AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

Exhibit 2.1

Execution Copy

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “Agreement”), dated as of May 27, 2008, is among PepperBall Technologies, Inc., a Delaware corporation (the “Company”), Security With Advanced Technology, Inc., a Colorado corporation (“SWAT”) and PTI Acquisition Corp., a Delaware corporation and a wholly-owned Subsidiary of SWAT (“Merger Sub”). Certain capitalized and non-capitalized terms used herein are defined in Section 8.13.

RECITALS

WHEREAS, the Boards of Directors of the Company, SWAT and Merger Sub each have, in light of and subject to the terms and conditions set forth herein, approved this Agreement and the transactions contemplated hereby, including the Merger, and declared the Merger advisable and fair to, and in the best interests of, their respective stockholders;

WHEREAS, pursuant to the Merger, among other things, and subject to the terms and conditions of this Agreement, all of the issued and outstanding shares of capital stock of the Company, other than such shares held by SWAT, Merger Sub or the Company, shall be converted into the right to receive shares of common stock, no par value per share, of SWAT (the “SWAT Common Stock”);

WHEREAS, as an inducement to SWAT and Merger Sub to enter into this Agreement, certain stockholders of the Company have concurrently herewith entered into a voting agreement in the form attached hereto as Exhibit A (“Company Voting Agreement”) pursuant to which, among other things, such stockholders have agreed to vote all shares of capital stock of the Company owned by them in favor of the Merger;

WHEREAS, as an inducement to the Company to enter this Agreement, certain stockholders of SWAT have concurrently herewith entered into a voting agreement in the form attached hereto as Exhibit B (“SWAT Voting Agreement”) pursuant to which, among other things, such Persons have agreed to vote all capital stock of SWAT owned by them in favor of the Merger;

WHEREAS, for federal income tax purposes, it is intended that the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement shall constitute a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a); and

WHEREAS, the Company, SWAT and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Merger as set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Company, SWAT and Merger Sub hereby agree as follows:

ARTICLE I

THE MERGER; ADVANCE NOTE

Section 1.1 The Merger. At the Effective Time and upon the terms and subject to the conditions of this Agreement and in accordance with the applicable provisions of the Delaware General Corporation Law (“Delaware Law”), Merger Sub shall be merged with and into the Company (the “Merger”). Following the Merger, the Company shall continue as the surviving corporation (the “Surviving Corporation”), and the separate corporate existence of Merger Sub shall cease.

Section 1.2 Effective Time. Subject to the provisions of this Agreement, the Company, SWAT and Merger Sub shall cause the Merger to be consummated by filing an appropriate certificate of merger in the form attached hereto as Exhibit C and other appropriate documents (the “Certificate of Merger”) with the Secretary of State of the State of Delaware in such form as required by, and executed in accordance with, the relevant provisions of Delaware Law, as soon as practicable on the Closing Date. The Merger shall become effective upon the filing of the Certificate of Merger (the “Effective Time”).

Section 1.3 Closing of the Merger. The closing of the Merger (the “Closing”) will take place at a time and on a date to be specified by the parties (the “Closing Date”), which shall be no later than the third business day after satisfaction or waiver of the conditions set forth in ARTICLE VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), at the offices of Xxxxxxxx & Xxxxxxxx LLP, 12531 High Bluff Drive, San Diego, California, or at such other time, date or place as agreed to by the parties hereto.

Section 1.4 Effects of the Merger. The Merger shall have the effects set forth in this Agreement, the Certificate of Merger and the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all of the properties, rights, privileges, powers and franchises of Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

Section 1.5 Directors and Officers.

(a) SWAT. As of the Effective Time, (i) the directors of SWAT shall be comprised in accordance with Schedule 1.5 hereto and (ii) the individuals listed on Schedule 1.5 hereto shall have been appointed as the officers of SWAT in accordance with Schedule 1.5 hereto.

