this Agreement by a
decree of specific performance and temporary, preliminary and permanent
injunctive relief to prevent breaches or threatened breaches of any of the
provisions of this Agreement, without posting any bond or other
undertaking.

       

      9.13         Severability.  If
any provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

       

      
        
          
          

        

        
          57

          
            

          

        

        
          
          

        

      

      The parties hereto have caused this
Agreement to be executed and delivered as of the date first set forth
above.

       

      
        
          	 	

                  PURCHASER:

                   

                  GEOI 1 Limited

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Michael
      T. Abram	 
	 	
                  Name:  Michael
      T. Abram 

                  Title:  Director

                	 

        

      
         

        
          
            	 	

                    
                      VERSAR:

                       

                      Versar, Inc.

                    

                  	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/ James
      Charles Dobbs	 
	 	Name:James
      Charles Dobbs 
Title:Senior
      Vice President	 

          

          
             

             

            
              	 	

                      
                        COMPANY

                        Professional
      Protection Systems Limited

                      

                    	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	/s/ Mark
      Whitcher	 
	 	Name:  Mark
      Whitcher 
Title:
      Managing Director	 

            

             

            
              
                
                

              

              
                1

                
                  

                

              

              
                
                

              

            

            
               

              
                
                  	 	

                          SELLERS:

                           

                        	 
	 	 	 	 
	
                           

                        	
                          By:
      

                        	/s/ Stephen
      Nobbs	 
	 	 	Name: Stephen
      Nobbs	 

                

              

               

              
                 

              

            

          

        

      

      Pinehurst
23

      Prospect
Lane

      Harpenden

      Hertfordshire

      AL5
2PL

      Fax:
__________________

       

       

      
        	
                 

              	
                By:
      

              	/s/ Mark
      Whitcher	 
	 	 	Name:  Mark
      Whitcher	 

         

      

       

      9 Slindon
Close

      Clanfield

      Hampshire

      PO8
0XZ

      Fax:
__________________

      

      
         

        
          	
                   

                	
                  By:
      

                	/s/ Jonathan
      Hambleton	 
	 	 	Name:  as
      attorney for Stephen Kimbell	 

           

        

         

      

      Peartree
House

      Pevers
Lane

      Weston
Underwood

      Olney

      MK46

      Fax:
__________________

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
         

        
          
            	
                     

                  	
                    By:
      

                  	/s/ Jonathan
      Hambleton	 
	 	 	Name:  as
      attorney for Peter Holden	 

             

          

        

         

      

      73 Putnoe
Lane

      Bedford

      Bedfordshire

      MK41
9AE

      Fax:
__________________

      

      
         

        
          
            	
                     

                  	
                    By:
      

                  	/s/ Jonathan
      Hambleton	 
	 	 	Name:  as
      attorney for Timothy Clark	 

             

          

        

      

       

      Rectory
Farm House

      Lower
Gravenhurst

      Bedfordshire

      MK45
4JR

      Fax:
__________________

       

      
        
          	
                   

                	
                  By:
      

                	/s/ Jonathan
      Hambleton	 
	 	 	Name:  Jonathan
      Hambleton	 

           

        

      

       

      Ashbrook
Farm

      Mill
Hill

      Keysoe

      Bedfordshire

      MK45
4RJ

      Fax:
__________________

      
         

        
          	
                   

                	
                  By:
      

                	/s/ Jonathan
      Hambleton	 
	 	 	Name:  as
      attorney for Richard Brown	 

           

           

        

      

      Clifton
House

      5
Timpsons Row

      Olney

      MK46
4JJ

      Fax:
__________________

      
 

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

      

      
        	
                 

              	
                By:
      

              	/s/ Stephen
      Nobbs	 
	 	 	Name:  as
      attorney for Simon Cuthbertson	 

         

      

       

      The Old
Coach House

      Lodge
Road

      Sharnbrook

       MK44
1JP

      Fax:
__________________

      

      
         

        
          	
                   

                	
                  By:
      

                	/s/ Stephen
      Nobbs	 
	 	 	Name:  as
      attorney for Oliver Wright	 

        

      

       

       

      10 High
Street

      Emberton

      Olney

      Buckinghamshire

      MK46
5DH

      Fax:
__________________

      

      
         

        
          	
                   

                	
                  By:
      

                	/s/ Stephen
      Nobbs	 
	 	 	Name:  as
      attorney for Ingrid Sladden	 

        

      

                                                              

       

      13 Sunset
Walk

      Eccles on
Sea

      Norwich

      NR12
0SX

      Fax:
__________________

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        
          	 	

                  
                    The
      Estate of Neil Bruce Copp, deceased 
Shareholder of the
      Company

                  

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Richard
      Benson	 
	 	Representing
      the Estate of Neil Bruce Copp	 

        

         

      

      

       

      c/o 2
Putney Hill

      London

      SW15
6AB

      Ref:
RMF

      Fax:
__________________

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      EXHIBIT
A

      CERTAIN
DEFINITIONS

       

      For
purposes of the Agreement (including this Exhibit A):

       

      “Accounting Referee”
shall have the meaning specified in Article
1.7(c)(iii).

       

      “Acquisition
Transaction” shall mean any transaction or series of transactions
involving:

       

      (a)    any
merger, consolidation, share exchange, share purchase, business combination,
issuance of securities, direct or indirect acquisition of securities,
recapitalization, tender offer, exchange offer or other similar transaction in
which (i) the Company is a constituent corporation or is otherwise
involved, (ii) a Person or “group”, as defined herein, of Persons directly
or indirectly acquires beneficial or record ownership of securities representing
more than 5% of the outstanding securities of any class of voting securities of
the Company or (iii) the Company issues securities representing more than
5% of the outstanding securities of any class of voting securities of the
Company;

       

      (b)    other
than inventory acquired and sold in the ordinary course of business, any direct
or indirect sale, lease, exchange, transfer, license, acquisition or disposition
of any business or businesses or of assets or rights that constitute or account
for 10% or more of the consolidated net revenues, net income or assets of the
Company; or

       

      (c)    any
liquidation or dissolution of any of the Company.

       

      “Adjustment Objection
Notice” shall have the meaning set forth in Article
1.8(f).

       

      “Adjustment Response
Period” shall have the meaning specified in Article
1.8(f).

       

      “Adjustment Statement”
shall have the meaning specified in Article
1.8(e).

       

      “Agreed Amount” shall
have the meaning specified in Article
8.6(b).

       

      “Agreement” shall have
the meaning specified in the introductory paragraph to this
Agreement.

       

      “Agreement Date” shall
have the meaning specified in the introductory paragraph to this
Agreement.

       

      “Balance Sheet” shall
have the meaning specified in Article
2.6(a)(i).

       

      “Balance Sheet Date”
shall have the meaning specified in Article
2.6(a)(ii).

       

      “Basket” shall have
the meaning specified in Article
8.4(a).

       

      “Board” shall have the
meaning specified in Article
2.1(d).

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      “Business” shall mean
the businesses of manufacture and distribution of personal protection and
decontamination products as carried on by the Company at Closing.

       

      “Business Day” shall
mean any day, other than a Saturday, Sunday or legal holiday in the State of New
York or in England, on which banks are open for substantially all their banking
business in New York and London.

       

      “CAA 2001” shall mean
the Capital Allowances Act 2001.

       

      “Capital Lease
Obligations” shall mean those lease obligations that are required to be
capitalized by the lessee pursuant to GAAP.

       

      “Cash Book Balance”
shall mean the net cash (cash to the credit in the Company’s bank accounts less
any indebtedness to Lloyds TSB Bank Plc incurred by the Company), as recorded in
the Company cash book.

       

      “CHAPS” shall mean the
Clearing House Automated Payment System.

       

      “Claim Notice” shall
have the meaning specified in Article
8.6(a).

       

      “Claim Recipient”
shall have the meaning specified in Article
8.6(a).

       

      “Claimed Amount” shall
have the meaning specified in Article
8.6(a).

       

      “Claiming Party” shall
have the meaning specified in Article
8.6(a).

       

      “Claim Saving”: shall mean a benefit or saving
received or made by a Purchaser Party as a direct result of a breach of any
provision of this Agreement.

       

      “Claim Saving Amount”
shall mean the monetary value of any Claim Saving actually received or
made by the Purchaser Party.

       

      “Closing” shall have
the meaning specified in Article
1.2.

       

      “Closing Certificate”
shall have the meaning specified in Article
1.4.

       

      “Closing Date” shall
have the meaning specified in Article
1.2.

       

      “Closing Indebtedness”
shall mean all Indebtedness of the Company outstanding immediately prior to the
Closing, other than Indebtedness with respect to the banking facility provided
by Lloyds TSB Bank Plc to the Company immediately prior to Closing (a copy of
such banking facility letter is provided at document 3.18 of the documents
attached to the Company Disclosure Schedule).

       

      “Company” shall have
the meaning specified in the introductory paragraph to this
Agreement.

       

      “Company Financial
Statements” shall have the meaning specified in Article
2.6(a).

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      “Company Constituent
Documents” shall have the meaning specified in Article
2.2.

       

      “Company
Contract” shall mean any Contract,
including any amendment or supplement thereto, (a) to which the Company is
a party; (b) by which the Company or any of its assets is bound or under
which the Company has any obligation or (c) under which Company has any
right or interest.

       

      “Company Disclosure
Schedule” shall mean the schedule
(dated as of the date of the Agreement) delivered to Purchaser on behalf of the
Company on the date of this Agreement.

       

      “Company Financial
Statements” shall have the meaning specified in Article
2.6(a).

       

      “Company Intellectual
Property” shall mean any and all Intellectual Property and Intellectual
Property Rights that are owned by, or claimed to be owned by, licensed to, or
filed in the name of the Company.

       

      “Company Material Adverse
Effect” An event, violation, inaccuracy, circumstance or other matter
will be deemed to have a “Material Adverse Effect” on the Company if,
individually or in the aggregate, such event, violation, inaccuracy,
circumstance or other matter had or could reasonably be expected to have a
material adverse effect on the business, assets, liabilities, operations, or
condition (financial or otherwise) of the Company, in any event if the adverse
effect for the Company has a value of more than US$50,000; provided, however, that Company
Material Adverse Effect shall not include any material adverse change, effect,
event, occurrence, state of facts or development (i) relating to or
resulting from the industry in which the Company operates generally or the U.S.
or European economy in general, only to the extent such adverse change, effect,
occurrence, state of fact or development does not affect the Company more
adversely than comparable Entities or (ii) resulting from any worldwide,
national or local crisis (political, economic, financial or regulatory),
including, without limitation, an outbreak or escalation of war, armed
hostilities, acts of terrorism, political instability or other national or
international calamity, crisis or emergency occurring within or outside the
United States or Europe.

       

      “Company Ordinary
Shares” shall have the meaning specified in Article
2.3(a).

       

      “Company Products”
shall mean all products, technologies and services developed (including
products, technologies and services under development), owned, made,
distributed, or sold by the Company.

       

      “Company Rights” shall
have the meaning specified in Article
2.3(c).

       

      “Company Year-End Financial
Statements” shall have the meaning specified in Article
2.6(a)(i).

       

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

      “Confidential
Information” means any data or information concerning the Company
(including trade secrets), without regard to form, regarding (for example and
including) (a) business process models, (b) proprietary software, (c) research,
development, products, services, marketing, selling, business plans, budgets,
unpublished financial statements, licenses, prices, costs, Contracts, suppliers,
customers, and customer lists, (d) the identity, skills and compensation of
employees, contractors, and consultants, (e) specialized training or (f)
discoveries, developments, trade secrets, processes, formulas, data, lists, and
all other works of authorship, mask works, ideas, concepts, know-how, designs,
and techniques, whether or not any of the foregoing is or are patentable,
copyrightable, or registrable under any intellectual property laws or industrial
property laws in the United Kingdom or elsewhere.  Notwithstanding the
foregoing, no data or information constitutes “Confidential Information” if such
data or information is publicly known and in the public domain through means
that do not involve a breach by the Company or a Seller or the Neil Bruce Copp
Shareholder of any covenant or obligation set forth in this
Agreement.

       

      “Confidentiality
Agreement” shall have the meaning specified in Article
6.2.

       

      “Consent” shall mean any approval,
consent, ratification, permission, waiver or authorization (including any
Governmental Authorization).

       

      “Contested Amount”
shall have the meaning specified in Article
8.6(b).

       

      “Contingent
Consideration” shall have the meaning specified in Article
1.7(a).

       

      “Contract” shall mean any written
agreement, oral or other agreement, contract, subcontract, lease, instrument,
note, warranty, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature, whether express or
implied.

       

      “Damages” shall include any actual
loss, damage, injury, liability, claim, demand, settlement, judgment, award,
fine, penalty, fee (including reasonable attorneys’ fees), charge, cost or
expense (including interest and reasonable costs of investigation, as
applicable).

       

      “Earn-Out Statement”
shall have the meaning specified in Article
1.7(c)(ii).

       

      “EBITDA” shall have
the meaning specified in Article
1.7(a).

       

      “Employee” shall have
the meaning specified in Article
2.19(b).

       

      “EMW” shall mean EMW
Picton Howell LLP of Seebeck House, 1 Seebeck Place, Knowlhill, Milton Keynes,
Buckinghamshire, MK5 8FR.

       

      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

      “EMW Client Account”
shall mean:-

       

      
        	
                Bank

              	
                Natwest
      Bank Plc

                 

              
	
                Address

              	
                501
      Silbury Boulevard

                Saxon
      Gate East

                Central
      Milton Keynes

                MK9
      3ER

                 

              
	
                Sort
      Code

              	
                60-14-55

                 

              
	
                Client
      Account number

              	
                63510731

                 

              
	
                Client
      Account Name

                 

              	
                EMW
      Picton Howell Client Account

              
	
                IBAN
      Number for Client Account

              	
                GB23NWBK60730163510731

                 

              

      

      

       

      “Encumbrance” shall
mean any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, claim, infringement, interference, option, right of first refusal,
preemptive right, community property interest or restriction of any nature
affecting property, real or personal, tangible or intangible, including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset, any restriction
on the possession, exercise or transfer of any other attribute of ownership of
any asset, any lease in the nature thereof.

       

      “Entity” shall mean any
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company), firm or other enterprise,
association, organization or entity.

       

      “Environmental Law”
means any Legal Requirement to which the Company is subject relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.

       

      “Estimated Balance
Sheet” shall have the meaning specified in Article
1.4.

       

      “Exchange Rate
Adjustment” shall have the meaning specified in Article
1.9.

       

      “GAAP” shall have the meaning
specified in Article
1.4.

       

      “GCC” shall mean Saudi
Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and the Sultanate of
Oman.

       

      “Governmental
Authorization” shall mean any: (a) approval, permit, license,
certificate, franchise, permission, clearance, registration, qualification or
other authorization issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement; or (b) right under any Contract with any Governmental
Body.

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

      “Governmental
Body” shall
mean any: (a) nation, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign, supranational or other government or
(c) governmental, self-regulatory or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).

       

      “group” for purposes
of the definition of Acquisition Transaction only, shall mean two or more
Persons who agree to act together for the purpose of acquiring, holding voting
or disposing of equity securities of an issuer.

       

      “Guaranteed
Obligations” shall have the meaning specified in Article
5.1.

       

      “Guaranteed Party”
shall have the meaning specified in Article
5.1.

       

      “Hold-Back” shall have
the meaning specified in Article
1.8(b).

       

      “ICTA 1988” means the
Income and Corporation Taxes Act 1988.

       

      “IHTA 1984” means the
Inheritance Tax Act 1984.

       

      “In-Licenses” shall
mean all agreements pursuant to which a third party has licensed any
Intellectual Property or Intellectual Property Rights to the
Company.

       

      “Indebtedness” shall
mean all outstanding indebtedness of the Company for borrowed money (excluding
trade creditors in the ordinary course of business) and any accrued interest
thereon, including, without limitation, debt to Personal Protection
Systems.

       

      “Indemnifying Party”
shall have the meaning specified in Article
8.7.

       

      “Intellectual
Property” shall mean and includes all algorithms, APIs, apparatus,
databases and data collections, diagrams, inventions (whether or not
patentable), know-how, logos, marks (including brand names, product names,
logos, and slogans), methods, network configurations and architectures,
processes, proprietary information, protocols, schematics, specifications,
software, software code (in any form including source code and executable or
object code), subroutines, user interfaces, techniques, URLs, web
sites, works of authorship and other forms of technology (whether or not
embodied in any tangible form and including all tangible embodiments of the
foregoing such as instruction manuals, prototypes, samples, studies, and
summaries).

       

      “Intellectual Property
Rights” shall mean and includes all past, present, and future rights of
the following types, which may exist or be created under the laws of any
jurisdiction in the world: (a) rights associated with works of authorship,
including exclusive exploitation rights, copyrights and moral rights;
(b) trademark and trade name rights and similar rights; (c) trade
secret rights; (d) patents and industrial property rights; (e) other
proprietary rights in Intellectual Property of every kind and nature; and
(f) all registrations, renewals, extensions, combinations, divisions, or
reissues of, and applications for, any of the rights referred to in clauses
(a) through (e) above.

       

      “Interim Financial
Statements” shall have the meaning specified in Article
2.6(a)(ii).

       

      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

        

      

      “IP Contracts” shall
mean In-Licenses and Out-Licenses, collectively.

       

      “Joint Account” shall
mean a bank account opened in the names of EMW and the Purchasers’
Solicitors.

       

      “Joint Account Instruction
Letter” means a letter in the Agreed Form addressed to the Purchaser’s
Solicitors and EMW from the Purchaser and the Sellers and the Neil Bruce Copp
Shareholder in relation to the operation of the Joint Account.

       

      “Kimbells
Shareholders” means Stephen Kimbell, Peter Holden, Timothy Clark,
Jonathan Hambleton and Richard Brown.

       

      “Knowledge” An
individual shall be deemed to have “knowledge” of a particular fact or other
matter if:

       

      (a)           such
individual is actually aware of such fact or other matter; or

       

      (b)           such
individual would have had knowledge of such fact following a reasonable
investigation, if under the circumstances a reasonable person would have
determined such investigation was required or appropriate in the normal course
of fulfillment of such individual’s duties.

       

      The
Company shall be deemed to have “knowledge” of a particular fact or other matter
if any Person listed on Part A of the Company
Disclosure Schedule has Knowledge of such fact or other matter.

       

      “Lease Deed of
Variation” shall mean the deed of variation to the lease dated January 4,
2005 between (1) Wolanski & Co Trustees Ltd and (2) the Company relating to
Protection House, Sherbourne Drive, Tilbrook, Milton Keynes MK7 8AP

      

       

      “Legal
Proceeding” shall mean any ongoing
or threatened action, suit, litigation, arbitration, proceeding (including any
civil, criminal, administrative, investigative or appellate proceeding),
hearing, inquiry, audit, examination or investigation commenced, brought,
conducted or heard by or before, or otherwise involving, any court or other
Governmental Body or any arbitrator or arbitration panel.

       

      “Legal
Requirement” shall mean any law to
which the Company is subject including federal, state, local, municipal, foreign
or international, multinational or other law, statute, constitution, principle
of common law, resolution, ordinance, legally binding code, edict, decree, rule,
regulation, ruling or legally binding requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Body.

       

      “LIBOR” means the
British Bankers’ Association Interest Settlement Rate at which Sterling deposits
are offered by banks for a 3 month period, displayed on the appropriate page of
the Reuters screen or any page or service replacing the same from time to
time.

       

      “Material Contracts”
shall have the meaning specified in Article
2.13(a).

       

      
        
          
          

        

        
          A-7

          
            

          

        

        
          
          

        

      

      “Materials of Environmental
Concern” means any chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products and any other substance that is
regulated under any applicable Environmental Law.

       

      “NBC
Shares” means the 70,000 B ordinary shares of GBP£0.01 in the capital of the
Company legally owned by the Neal Bruce Copp Shareholder.

       

      “Neil Bruce Copp
Shareholder” shall have the meaning specified in the introductory
paragraph to this Agreement.

       

      “Net Book Value” means
in respect of the Company the balance on the called up share capital account
plus share premium account and plus any accumulated balance on the profit and
loss account.

       

      “Nobbs” shall have the
meaning specified in the introductory paragraph to this Agreement.

       

      “Noncompete Period”
shall have the meaning specified in Article
6.1(b).

       

      “Objection Notice”
shall have the meaning specified in Article
1.7(c)(iii).

       

      “Order” shall mean any
decree, permanent injunction, stipulation, order or similar action.

       

      “Out-Licenses” shall
mean all agreements pursuant to which the Company has granted to any third party
any rights or licenses to Intellectual Property or Company
Products.

       

      “Outstanding Sum”
shall have the meaning specified in Article
1.8(d).

       

      “Permitted
Encumbrances” shall mean (i) liens for taxes or other governmental
charges not at the time delinquent or thereafter payable without penalty or
being contested in good faith; (ii) liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords incurred in the ordinary course of business
for sums not overdue, payable without penalty or being contested in good faith;
(iii) easements, reservations, rights of way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances affecting real
property in a manner not affecting the value or use of such property; (iv) liens
securing obligations under a capital lease or securing the purchase price of
equipment if such liens do not extend to property other than the property leased
under such capital lease or so purchased, and any accessions, replacements,
substitutions and proceeds (including insurance proceeds) thereof or
thereto.

       

      “Person” shall mean any
individual, Entity or Governmental Body.