(b) Surviving Corporation. The directors of the Surviving Corporation shall be comprised in accordance with Schedule 1.5 hereto and shall hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal. The officers of the Company at the Effective Time shall be the initial officers of the Surviving Corporation and shall hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal.

Section 1.6 Certificate or Articles of Incorporation and Bylaws.

(a) SWAT. The articles of incorporation and bylaws of SWAT as in effect immediately prior to the Effective Time shall remain in full force and effect after the Effective Time; provided, however, that Article FIRST of the articles of incorporation of SWAT shall be amended to read in its entirety as follows: “The name of the Corporation is PepperBall Technologies, Inc.”

(b) Surviving Corporation. Effective immediately following the Merger, the certificate of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be amended in its entirety to read as set forth in the Certificate of Merger. Effective immediately following the Merger, the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until amended in accordance with applicable Law.

Section 1.7 Advance Note. Upon the execution of this Agreement, SWAT will deliver $495,000 to the Company by wire transfer of immediately available U.S. funds (the “Advance”) in exchange for a promissory note, carrying a principal amount equal to the Advance, in substantially the form attached hereto as Exhibit D (the “Advance Note”). The Company shall only be obligated to repay the Advance Note in the event the Merger is not consummated due to either (i) the Company’s failure to obtain the Company Stockholder Approval, or (ii) the Company Board Recommendation is withdrawn. At SWAT’s option, if the Company shall be obligated to repay the Advance Note, SWAT may waive the return of $250,000 of the Advance Note in exchange for (x) a mutual settlement of all claims and matters relating to Case No. ‘07CV 0672 JAH POR, PepperBall Technologies, Inc. v. Security With Advanced Technology, Inc., Vizer Group, Inc. and Avurt International, Inc., pending in the United States District Court, Southern District of California (the “Current Action”), and (y) a non-exclusive worldwide license to use the Company’s intellectual property rights for projectiles and any technology contained in the launchers or subsequent versions of such launchers SWAT is having produced by Tiberius Arms (the “License”). The License shall have an initial term of five years (with SWAT having the right to renew for additional five year terms unless SWAT is in default under the License), carry a royalty equal to 3% of SWAT’s net sales of non-lethal projectiles and launchers (subject to a $100,000 per year royalty maximum) and provide for SWAT to pay the Company $250,000 upon the signing of the License (which shall be paid by SWAT’s waiver of the return of $250,000 of the Advance Note as described above), with 50% of such payment to be treated as a royalty prepayment.

ARTICLE II

CONVERSION OF SECURITIES; EXCHANGE OF NOTES;
ANTI-DILUTION PROTECTION

Section 2.1 Conversion of Shares.

(a) By action of the holders of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock of the Company (collectively, “Company Preferred Stock”), each share of Company Preferred Stock outstanding immediately prior to the Effective Time shall be converted immediately prior to the Effective Time (subject to the satisfaction of the conditions set forth in Section 6.1 and Section 6.3) into that number of shares of Company’s common stock, par value $0.001 per share (the “Company Common Stock”), into which one share of Series A Preferred Stock and Series B Preferred Stock is then convertible.

(b) At the Effective Time, each outstanding share of common stock, par value $.001 per share, of Merger Sub shall, by virtue of the Merger and without any action on the part of the Company, SWAT or Merger Sub, be converted into one fully paid and non-assessable share of common stock of the Surviving Corporation.

(c) At the Effective Time, each share of Company Common Stock, issued and outstanding immediately prior to the Effective Time (including the shares of Company Common Stock issued upon conversion of the Company Preferred Stock) (individually, a “Share” and collectively, the “Shares”) (other than (i) Shares held by the Company, (ii) Shares held by SWAT or Merger Sub or (iii) Dissenting Shares (as hereinafter defined)) shall, by virtue of the Merger and without any action on the part of SWAT, Merger Sub or the Company or any holder thereof, be converted into and be exchangeable for the right to receive the number (rounded down to the nearest whole share) of fully paid and non-assessable shares of SWAT Common Stock equal to the Exchange Ratio.