       

      “Personal Protection
Systems” shall mean Personal Protection Systems Limited, a company
incorporated in England and Wales (registered number 00762284) whose registered
office is at Protection House, Sherbourne Drive, Tilbrook, Milton Keynes,
Buckinghamshire, MK7 8HX.

       

      “Plans” shall have the
meaning specified in Article
2.19(a).

       

      
        
          
          

        

        
          A-8

          
            

          

        

        
          
          

        

      

      “Policies” shall have
the meaning specified in Article
2.22(a).

       

      “Post-Closing Purchase Price
Adjustment” shall have the meaning specified in Article
1.8(c).

       

      “Purchase Commitments”
shall have the meaning specified in Article
2.14(a).

       

      “Purchase Price” shall
have the meaning specified in Article
1.1.

       

      “Purchaser” shall have
the meaning specified in the introductory paragraph to this
Agreement.

       

      “Purchaser Party” shall mean any of the
following Persons: (a) Purchaser; (b) Versar, any company of which it
is a Subsidiary (its holding company) and any other Subsidiaries of any such
holding company (including the Company following the Closing Date); and each
company in a group that is a member of the group PROVIDED that if a company
ceases to be a member of the group such company shall immediately cease to be a
Purchaser Party

       

      “Purchaser’s
Solicitors” shall mean Paul, Hastings, Janofsky & Walker LLP of
Eighth Floor, Ten Bishops Square London, E1 6EG.

       

      “Real Property” shall
have the meaning specified in Article
2.11.

       

      “Registered IP” means
all Intellectual Property Rights that are registered, filed or issued under the
authority of any Governmental Body, including all patents, registered
copyrights, and registered trademarks and all applications for any of the
foregoing.

       

      “Related Agreements”
shall mean the Seller Notes.

       

      “Related Party” shall
mean  (a)  each individual who is a corporate officer or director
of the Company; (b) each member of the immediate family of each of the
individuals referred to in clause (a) above; and (c) any trust or
other Entity (other than the Company) in which any one of the individuals
referred to in clauses (a) and (b) above holds (or in which more than
one of such individuals collectively hold), beneficially or otherwise, a
controlling interest.

       

      “Representatives”
shall mean officers, directors, employees, agents, attorneys, accountants,
advisors and representatives.

       

      “Response Notice”
shall have the meaning specified in Article
8.6(b).

       

      “Response Period”
shall have the meaning specified in Article
1.7(c)(iii).

       

      “Sale” shall mean the
purchase and sale of the Shares pursuant to this Agreement.

       

      “Schedule of Company
Transaction Costs” shall have the meaning specified in Article
1.4.

       

      “Securities Act” shall
have the meaning specified in Article
1.6.

       

      
        
          
          

        

        
          A-9

          
            

          

        

        
          
          

        

      

      “Sellers” shall have
the meaning specified in the introductory paragraph to this
Agreement.

       

      “Seller Notes” shall
have the meaning specified in Article
1.5.

       

       “Shares” shall have
the meaning specified in the Recitals to this Agreement.

       

      “Subsidiary” in
relation to a company wherever incorporated (a holding company) means a
“subsidiary” as defined in Article 1159 of the Companies Act 2006 and any other
company which is a subsidiary (as so defined) of a company which is itself a
subsidiary of such holding company.

       

      “Subsidiary Interim Financial
Statements” shall have the meaning specified in Article
2.6(a)(iv).

       

      “Subsidiary Year-End
Financial Statements” shall have the meaning specified in Article
2.6(a)(iii).

       

      “Target Cash” shall
have the meaning specified in Article
1.8(c).

       

      “Target Net Book
Value” shall have the meaning specified in Article
1.8(c).

       

      “Target Warranty
Reserve” shall have the meaning specified in Article
1.8(c).

       

      “Taxation” or “Tax” means any form
of taxation, withholding, duty, impost, levy  or tariff in each case
in the nature of taxation, anywhere in the world, whenever and wherever imposed
including, without limitation, income tax, corporation tax, capital gains tax,
value added tax, import or export duties, stamp duty, stamp duty reserve tax,
national insurance and social security contributions, and including any fines,
penalties, surcharge, interest or other imposition relating to any such tax,
withholding, duty, impost or levy.

       

      “Tax Covenant” is
included in Schedule
6.4 to this Agreement.

       

      “Tax Statute” means
any primary or secondary statute, instrument, enactment, order, law, by-law or
regulation in any jurisdiction making any provision for or in relation to
Tax.

       

      “Tax Warranties” shall
mean the warranties set out at Article 2.18 of this
Agreement.

       

      “Territory” shall mean
the European Union, Japan and the GCC.

       

      “TCGA 1992” means the
Taxation of Capital Gains Act 1992.

       

      “Third Party Claims”
shall have the meaning specified in Article
8.7.

       

      “Title Warranties”
shall mean the warranties set out at Article 3.1 and 3.2 of this
Agreement

       

      
        
          
          

        

        
          A-10

          
            

          

        

        
          
          

        

      

      “Transaction Costs”
shall mean all fees, costs and expenses incurred by the Sellers, the Neil Bruce
Copp Shareholder or by the Company for its account or for the account of any of
the Sellers or the Neil Bruce Copp Shareholder at any time in connection with
pursuing, negotiating or consummating the Letter of Intent, this Agreement, the
Related Agreements and/or the transactions contemplated hereby or thereby,
including, without limitation, legal, investment banking and other professional
fees and expenses, including, without limitation, any fees payable to a
financial advisor in connection therewith, the amount of all bonuses,
accelerated payments or other similar amounts that may become payable by the
Company to any directors, officers or employees of the Company or to other
Persons in connection with or as a result of the consummation of the
transactions contemplated by this Agreement and the Related Agreements,
including, without limitation, any Taxes or other amounts payable by the Company
in connection therewith, fees and expenses for any appraisal or other valuation
of the Company performed by the Company or the Sellers, travel and overhead
expenses of representatives of the Sellers, the Neil Bruce Copp Shareholder or
the Company incurred in connection with pursuing, negotiating or consummating
this Agreement, the Related Agreements or the transactions contemplated hereby
or thereby and the filing fees associated with obtaining any domestic or foreign
antitrust, anti-competition or other necessary Governmental Authorization
required for the consummation of the transactions contemplated by this
Agreement, but not including any professional costs, fees, disbursements and
expenses (plus any applicable VAT) and Tax accrued or owing by the Company
relating to entering into the lease amendment required pursuant to Article 7.3 of this
Agreement.

       

      “Transactions” shall
mean the Sale and the other transactions contemplated by this Agreement and the
Related Agreements.

       

      “Turnover” shall mean
revenue recognized by the Company in respect of goods and services supplied,
exclusive of VAT and trade discounts.

       

      “VAT” means value
added tax or any similar sales tax in any jurisdiction.

       

      “VATA 1994” means the
Value Added Tax Act 1994.

       

      “Versar” shall have
the meaning specified in the introductory paragraph to this
Agreement.

       

      “Warranty
Reserve” means a provision made by the Company (in accordance with the Company’s
historical accounting practices) in relation to possible claims from customers
relating to the supply of collapsible frame systems.

       

      “Whitcher” shall have
the meaning specified in the introductory paragraph to this
Agreement

       

      “Windfall” means the
amount by which any asset or profit proves to have been understated in the
Company Financial Statements or the amount by which any liability or loss proves
to have been overstated in the Company Financial Statements

       

      
        
          
          

        

        
          A-11

          
            

          

        

        
          
          

        

      

      Schedule
6.4

       

      Tax
Covenant 

       

       

      
        	
                1.  

              	
                INTERPRETATION

              

      

       

       

      
        	
                1.1  

              	
                The
      definitions and rules of interpretation in this paragraph 1.1 shall apply
      in this Tax Covenant.

              

      

       

      Costs: means obligations,
liabilities, losses, damages, costs (including reasonable legal costs) and
expenses (including Tax) in each case of any nature whatsoever.

       

      Event: includes (without
limitation) any event, act, transaction (including, without limitation, the
execution of and Closing of this Agreement and/or any Related Agreement),
payment, action, circumstance, dealing, state of affairs, expiry of any time
period, default, omission or occurrence of any nature whatsoever and whether or
not the Company or the Purchaser is a party to it, and also the death or the
winding up or dissolution of any person, any change in residence of a person for
the purposes of any Tax, any failure to take action which would have prevented
or avoided an apportionment or deemed distribution of income (regardless of
whether any action taken after Closing could have prevented or avoided the
apportionment or deemed distribution), the Company becoming or ceasing to be
associated or connected with any person for the purposes of any Tax, and in any
one or more such case whether alone or in any combination and any reference to
an event occurring on or before a particular date shall include events which for
Tax purposes are deemed to have, or are treated or regarded as having, occurred
on or before that date.

       

      IHT Liability: means any
inheritance tax liability falling on the Company (including any interest and
penalties thereon) which:

       

      
        	
                (a)  

              	
                arises
      as a result of a transfer of value occurring or being deemed to occur on
      or before Closing (whether or not in conjunction with the death of any
      person whensoever occurring);

              

      

       

      
        	
                (b)  

              	
                has
      given rise before or on Closing to a charge on any of the shares in or
      assets of the Company or a power to sell, mortgage or charge any of the
      Shares in or assets of the Company;
or

              

      

       

      
        	
                (c)  

              	
                after
      Closing becomes a charge on or gives rise to a power to sell, mortgage or
      charge any of the Shares in or assets of the Company as a result of the
      death of any person within seven years of a transfer of value which
      occurred before Closing;

              

      

       

      and in
determining for the purposes of this definition whether a charge on or power to
sell, mortgage or charge any of the Shares or assets of the Company exists at
any time, the fact that the inheritance tax is not yet payable, or may be paid
by instalments, shall be disregarded, and such inheritance tax shall be treated
as becoming due, and a charge or power to sell, mortgage or charge as arising,
on the date of the transfer of value or other date or event on or in respect of
which it becomes payable or arises, and the provisions of section 213 of the
Inheritance Tax Act 1984 shall not apply.

       

      
        
          
          

        

        
          A-12

          
            

          

        

        
          
          

        

      

      ITEPA: means the Income Tax
(Earnings and Pensions) Act 2003.

       

      Liability
for Taxation or
Liability for Tax: any liability of the Company to make a payment of or
in respect of Tax, whether or not the same is primarily payable by the Company
and whether or not the Company has or may have any right of reimbursement
against any other person or persons and also (without limitation)
includes:

       

      
        	
                (a)  

              	
                the Loss of any Relief (Accounts
      Relief) where such Relief has been taken into account in computing
      and so reducing or eliminating any provision for deferred Tax which
      appears in the Last Accounts (or which, but for such Relief, would have
      appeared in the Last Accounts) or where such Relief was treated as an
      asset of the Company or otherwise taken into account in the Last Accounts
      or was taken into account in computing any deferred Tax asset which
      appears in the Last Accounts (Loss
      of an Accounts Relief), in which case the
      amount of the Liability for Taxation shall be the amount of Tax which
      would (on the basis of Tax rates current at the date of such Loss) have
      been saved but for such Loss, assuming for this purpose that the Company
      had sufficient profits or was otherwise in a position to use the Relief;
      

              

      

       

      
        	
                (b)  

              	
                the Loss of any right to repayment of Tax (including any
      repayment supplement) (Repayment
      Relief) which was treated as an asset in the Last Accounts (Loss
      of a Repayment Relief), in which case the amount of the Liability
      for Taxation shall be the amount of the Loss of the right to repayment and
      any related repayment supplement;

              

      

       

      
        	
                (c)  

              	
                the set off or use against income, profits or gains earned,
      accrued or received or against any Tax chargeable in respect of an Event
      occurring on or before the Last Accounts Date of any Relief (Post-Accounts
      Date) or right to repayment of Tax (including any repayment
      supplement) which is not available before the Last Accounts Date, but
      arises after the Last Accounts Date in circumstances where, but for such
      set off or use, the Company would have had a liability to make a payment
      of or in respect of Tax for which the Purchaser would have been able to
      make a claim against the Sellers under this Tax Covenant (Loss
      of a Post-Accounts Date Relief), in which case the amount of the
      Liability for Taxation shall be the amount of Tax saved by the Company as
      a result of such set off or use; and

              

      

       

      
        	
                (d)  

              	
                any liability of the Company to make a payment pursuant to an
      indemnity, guarantee or covenant entered into before Closing under which
      the Company has agreed to meet or pay a sum equivalent to or by reference
      to another person’s Tax liability, in which case the Liability for
      Taxation shall be equal to the amount of the liability.
    

              

      

       

      
        
          
          

        

        
          A-13

          
            

          

        

        
          
          

        

      

      LIBOR: means the British
Bankers’ Association Interest Settlement Rate at which Sterling deposits are
offered by banks for a 3 month period, displayed on the appropriate page of the
Reuters screen or any page or service replacing the same from time to
time.

       

      Loss: any
reduction, modification, loss, counteraction, nullification, utilisation,
disallowance or clawback for whatever reason.

       

      Overprovision: the
amount by which any provision in the Last Accounts relating to Tax (other than a
provision for deferred Tax) is overstated (except to the extent that such
overstatement results from the utilisation of a Purchaser’s Relief), applying
the accounting policies, principles and practices adopted in relation to the
preparation of the Last Accounts (and ignoring the effect of any change in law
made after Closing).

       

      Payroll Type Tax Liability:
means (whether of the United Kingdom or otherwise) any Liability for Taxation
(or amounts in respect of Tax) of the Company, arising as a result of or in
connection with any liability of the Company to operate PAYE or make similar
deductions (including without limitation deductions made to comply with or to
meet any liability to account for Tax pursuant to regulations made under Part 11
of ITEPA) or to deduct or account for national insurance contributions or
similar Taxes (including in each case interest and penalties
thereon).

       

      Purchaser's Relief:
means:

       

      
        	
                (a)  

              	
                any
      Accounts Relief (as defined in paragraph (a) of the definition of
      Liability for Taxation) or Repayment Relief (as defined in paragraph (b)
      of the definition of Liability for
Taxation);

              

      

       

      
        	
                (b)  

              	
                any
      Post Accounts Date Relief of the Company (as defined in paragraph (c) of
      the definition of Liability for Taxation);
and

              

      

       

      
        	
                (c)  

              	
                any
      Relief, whenever arising, of the Purchaser or any member of the
      Purchaser's Tax Group other than the
Company.

              

      

       

      Purchaser's
Tax Group: the
Purchaser and any other company or companies which either are or become after
Closing, or have within the seven years ending at Closing, been treated as
members of the same group as, or otherwise connected or associated in any way
with, the Purchaser for any Tax purpose.

       

      Relief:
includes, unless the context otherwise requires, any relief, allowance, credit,
deduction, loss, exemption or set-off in respect of any Tax or relevant to the
computation of any income, profits or gains for the purposes of any Tax, or any
repayment of or saving of Tax (including any repayment supplement or interest in
respect of Tax) or any right to a repayment of Tax, and:

       

      
        	
                (a)  

              	
                any
      reference to the "use" or "set off" of relief shall be construed
      accordingly and shall include use or set off in part;
  and

              

      

       

      
        	
                (b)  

              	
                any
      reference to the Loss of a relief shall include the absence, non-existence
      or cancellation of any such relief, or to such relief being available only
      in a reduced amount;

              

      

       

      
        
          
          

        

        
          A-14

          
            

          

        

        
          
          

        

      

      Saving: the reduction or elimination
of any liability of the Company to make an actual payment of corporation tax in
respect of which the Sellers would not have been liable under paragraph 2, by
the use of any Relief (other than a Purchaser's Relief) arising wholly as a
result of a Liability for Taxation in respect of which the Sellers have made a
payment under paragraph 2 of this Tax Covenant.

       

      Tax: includes (without
limitation) corporation tax, income tax (including amounts on account of income
tax required to be deducted or withheld from or accounted for in respect of any
payment), capital gains tax, inheritance tax, value added tax, national
insurance contributions, capital duty, stamp duty, stamp duty reserve tax, stamp
duty land tax, duties of customs and excise, petroleum revenue tax, rates, all
taxes, and all other taxes on gross or net income, profits or gains,
distributions, receipts, sales, use, occupation, franchise, value added, and
personal property, and all levies, imposts, duties, charges or withholdings in
the nature of taxation, together with all penalties, charges and interest
relating to any of the foregoing or to any late or incorrect return in respect
of any of them, and Taxation
shall have the same meaning.

       

      Tax
Claim: any
assessment (including self-assessment), notice, demand, letter or other document
issued or action taken by or on behalf of any Taxation Authority from which it
appears that the Purchaser or the Company is or may be subject to a Liability
for Taxation or other liability in respect of which the Sellers are or may be
liable under this Tax Covenant.

       

      Taxation
Authority: any
government, state or municipality or any local, state, federal or other fiscal,
revenue, customs or excise authority, body or official competent to impose,
administer, levy, assess or collect Tax in the United Kingdom or
elsewhere.

       

      Taxation
Statute: any
directive, statute, enactment, law or regulation wheresoever enacted or issued,
coming into force or entered into providing for or imposing any Tax and
including orders, regulations, instruments, bye-laws or other subordinate
legislation made under the relevant statute or statutory provision and any
directive, statute, enactment, law, order, regulation or provision which amends,
extends, consolidates or replaces the same or which has been amended, extended,
consolidated or replaced by the same.

       

      TCGA: means the Taxation of
Chargeable Gains Act 1992.

       

      VAT: means value added tax and
any similar sales or turnover tax.

       

      
        	
                1.2  

              	
                References
      to gross receipts, income, profits or gains
      earned, accrued or received shall include any gross receipts, income,
      profits or gains deemed pursuant to the relevant Taxation Statute to have
      been or treated or regarded as earned, accrued or
  received.

              

      

       

      
        	
                1.3  

              	
                References
      to a repayment
      of Tax shall include any repayment supplement or interest in
      respect of it.

              

      

       

      
        
          
          

        

        
          A-15

          
            

          

        

        
          
          

        

      

       

      
        	
                1.4  

              	
                A
      reference to an Event
      occurring on or before Closing includes a series or combination of
      Events the first of which occurred on or before Closing and was not in the
      ordinary course of business of the Company and any of which occurring
      after Closing were in the ordinary course of business of the
      Company.

              

      

       

      
        	
                1.5  

              	
                Any
      reference to something occurring in the ordinary course of
      business shall, without prejudice to the generality thereof, be
      deemed not to include:

              

      

       

      
        	
                (a)  

              	
                anything
      which involves, or leads directly or indirectly to, any liability of the
      Company to Tax that is the primary liability of, or properly attributable
      to, or due from another person (other than a member of the Purchaser's Tax
      Group), or is the liability of the Company only because some other person,
      other than a member of the Purchaser's Tax Group, has failed to pay it or
      is the liability of the Company because it has elected to be regarded as
      taxable or liable or to be regarded as having made a disposal;
      or

              

      

       

      
        	
                (b)  

              	
                anything
      which relates to or involves the acquisition or disposal of an asset or
      the supply of services (including the lending of money, or the hiring or
      licensing of tangible or intangible property) in a transaction which is
      not entered into on arm's length terms;
or

              

      

       

      
        	
                (c)  

              	
                anything
      which relates to or involves the making of a distribution for Tax
      purposes, the creation, cancellation or re-organisation of share or loan
      capital, the creation, cancellation or repayment of any intra-Group debt
      or the Company becoming or ceasing to be or being treated as ceasing to be
      a member of a Group or as becoming or ceasing to be associated or
      connected with any other company for any Tax purposes;
  or

              

      

       

      
        	
                (d)  

              	
                anything
      which relates to a transaction or arrangement which includes, or a series
      of transactions or arrangements which include, any step or steps having no
      commercial or business purpose apart from the reduction, avoidance or
      deferral of a Liability for Taxation;
or

              

      

       

      
        	
                (e)  

              	
                anything
      which gives rise to a Liability for Taxation on deemed (as opposed to
      actual) profits or to the extent that it gives rise to a Liability for
      Taxation on an amount of profits greater than the difference between the
      sale proceeds of an asset and the amount attributable to that asset in the
      Last Accounts or, in the case of an asset acquired since the Last Accounts
      Date, the cost of that asset; or

              

      

       

      
        	
                (f)  

              	
                anything
      which involves, or leads directly or indirectly to, a change of residence
      of the Company for Tax purposes; or

              

      

       

      
        	
                (g)  

              	
                surrendering
      or otherwise moving Reliefs around the Purchaser’s
  Group.

              

      

       

      
        
          
          

        

        
          A-16

          
            

          

        

        
          
          

        

      

       

      
        	
                1.6  

              	
                For
      the purposes of this Tax Covenant:

              

      

       

      
        	
                (a)  

              	
                Any
      stamp duty which is charged or chargeable on any document executed prior
      to Closing which is necessary to establish the title of the Company to any
      asset or in the enforcement or production of which the Company is
      interested shall be deemed, together with any interest, fines or penalties
      relating to such stamp duty, to be a liability of the Company to make an
      actual payment of Tax.

              

      

       

      
        	
                (b)  

              	
                The
      rule known as the ejusdem generis rule
      shall not apply and accordingly:

              

      

       

      
        	
                (i)  

              	
                general
      words shall not be given a restrictive meaning by reason of the fact that
      they are preceded by words indicating a particular class of acts, matters
      or things; and

              

      

       

      
        	
                (ii)  

              	
                general
      words shall not be given a restrictive meaning by reason of the fact that
      they are followed by particular examples intended to be embraced by the
      general words.

              

      

       

      
        	
                (c)  

              	
                All
      payments made by the Covenantor to the Purchaser under this deed, shall,
      so far as possible, be made by way of adjustment to the consideration for
      the sale of the Shares.

              

      

       

      
        	
                (d)  

              	
                No
      delay or omission by the Purchaser in exercising any rights under this
      deed shall prejudice such rights or be construed as a waiver or partial
      waiver of such rights, nor shall it exclude the further exercise of such
      rights.

              

      

       

      
        	
                (e)  

              	
                The
      Purchaser shall in its absolute discretion decide whether to make a claim
      under this deed or the Warranties or
both.

              

      

       

      
        	
                1.7  

              	
                Unless
      the contrary intention appears, words and expressions defined in the
      Agreement have the same meaning in this Tax Covenant and any provisions in
      this Agreement concerning matters of construction or interpretation also
      apply in this Tax Covenant. For the avoidance of doubt, in the event of a
      conflict between the Tax Covenant and the Agreement, the provisions of
      this Tax Covenant shall prevail.

              

      

       

      
        	
                2.  

              	
                Covenant
      

              

      

       

      
        	
                2.1  

              	
                Nobbs
      and Whitcher covenant with the Purchaser that, subject to the provisions
      of this Tax Covenant, Nobbs and Whitcher shall be jointly and severally
      liable to pay to the Purchaser an amount equal to
  any:

              

      

       

      
        
          
          

        

        
          A-17

          
            

          

        

        
          
          

        

      

      
        	
                (a)  

              	
                without
      prejudice to the generality of the other provisions of this paragraph 2 Liability for Taxation resulting from, by
      reference to or in consequence of, or in respect
  of:

              

      

       

      
        	
                (i)  

              	
                any
      gross receipts, income, profits or gains earned, accrued or received by
      the Company on or before Closing;

              

      

       

      
        	
                (ii)  

              	
                any
      Event occurring on or before Closing;
or

              

      

       

      
        	
                (iii)  

              	
                any
      failure to discharge or default in discharging any of Nobbs and Whitcher's
      obligations under this Tax Covenant, including any failure to meet any
      relevant time limit;

              

      

       

      
        	
                (b)  

              	
                without
      prejudice to the generality of the other provisions of this paragraph 2 Liability for Taxation which arises solely as
      a result of, by reference to or in consequence of the relationship for Tax
      purposes of the Company with any person other than a member of the
      Purchaser's Tax Group whensoever
arising;

              

      

       

      
        	
                (c)  

              	
                without
      prejudice to the generality of the other provisions of this paragraph 2 any Liability for Taxation falling within
      paragraph (a) to paragraph (d) of the definition of Liability for
      Taxation;

              

      

       

      
        	
                (d)  

              	
                without prejudice to the generality of the other provisions
      of this paragraph 2, any IHT Liability falling on the Company;
      

              

      

       

      
        	
                (e)  

              	
                without
      prejudice to the generality of the other provisions of this paragraph 2,
      any Payroll Type Tax Liability arising in respect of, by reference to or
      in consequence of:

              

      

       

      
        	
                (i)  

              	
                the
      subscription for or acquisition or disposal of the Shares on or prior to
      Closing or the issue of the Versar common stock to Whitcher pursuant to
      Article 1.6 of the Agreement (as the case may be) including without
      limitation any payments to the Sellers under this Agreement which shall
      include for the avoidance of doubt any payments in the nature of deferred
      or contingent consideration and the issue of the Seller
    Notes;

              

      

       

      
        	
                (ii)  

              	
                the
      occurrence of any other event or circumstance giving rise to a Payroll
      Type Tax Liability in relation to the acquisition, ownership or disposal
      of the Shares on or prior to Closing whether under Chapters 2 to 4
      inclusive of Part 7 of ITEPA or
otherwise;

              

      

       

      
        	
                (iii)  

              	
                without
      prejudice to the meaning of a Payroll Type Tax Liability, a failure by the
      Covenantor and/or the Management Sellers (as may be the case) to make any
      payment required pursuant to the covenants in paragraphs 2.1(e)(i) to
      2.1(e)(ii) within any period specified for Tax purposes (whether pursuant
      to section 222 of ITEPA or
otherwise),

              

      

       

      
        
          
          

        

        
          A-18

          
            

          

        

        
          
          

        

      

      
        	
                (a)  

              	
                provided
      that the covenants in this paragraph 2.1(e) shall not extend to any United
      Kingdom employer's secondary Class 1 national insurance contributions in
      respect of which it is unlawful to seek an
  indemnity;

              

      

       

      
        	
                (f)  

              	
                without
      prejudice to the generality of the other provisions of this paragraph 2,
      any Liability for Taxation in respect of a chargeable gain which arises as
      a result of the disposal at any time of any asset acquired by the Company
      before Closing, to the extent that such tax liability would not have
      arisen if the expenditure allowable under section 38(1)(a) of the TCGA in
      respect of the asset (ignoring any other relief) had not been less than
      the value of the asset stated or recognised in the Last Accounts or, in
      the case of an asset acquired since the Last Accounts Date, the cost of
      that asset;

              

      

       

      
        	
                (g)  

              	
                without
      prejudice to the generality of the other provisions of this paragraph 2,
      any liability of the Company to make a payment or repayment under any
      indemnity, covenant, warranty, mortgage, guarantee or charge entered into
      or created on or before Closing of a sum equivalent to or by reference to
      another person's Liability for Tax;

              

      

       

      
        	
                (h)  

              	
                any
      Costs reasonably and properly suffered or incurred by the Company and/or
      any member of the Purchaser's Tax Group as a result of, or in connection
      with, any claim being successfully made against the Company in respect of
      or relating to Tax under the terms of any agreement for the sale and
      purchase of shares or a business or part of a business entered into by the
      Company (if any) prior to Closing
and

              

      

       

      
        	
                3.  

              	
                Costs 

              

      

      

      The
covenant contained in paragraph 2 shall extend to all Costs incurred by the
Purchaser, any member of the Purchaser's Tax Group or the Company in connection
with a successful claim under the Tax Covenant or in connection with the subject
matter of any such successful claim, including in connection with any action
taken as referred to in paragraph 11 and any satisfaction or settlement of a
Liability for Tax in accordance with that paragraph.

       

      
        	
                4.  

              	
                Payment
      date and interest

              

      

       

      
        	
                4.1  

              	
                Where
      Nobbs and Whitcher are liable to make any payment under paragraph 2
      (including any payment pursuant to paragraph 3), the due date for the
      making of that payment (Due
      Date) shall be the earlier of the date falling ten days after the
      Purchaser has served a notice on Nobbs and Whitcher demanding that payment
      and in a case:

              

      

       

      
        	
                (a)  

              	
                that
      involves an actual payment of Tax by the Company (including any payment
      pursuant to paragraph 3), the date on which the Tax in question would have
      had to have been paid to the relevant Taxation Authority in order to
      prevent a liability to interest or a fine, surcharge or penalty from
      arising in respect of the Liability for Taxation in question;
      or

              

      

       

      
        
          
          

        

        
          A-19

          
            

          

        

        
          
          

        

      

      
        	
                (b)  

              	
                that falls within paragraph 2.1(a) of the definition of
      Liability for Taxation, the last date on which the Tax is or would have
      been required to be paid to the relevant Taxation Authority in respect of
      the period in which the Loss of the Relief occurs (assuming for this
      purpose that the Company had sufficient profits or was otherwise in a
      position to use the Relief); or

              

      

       

      
        	
                (c)  

              	
                that
      falls within paragraph 2.1(b) of the definition of Liability for Taxation,
      the date on which the repayment was due from the relevant Taxation
      Authority; or

              

      

       

      
        	
                (d)  

              	
                that
      falls within paragraph 2.1(c) of the definition of Liability for Taxation,
      the date on which the Tax saved by the Company is or would have been
      required to be paid to the relevant Taxation Authority;
  or

              

      

       

      
        	
                (e)  

              	
                that falls within paragraph 2.1(d) of the definition of
      Liability for Taxation not later than the fifth day before the day on
      which the Company is due to make the payment or repayment.
      

              

      

       

      
        	
                4.2  

              	
                Any
      dispute as to the amount specified in any notice served on Nobbs and
      Whitcher under paragraph 4.1(b) to paragraph 4.1(e) shall be determined by
      the auditors of the Company for the time being, acting as experts and not
      as arbitrators (“Adjudicator”) (the fees
      and other expenses of such Adjudicator shall be paid by the party whose
      determination of such amount most diverges from the determination of the
      Adjudicator).

              

      

       

      
        	
                4.3  

              	
                If
      any sums required to be paid by Nobbs and Whitcher under this Tax Covenant
      are not paid on the Due Date then, except to the extent that Nobbs and
      Whitcher’s liability under paragraph 2 compensates the Purchaser for the
      late payment by virtue of it extending to interest and penalties, such
      sums shall bear interest (which shall accrue from day to day after as well
      as before any judgment for the same) at the rate of 5.0% above LIBOR from
      the due date to and including the day of actual payment of such sum,
      compounded quarterly.  Such interest shall be paid on the demand
      of the Purchaser.

              

      

       

      
        	
                4.4  

              	
                All
      sums payable by Nobbs and Whitcher under this Tax Covenant shall be made
      in full without any set off or counterclaim howsoever
    arising.

              

      

       

      
        	
                4.5  

              	
                All
      sums payable by Nobbs and Whitcher under this Tax Covenant shall be paid
      free and clear of all deductions or withholdings whatsoever, save as
      required by law. If any deduction or withholding is required by law to be
      made from any sums payable by Nobbs and Whitcher under this Tax Covenant,
      Nobbs and Whitcher shall pay such additional amount as will, after such
      deduction or withholding has been made, leave the Purchaser with the full
      amount which would have been received by it had no such deduction or
      withholding been required to be
made.

              

      

       

      
        
          
          

        

        
          A-20

          
            

          

        

        
          
          

        

      

      
        	
                4.6  

              	
                If
      any sum paid to the Purchaser in respect of an obligation of Nobbs and
      Whitcher under this Tax Covenant (including in circumstances where any
      Purchaser’s Relief is available in respect of such charge to Tax) is
      required by law to be brought into charge to Tax, then Nobbs and Whitcher
      shall pay such additional amount as shall be required to ensure that the
      total amount paid, less the Tax chargeable on such amount (or that would
      be so chargeable but for such Purchaser’s Relief), is equal to the amount
      that would otherwise be payable.

              

      

       

      
        	
                4.7  

              	
                Paragraph
      4.6 shall apply in respect of any amount deducted or withheld as
      contemplated by paragraph 4.5 as it applies to sums paid to the Purchaser,
      save to the extent that in computing the Tax chargeable the Purchaser is
      able to obtain a credit for the amount deducted or
    withheld.

              

      

       

      
        	
                4.8  

              	
                All
      sums payable under this Tax Covenant are (unless expressly stated
      otherwise) exclusive of any applicable
VAT.

              

      

       

      
        	
                5.  

              	
                Exclusions 

              

      

       

      
        	
                5.1  

              	
                The covenant contained in paragraph 2 shall not cover any
      Liability for Taxation to the extent that:

              

      

       

      
        	
                (a)  

              	
                a
      provision or reserve in respect thereof is made in the Last Accounts,
      Estimated Balance Sheet or the Adjustment Statement as determined in
      accordance with Article 1.8 of this Agreement;
  or

              

      

       

      
        	
                (b)  

              	
                it
      arises as a result of a transaction in the ordinary course of business of
      the Company between the Last Accounts Date and Closing and is not an
      interest or penalty, surcharge or fine in connection with Tax;
      or

              

      

       

      
        	
                (c)  

              	
                it
      arises or is increased as a result only of any change in the law of Tax
      announced and coming into force after Closing (whether relating to rates
      of Tax or otherwise) or the withdrawal of any extra-statutory concession
      previously made by a Taxation Authority (whether or not the change
      purports to be effective retrospectively in whole or in part);
      or

              

      

       

      
        	
                (d)  

              	
                it
      arises as a result of the amendment to the terms of the lease (pursuant to
      Article 7.2 of the Agreement) dated January 4, 2005 between (1) Wolanski
      & Co Trustees Ltd and (2) the Company relating to Protection House,
      Sherbourne Drive, Tilbrook, Milton Keynes MK7 8AP;
  or

              

      

       

      
        	
                (e)  

              	
                it
      would not have arisen but for a change after Closing in the accounting
      bases on which the Company values its assets (other than a change made in
      order to comply with UK GAAP); or

              

      

       

      
        
          
          

        

        
          A-21

          
            

          

        

        
          
          

        

      

      
        	
                (f)  

              	
                it
      solely arises as a result of the Company ceasing to be entitled to the
      small companies' rate of corporation tax as a direct result of the Company
      joining the Purchaser's Tax Group following Closing;
  or

              

      

       

      
        	
                (g)  

              	
                the
      Purchaser is compensated for any such matter under any other provision of
      this Agreement; or

              

      

       

      
        	
                (h)  

              	
                it
      would not have arisen but for a voluntary act or transaction carried out
      by the Purchaser or the Company after Closing except that this exclusion
      shall not apply where any such act or
  transaction:

              

      

       

      
        	
                (i)  

              	
                is
      carried out or effected in the ordinary course of business;
    or

              

      

       

      
        	
                (ii)  

              	
                is
      carried out or effected pursuant to a legally binding commitment which was
      created on or before Closing or which for some other reason could not
      reasonably have been avoided; or

              

      

       

      
        	
                (iii)  

              	
                (without
      prejudice to paragraphs 5.1(g)(i) and 5.1(g)(ii)) is carried out in
      circumstances where the Purchaser did not know and (on the basis of the
      information actually supplied in writing by Nobbs and Whitcher to the
      Purchaser prior to Closing) could not reasonably be expected to know it
      would or might give rise to the Liability for Taxation in
      question.

              

      

       

      
        	
                6.  

              	
                Overprovisions 

              

      

       

      
        	
                6.1  

              	
                If,
      on or before the seventh anniversary of Closing, the auditors for the time
      being of the Company certify (at the request and expense of Nobbs and
      Whitcher) that any provision for Tax in the Last Accounts has proved to be
      an Overprovision, then:

              

      

       

      
        	
                (a)  

              	
                the
      amount of any Overprovision shall first be set off against any payment
      then due from Nobbs and Whitcher under this Tax
  Covenant;

              

      

       

      
        	
                (b)  

              	
                to the extent that there is an excess, a refund shall be made
      to Nobbs and Whitcher of any previous payment or payments made by Nobbs
      and Whitcher under this Tax Covenant (and not previously refunded under
      this Tax Covenant) up to the amount of such excess;
  

              

      

       

      
        	
                (c)  

              	
                to
      the extent that such excess as referred to in paragraph 6.1(b) is not
      exhausted, the remainder of that excess shall be carried forward and set
      off against any future payment or payments which become due from Nobbs and
      Whitcher under this Tax Covenant;
and

              

      

       

      
        	
                (d)  

              	
                if
      there remains an amount of Overprovision on the seventh anniversary of
      Closing (“Tax Expiry Period”) then such amount shall within 5 Business
      Days of the end  of the Tax Expiry Period (or any earlier date
      agreed by Whitcher, Nobbs and the Purchaser) be paid to Whitcher and
      Nobbs.

              

      

       

      
        
          
          

        

        
          A-22

          
            

          

        

        
          
          

        

      

       

      
        	
                6.2  

              	
                After
      the Company’s auditors have produced any certificate under this paragraph
      4, Nobbs and Whitcher or the Purchaser may, at any time before the seventh
      anniversary of Closing, request the auditors for the time being of the
      Company (as the case may be) to review (at the expense of Nobbs and
      Whitcher) that certificate in the light of all relevant circumstances,
      including any facts of which they were not or it was not aware, and which
      were not taken into account, at the time when such certificate was
      produced and to certify whether, in their opinion, the certificate remains
      correct or whether, in light of those circumstances, it should be
      amended.

              

      

       

      
        	
                6.3  

              	
                If
      the auditors make an amendment to the earlier certificate and the amount
      of the Overprovision is revised, that revised amount shall be substituted
      for the previous amount and any adjusting payment that is required shall
      be made by or to Nobbs and Whitcher (as the case may be) as soon as
      reasonably practicable.

              

      

       

      
        	
                7.  

              	
                Savings 

              

      

       

      
        	
                7.1  

              	
                If
      (at Nobbs and Whitcher’s request and expense) the auditors for the time
      being of the Company determine that the Company has obtained a Saving, the
      Purchaser shall, as soon as reasonably practicable thereafter, repay to
      Nobbs and Whitcher the lesser of:

              

      

       

      
        	
                (a)  

              	
                the
      amount of the Saving (as determined by the auditors) less any costs
      incurred by the Purchaser or the Company;
and

              

      

       

      
        	
                (b)  

              	
                the
      amount paid by Nobbs and Whitcher under paragraph 1 in respect of the
      Liability for Taxation which gave rise to the Saving less any part of that
      amount previously repaid to Nobbs and Whitcher under any provision of this
      Tax Covenant or otherwise,

              

      

       

      
        	
                (b)  

              	
                in
      each case after first having set off against any payment then due from
      Whitcher and Nobbs under this Tax
Covenant.

              

      

       

      
        	
                8. 

              	
                Recovery from third parties

              

      

       

      
        	
                8.1  

              	
                Where Nobbs and Whitcher have paid an amount in full
      discharge of a liability under paragraph 2 in respect of any Liability for
      Taxation and the Purchaser or the Company is or becomes entitled to
      recover from some other person (not being the Purchaser, the Company or
      any other company within the Purchaser’s Tax Group), any amount in respect
      of such Liability for Taxation, the Purchaser shall or shall procure that
      the Company shall: 

              

      

       

      
        	
                (a)  

              	
                notify
      Nobbs and Whitcher of its entitlement as soon as reasonably practicable;
      and

              

      

       

      
        
          
          

        

        
          A-23

          
            

          

        

        
          
          

        

      

      
        	
                (b)  

              	
                if required by Nobbs and Whitcher and, subject to the
      Purchaser or the Company being secured and indemnified by Nobbs and
      Whitcher against any Tax that may be suffered on receipt of that amount
      and any costs and expenses incurred in recovering that amount, take or
      procure that the Company takes all reasonable steps to enforce that
      recovery against the person in question (keeping Nobbs and Whitcher,
      reasonably informed of the progress of any action taken), provided that
      the Purchaser shall not be required to take any action pursuant to this
      paragraph 8.1 (other than an action against:
  

              

      

       

      
        	
                (i)  

              	
                a
      Taxation Authority; or

              

      

       

      
        	
                (ii)  

              	
                a
      person who has given Tax advice to the Company on or before
      Closing),

              

      

       

      which, in
the Purchaser’s reasonable opinion, is likely to harm its, the Company’s
commercial relationship (potential or actual) with that or any other
person.

       

      
        	
                8.2  

              	
                If
      the Purchaser or the Company recovers any amount referred to in paragraph
      8.1, the Purchaser shall account to Nobbs and Whitcher for the lesser
      of:

              

      

       

      
        	
                (a)  

              	
                any
      amount recovered (including any related interest or related repayment
      supplement) less any Tax suffered in respect of that amount and any costs
      and expenses incurred in recovering that amount (save to the extent that
      amount has already been made good by Nobbs and Whitcher under paragraph
      8.1(b)); and

              

      

       

      
        	
                (b)  

              	
                the
      amount paid by Nobbs and Whitcher under paragraph 2 in respect of the
      Liability for Taxation in question.

              

      

       

      
        	
                9.  

              	
                Management of pre-Closing Tax affairs
  

              

      

       

      
        	
                9.1  

              	
                In this paragraph 9 and in paragraph 10, the following terms
      shall have the following meanings:

              

      

       

      
        	
                1.2  

              	
                accounting period: means
      the period between July 1, and June 30 of each calendar
    year;

              

      

       

      
        	
                1.3  

              	
                pre-Closing Tax affairs:
      means the Tax affairs of the Company for which Nobbs and Whitcher are
      responsible under this paragraph 9;

              

      

       

      
        	
                1.4  

              	
                Tax documents: means the
      Tax returns, claims and other documents which Nobbs and Whitcher are
      required to prepare on behalf of the Company under paragraphs 9.2(a) and
      9.2(b);

              

      

       

      
        
          
          

        

        
          A-24

          
            

          

        

        
          
          

        

      

      
        	
                1.5  

              	
                Tax return: means any
      return required to be made to any Tax Authority of income, profits or
      gains or of any other amounts or information relevant for the purposes of
      Tax, including any related accounts, computations and attachments;
      and

              

      

       

      
        	
                1.6  

              	
                time limit: means the
      latest date on which a Tax document can be executed or delivered to a
      relevant Tax Authority either without incurring interest or a penalty, or
      in order to ensure that such Tax document is
  effective.

              

      

       

      
        	
                9.2  

              	
                Subject
      to and in accordance with the provisions of this paragraph 9 Nobbs and
      Whitcher or their duly authorised agents shall, in respect of all
      accounting periods ending on or before Closing, and at its their own
      cost:

              

      

       

      
        	
                (a)  

              	
                prepare
      the Tax returns of the Company;

              

      

       

      
        	
                (b)  

              	
                prepare
      on behalf of the Company all claims, elections, surrenders, disclaimers,
      notices and consents for the purposes of Tax;
  and

              

      

       

      
        	
                (c)  

              	
                (subject
      to paragraph 11) deal with all matters relating to Tax which concern or
      affect the Company, including the conduct of all negotiations and
      correspondence and the reaching of all agreements relating thereto or to
      any Tax documents.

              

      

       

      
        	
                9.3  

              	
                Except
      with the Purchaser's written consent (not to be unreasonably withheld or
      delayed), Nobbs and Whitcher shall not, and shall procure that its duly
      authorised agents do not, prepare any Tax document (or any similar
      document relating to the Tax affairs of Nobbs and Whitcher) which
      comprises or includes a claim, election, surrender, disclaimer, notice or
      consent, or withdraw any such item unless the making, giving or withdrawal
      of it (as the case may be) could not have any adverse effect on the
      Liability for Tax of the Company or any member of the Purchaser's Tax
      Group.

              

      

       

      
        	
                9.4  

              	
                Nobbs
      and Whitcher or its duly authorised agents shall deliver all Tax documents
      to the Purchaser for authorisation, signing and submission to the relevant
      Tax Authority.  If a time limit applies in relation to any Tax
      document, Nobbs and Whitcher shall ensure that the Purchaser receives the
      Tax document no later than fifteen Business Days before the expiry of the
      time limit.

              

      

       

      
        	
                9.5  

              	
                If
      Nobbs and Whitcher or its duly authorised agent fails to deliver a Tax
      document to which a time limit applies to the Purchaser within the period
      specified in paragraph 9.4, and such Tax document is a Tax return or is
      otherwise material to the Tax position of the Company,
    then:

              

      

       

      
        
          
          

        

        
          A-25

          
            

          

        

        
          
          

        

      

      
        	
                (a)  

              	
                Nobbs
      and Whitcher shall notify the Purchaser of such failure as soon as is
      practicable;

              

      

       

      
        	
                (b)  

              	
                the
      Purchaser shall be permitted to arrange for the preparation and submission
      of the Tax document (but shall not be liable for any failure to do so);
      and

              

      

       

      
        	
                (c)  

              	
                (for
      the avoidance of doubt) paragraph 2.1(a)(iii) shall apply in respect of
      such failure.

              

      

       

      
        	
                9.6  

              	
                Nobbs
      and Whitcher shall procure that:

              

      

       

      
        	
                (a)  

              	
                the
      Purchaser is kept fully informed of the progress of all matters relating
      to the pre-Closing Tax affairs;

              

      

       

      
        	
                (b)  

              	
                the
      Purchaser promptly receives copies of all written correspondence with any
      Tax Authority insofar as it is relevant to the pre-Closing Tax
      affairs;

              

      

       

      
        	
                (c)  

              	
                no
      Tax document is submitted to any Tax Authority which is not, so far as
      Nobbs and Whitcher are aware, complete, true and accurate in all respects,
      and not misleading; and

              

      

       

      
        	
                (d)  

              	
                no
      Material Correspondence is submitted to, or any Material Agreement reached
      with, any Tax Authority without the prior approval of the Purchaser (such
      approval not to be unreasonably withheld or
  delayed).

              

      

       

      
        	
                9.7  

              	
                For
      the purposes of paragraph 9.6(d) above, Material Correspondence
      and Material
      Agreements are Tax documents, other correspondence and agreements
      which Nobbs and Whitcher consider or ought reasonably to consider may be
      of material importance to the Purchaser as regards either the future
      relationship with the Tax Authority concerned, or the future Liability for
      Tax, of the Company or any other member of the Purchaser's Tax
      Group.

              

      

       

      
        	
                9.8  

              	
                Nobbs
      and Whitcher agree to devote reasonable resources to dealing with
      pre-Closing Tax affairs. Following Closing Nobbs and Whitcher and its
      agent shall cease to be responsible for, or to have power or authority to
      deal with, pre-Closing Tax affairs on behalf of the Company (other than in
      a capacity as a director and/or employee of the
  Company).

              

      

       

      
        
          
          

        

        
          A-26

          
            

          

        

        
          
          

        

         

      

      
        	
                9.9  

              	
                The
      Purchaser shall be under no obligation to procure the authorisation,
      signing, or submission to a Tax Authority of any Tax document delivered to
      it under paragraph 9.4 which it considers in its reasonable opinion to be
      false, misleading, incomplete or inaccurate in any respect, but for the
      avoidance of doubt shall be under no obligation to make any enquiry as to
      the completeness or accuracy thereof and shall be entitled to rely
      entirely on Nobbs and Whitcher and its
agent.

              

      

       

      
        	
                9.10  

              	
                If
      the Purchaser considers in its reasonable opinion
  that:

              

      

       

      
        	
                (a)  

              	
                any
      Tax document prepared by or on behalf of Nobbs and Whitcher pursuant to
      paragraph 9.2 is false, misleading, incomplete or inaccurate in any
      material respect (otherwise than as a result of the non-disclosure of
      information by the Purchaser or the Company to Nobbs and Whitcher);
      or

              

      

       

      
        	
                (b)  

              	
                the
      way in which Nobbs and Whitcher or its duly authorised agent are
      conducting or are proposing to conduct the pre-Closing Tax affairs is
      improper or negligent or is likely
to:

              

      

       

      
        	
                (i)  

              	
                involve
      unreasonable delay in reaching agreement with a relevant Tax Authority;
      or

              

      

       

      
        	
                (ii)  

              	
                prejudice
      the future relationship with the Tax Authority of the Company or any other
      member of the Purchaser's Tax
Group,

              

      

       

      
        	
                1.7  

              	
                then,
      without prejudice to any rights or remedies available to the Purchaser
      under this Tax Covenant, the Purchaser shall be entitled to serve notice
      on Nobbs and Whitcher terminating its authority to deal with pre-Closing
      Tax affairs, whereupon the provisions of paragraph 9.7 shall apply as if
      the date referred to in that paragraph had
  passed.

              

      

       

      
        	
                10.  

              	
                Conduct
      of Other Tax Affairs

              

      

       

      
        	
                10.1  

              	
                Subject
      to paragraph 11, the Purchaser or its duly authorised agents shall have
      sole conduct of all Tax affairs of the Company which are not pre-Closing
      Tax affairs and shall be entitled to deal with such Tax affairs in any way
      in which it, in its absolute discretion, considers
  fit.

              

      

       

      
        
          
          

        

        
          A-27

          
            

          

        

        
          
          

        

      

       

      
        	
                10.2  

              	
                In
      respect of any accounting period commencing prior to Closing and ending
      after Closing (Straddle
      Period) Nobbs and Whitcher shall provide such assistance as the
      Purchaser shall reasonably request in preparing all tax returns relating
      to the Straddle Period. PROVIDED always that such returns and computations
      shall not be submitted to the relevant Tax Authority without giving Nobbs
      and Whitcher a reasonable opportunity to review and comment on the content
      thereof (and in any event, copies of such returns and computations shall
      be submitted to Nobbs and Whitcher not less than 15 Business Days before
      they are required to be submitted to the relevant Tax
      Authority).  Nobbs and Whitcher may, within 10 Business Days of
      receipt of such returns and computations, submit to the Purchaser in
      writing any amendments or adjustments as Nobbs and Whitcher reasonably
      considers to be necessary or desirable and the Purchaser will not
      unreasonably refuse to incorporate any such amendments or adjustments
      proposed by Nobbs and Whitcher. The Purchaser shall procure that Nobbs and
      Whitcher (at the cost of Nobbs and Whitcher) is given access to such of
      the books and records of the Company as it may reasonably require for the
      purposes of this paragraph 10.2.

              

      

       

      
        	
                11.  

              	
                Conduct
      of Tax Claims

              

      

       

      
        	
                11.1  

              	
                Without
      prejudice to its rights hereunder, if the Purchaser or the Company becomes
      aware of a Tax Claim, the Purchaser shall give or procure that notice in
      writing is given to Nobbs and Whitcher as soon as is reasonably
      practicable, provided that if Nobbs and Whitcher receive any Tax Claim for
      whatever reason, they shall notify the Purchaser in writing as soon as is
      reasonably practicable and the Purchaser shall be deemed, on receipt of
      such notification, to have given Nobbs and Whitcher notice of such Tax
      Claim in accordance with the provisions of this paragraph 11, provided
      always that the giving of such notice shall not be a condition precedent
      to Nobbs and Whitcher’s liability under this Tax Covenant.
      

              

      

       

       

      
        	
                11.2  

              	
                Provided
      Nobbs and Whitcher secure and indemnify the Purchaser and the Company to
      the Purchaser’s reasonable satisfaction against all liabilities, costs,
      damages or expenses which may be incurred thereby including any additional
      Liability for Taxation, the Purchaser shall take and shall procure that
      the Company shall take such action as Nobbs and Whitcher may reasonably
      request by notice in writing given to the Purchaser or the Company to
      avoid, dispute, defend, resist, appeal or compromise any Tax Claim (such a
      Tax Claim where action is so requested being hereinafter referred to as a
      Dispute),
      provided that neither the Purchaser nor the Company shall be obliged to
      appeal or procure an appeal against any assessment to Tax raised on any of
      them if, Nobbs and Whitcher having been given written notice of the
      receipt of such assessment, the Purchaser or the Company have not within
      14 days of the date of the notice received instructions in writing from
      Nobbs and Whitcher to do so.
  

              

      

       

      
        	
                11.3  

              	
                If:

              

      

       

      
        	
                (a)  

              	
                Nobbs
      and Whitcher do not request the Purchaser or the Company to take any
      action under paragraph 11.2 or fail to secure and indemnify the Purchaser
      or the Company to the Purchaser’s reasonable satisfaction within a period
      of time (commencing with the date of the notice given to Nobbs and
      Whitcher) that is reasonable, having regard to the nature of the Tax Claim
      and the existence of any time limit in relation to avoiding, disputing,
      defending, resisting, appealing or compromising such Tax Claim, and which
      period shall not in any event exceed a period of 14 days;
    or

              

      

       

      
        
          
          

        

        
          A-28

          
            

          

        

        
          
          

        

      

       

      
        	
                (b)  

              	
                either
      Nobbs or Whitcher (or the Company before Closing) has been involved in a
      case involving fraudulent conduct or wilful default in respect of the
      Liability for Taxation which is the subject matter of the Dispute;
      or

              

      

       

      
        	
                (c)  

              	
                the
      Dispute involves an appeal against a determination by the Tax Chamber of
      the First-tier Tribunal (or, for appeals lodged before 1 April 2009, a
      determination by the General or Special Commissioners or the VAT and
      Duties Tribunal) unless Nobbs and Whitcher have obtained the opinion of
      Tax counsel of at least 5 years’ standing that there is a reasonable
      prospect that the appeal will
succeed,

              

      

       

      the
Purchaser or the Company shall have the conduct of the Dispute absolutely
(without prejudice to its rights under this Tax Covenant) and shall be free to
pay or settle the Tax Claim on such terms as the Purchaser or the Company may in
its absolute discretion consider fit.

       

      
        	
                11.4  

              	
                Subject
      to paragraph 11.3, by agreement in writing between the Purchaser and Nobbs
      and Whitcher, the conduct of a Dispute may be delegated to Nobbs and
      Whitcher on such terms as may be agreed from time to time between the
      Purchaser and Nobbs and Whitcher provided that, unless the Purchaser and
      Nobbs and Whitcher specifically agree otherwise in writing, the following
      terms shall be deemed to be incorporated into any such
      agreement:

              

      

       

      
        	
                (a)  

              	
                the
      Purchaser or the Company shall promptly be kept fully informed of all
      matters pertaining to a Dispute and shall be entitled to see and keep
      copies of all correspondence and notes or other written records of
      telephone conversations or meetings and, in the event that there is no
      written record, shall be given an immediate report of all telephone
      conversations with any Taxation Authority to the extent that it relates to
      a Dispute;

              

      

       

      
        	
                (b)  

              	
                the
      appointment of solicitors or other professional advisers shall be subject
      to the written approval of the Purchaser, such approval not to be
      unreasonably withheld or delayed;

              

      

       

      
        	
                (c)  

              	
                all
      material written communications pertaining to the Dispute which are to be
      transmitted to the relevant Taxation Authority shall first be submitted to
      the Purchaser or the Company for approval and shall only be finally
      transmitted if such approval is given, such approval not to be
      unreasonably withheld or delayed;
and

              

      

       

      
        
          
          

        

        
          A-29

          
            

          

        

        
          
          

        

      

       

      
        	
                (d)  

              	
                Nobbs
      and Whitcher shall make no settlement or compromise of the Dispute or
      agree any matter in the conduct of the Dispute which is likely to affect
      the amount thereof or the future liability to Tax of the Purchaser or the
      Company without the prior approval of the Purchaser or the Company, such
      approval not to be unreasonably withheld or
  delayed.

              

      

       

      
        	
                11.5  

              	
                The
      Purchaser shall provide and shall procure that the Company provides to
      Nobbs and Whitcher and Nobbs and Whitcher's professional advisors
      reasonable access to premises and personnel and to any relevant assets,
      documents and records within their power, possession or control for the
      purpose of investigating the matter and enabling Nobbs and Whitcher to
      take such action as is referred to in this paragraph
  11.

              

      

       

      
        	
                11.6  

              	
                Neither
      the Purchaser nor the Company shall be subject to any claim by or
      liability to Nobbs and Whitcher for non-compliance with any of the
      foregoing provisions of this paragraph 11 if the Purchaser or the Company
      has bona fide acted in accordance with the instructions of Nobbs and
      Whitcher.

              

      

       

      
        	
                12.  

              	
                Purchaser’s
      Undertaking

              

      

       

      
        	
                12.1  

              	
                The
      Purchaser shall pay to Nobbs and Whitcher
      an amount equal to any tax liability relating to any of the
      following Events occurring or deemed to occur after
    Closing:

              

      

       

      
        	
                (a)  

              	
                the Company or any member of the Purchaser’s Tax
      Group failing to pay any amount of Taxation to which it is primarily
      liable to the extent that such tax liability arises in circumstances where
      the Purchaser would not have been entitled to make a claim against
      Nobbs
      and Whitcher under paragraph 2 of the Tax Covenant had such
      liability for taxation been paid by the Company or the relevant member of
      the Purchaser's Tax Group;

              

      

       

      
        	
                (b) 

              	
                the
      making by the Company or any member of the Purchaser’s Tax Group of any
      payment or deemed payment which is treated as a chargeable payment for the
      purposes of Section 214 of Income and Corporation Taxes Act 1988 where the
      Company or the relevant member of the Purchaser’s Tax Group was aware that
      such payment would give rise to such tax
  liability;

              

      

       

      
        	
                (c)  

              	
                the
      Company or any member of the Purchaser’s Tax Group (such company being a
      member of the Purchaser’s Tax Group at the date of Closing) and which is
      at Closing resident in the United Kingdom for Taxation purposes, ceasing
      to be resident in the United Kingdom for Taxation
  purposes.

              

      

       

      
        
          
          

        

        
          A-30

          
            

          

        

        
          
          

        

         

      

      
        	
                12.2  

              	
                Any
      payment made by the Purchaser under paragraph 12.1 above shall be made 5
      days before the last day on which the relevant payment of Taxation is due
      to be made to the relevant Taxation Authority without incurring any
      liability to interest or penalties.

              

      

       

      
        	
                12.3  

              	
                The Purchaser shall pay Nobbs and Whitcher
      an amount equal to all costs and
      expenses reasonably and properly incurred by Nobbs and Whitcher
      in connection with such tax liability
      as described in paragraph 12 above or any action taken under this
      paragraph.

              

      

       

      
        
          
          

        

        
          A-31

          
            

          

        

        
          
          

        

      

      

       

      Schedule
8.2(v)

       

      Damages
related to any claim made against the Company by TVI Corporation (“TVI Claim”); provided
that any such claim relates to any act or omission by the Company and such act
or omission occurred prior to the Closing Date; and provided further that the
Purchaser Parties shall not be entitled to bring a claim under this Article 8.2
(a) (v) if the TVI Claim relates to products or goods sold or distributed by the
Purchaser Party after the Closing Date that were not sold or distributed by the
Company on or prior to the Closing Date.Fiscal 2010 Annual Performance Bonus Program

 Exhibit 10.1 
 FISCAL 2010 ANNUAL PERFORMANCE BONUS PROGRAM 
 FOR JOHN D.
CARTER AND TAMARA L. LUNDGREN 
 The Amended and Restated Employment Agreements between the Company and each of John D. Carter
and Tamara L. Lundgren provide for annual cash bonuses under bonus programs to be developed by the Compensation Committee (the “Committee”), with bonuses payable based on Company financial performance and achievement of management
objectives as determined by the Committee at the beginning of each fiscal year. The annual bonus program for Mr. Carter and Ms. Lundgren for fiscal 2010 has two components. The first component consists of awards with cash payouts based on
achievement of Company financial performance targets. The second component is based on the achievement of management objectives established by the Committee. The two components of the annual performance bonus program shall operate independently, and
the Committee shall make determinations with respect to the second component without regard to the outcomes under the first component. 
 Company Financial Performance Targets 
 Calculation of Cash Payout. For fiscal 2010, the
Company financial performance targets shall be the Company’s earnings per share (“EPS”) and return on capital employed (“ROCE”), and each performance target shall be weighted equally. Cash payouts to the participants under
this component of the bonus program shall be determined based on the level of achievement of each performance target. The Committee has established performance targets for EPS and ROCE and corresponding payouts as a percentage of a
participant’s target amount. Payouts begin at positive levels of EPS and ROCE. 
 Participants’
Target Amounts. The total target amount for Mr. Carter for the Company financial performance component shall be 50% of his annual base salary as in effect on August 31, 2010, with one-half of this target amount subject to each of the
two financial performance targets and the maximum total bonus under these two targets not to exceed three times his target amount under this component. The total target amount for Ms. Lundgren for the Company financial performance component
shall be 50% of her annual base salary as in effect on August 31, 2010, with one-half of this target amount subject to each of the two financial performance targets and the maximum total bonus under these two targets not to exceed seven times
her target amount under this component. 
 EPS. The EPS goal for fiscal 2010 shall be based on the
Adjusted EPS for that year. Adjusted EPS for fiscal 2010 shall mean the Company’s diluted earnings per share for that fiscal year before extraordinary items and the cumulative effects of changes in accounting principles, if any, as set forth in
the audited consolidated financial statements of the Company and its subsidiaries for that fiscal year, adjusted to eliminate the impact of such other items as the Committee shall have specified at the time of establishment of the performance
targets. 

 ROCE. The Company’s ROCE for fiscal 2010 shall be equal to the
sum of the Adjusted Operating Income of the Company’s Metals Recycling Business (“MRB”) and the Adjusted Operating Income of the Company’s Auto Parts Business (“APB”) for fiscal 2010 divided by the sum of the Average
Capital Employed of MRB and the Average Capital Employed of APB for fiscal 2010. Adjusted Operating Income for each business for fiscal 2010 shall mean the business’s segment operating income for fiscal 2010 as set forth in the audited
consolidated financial statements of the Company and its subsidiaries for fiscal 2010, adjusted to eliminate the impact of such items as the Committee shall have specified at the time of establishment of the performance targets and then reduced by
the Company’s effective tax rate for fiscal 2010 as determined from the audited consolidated statement of operations of the Company and its subsidiaries for fiscal 2010. Average Capital Employed for each business for fiscal 2010 shall mean the
average of five (5) numbers consisting of the business’s Capital Employed as of the last day of the fiscal year and as of the last day of the four preceding fiscal quarters. Capital Employed for each business as of any date shall mean
(i) the business’s total assets (adjusted to eliminate the impact of such items as the Committee shall have specified at the time of establishment of the performance targets), minus (ii) the business’s total liabilities other
than debt for borrowed money and capital lease obligations, plus (iii) its intercompany payable balances, minus (iv) its intercompany receivable balances, in each case as set forth in the consolidated financial statements of the Company
and its subsidiaries as of the applicable date or otherwise determined from the Company’s accounting records on a consistent basis. 
 Change in Accounting Principle. If the Company implements a change in accounting principle during fiscal 2010 either as a result of issuance of new accounting standards or otherwise, and the effect
of the accounting change was not reflected in the Company’s business plan at the time of approval of this award, then EPS and ROCE shall be adjusted to eliminate the impact of the change in accounting principle. 
 Management Objectives 
 The
second component of the annual bonus program is based on the achievement of the management objectives determined by the Committee. The Committee shall establish the management objectives and specify the weight to be assigned to each objective.
Following the end of the fiscal year, the Committee shall evaluate the performance of each participant against the management objectives, determine the extent to which each objective has been met and determine the amount of the bonus to be paid. The
target bonus amount for Mr. Carter for this component of the bonus program shall be 50% of his annual base salary as in effect on August 31, 2010, and the maximum bonus under this component may not exceed three times this target amount.
The target bonus amount for Ms. Lundgren for this component of the bonus program shall be 50% of her annual base salary as in effect on August 31, 2010, and the maximum bonus under this component may not exceed three times this target
amount. The actual amount of the bonuses under this component shall be determined by the Committee. 

 General Provisions 
 Certification. Following the end of fiscal 2010 and prior to the payment of any bonus based on the Company financial performance targets, the Committee shall certify in
writing the level of attainment of each performance target for the year and the calculation of the bonus amounts for each participant. Payouts shall be made in cash to the participants as soon as practicable after October 31, 2010 following
certification by the Committee. 
 Conditions to Payment. Subject to the terms of each participant’s
employment agreement and change in control agreement, a participant must be employed by the Company on August 31, 2010 to receive this component of the annual bonus. 
 IRS Section 162(m). For Mr. Carter, the Company Financial Performance component of the annual bonus program is implemented pursuant to the Executive Annual Bonus
Plan, which was approved by shareholders in 2005, and is intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. The EPS and ROCE performance targets are among performance goals approved by
shareholders in the Executive Annual Bonus Plan. For Ms. Lundgren, the Company Financial Performance component does not qualify as performance-based compensation under Section 162(m).

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