(d) For purposes of this Agreement, the “Exchange Ratio” shall be determined in accordance with the following formula:


E =		Y Z

where E =

the Exchange Ratio

Y =

all shares of SWAT Common Stock (assuming conversion of all outstanding shares of SWAT Series A Convertible Preferred Stock and Series B Convertible Preferred Stock (collectively the “SWAT Preferred Stock”) into shares of SWAT Common Stock) issued and outstanding as of 11:59 pm (San Diego, California time) on the day immediately preceding the Closing Date

Z =

all outstanding shares of Company Common Stock (assuming conversion of all outstanding shares of Company Preferred Stock into shares of Company Common Stock), as of 11:59 pm (San Diego, California time) on the day immediately preceding the Closing Date

All such shares of SWAT Common Stock issued pursuant to this Section 2.1 are referred to herein as the “Merger Consideration.”

(e) At the Effective Time, each Share of Company Common Stock owned by SWAT, Merger Sub or the Company immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof and no consideration shall be delivered in exchange therefor.

(f) If, between the date of this Agreement and the Effective Time, either (i) the outstanding shares of Company Common Stock or Company Preferred Stock shall have been changed into a different number of shares or a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, or any similar event, or (ii) the number of shares of Company Common Stock issuable upon conversion of each share of Company Preferred Stock shall have been changed pursuant to contract, an anti-dilution adjustment provision contained in the Company’s certificate of incorporation or otherwise, the calculation of the Exchange Ratio shall be correspondingly adjusted to the extent necessary to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, change in conversion ratio or such similar event.

(g) If, between the date of this Agreement and the Effective Time, the outstanding shares of SWAT Common Stock shall have been changed into a different number of shares or a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, or any similar event, the calculation of the Exchange Ratio shall be correspondingly adjusted to the extent necessary to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, or such similar event.

Section 2.2 Stock Options; Warrants.

(a) At the Effective Time, the Company Stock Options, whether vested or unvested, will be assumed by SWAT (“Assumed Stock Options”). The Company represents and warrants that Section 2.2(a) of the Company Disclosure Schedule sets forth a true and complete list as of the date hereof of all holders of outstanding options to purchase shares of Company Common Stock (“Company Stock Options”), including the number of shares of Company Common Stock subject to each such option, the exercise or vesting schedule, the exercise price per share and the term of each such option. On the Closing Date, the Company shall deliver to SWAT an updated Section 2.2(a) of the Company Disclosure Schedule current as of such date. Each such option so assumed by SWAT under this Agreement shall continue to have, and be subject to, the same terms and conditions set forth in the PepperBall Technologies, Inc. 2000 Stock Option Plan and the Jaycor Tactical Solutions, Inc. 2000 Nonqualified Stock Option Plan (collectively the “Company Option Plans”) and any stock option agreement governing such option immediately prior to the Effective Time, except that (a) such option will be exercisable for that number of whole shares of SWAT Common Stock equal to the product of the number of shares of Company Common Stock that were issuable upon exercise of such option immediately prior to the Effective Time multiplied by the Exchange Ratio and rounded down to the nearest whole number of shares of SWAT Common Stock, (b) the per share exercise price for the shares

of SWAT Common Stock issuable upon exercise of such assumed option will be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent and (c) any restriction on the exercisability of such Company Stock Option shall continue in full force and effect, and the term, exercisability, vesting schedule and other provisions of such Company Stock Option shall remain unchanged. Consistent with the terms of the Company Option Plans and the documents governing the outstanding options, the Merger will not terminate any of the outstanding options under the Company Option Plans or accelerate the exercisability or vesting of such options or the shares of SWAT Common Stock which will be subject to those options upon SWAT’s assumption of the options in the Merger. To the extent possible, the Assumed Stock Options will be subject to the SWAT 2004 Incentive Plan (the “SWAT Stock Plan”) (provided that if such action is not possible, the parties will mutually agree upon other arrangements with respect to such Assumed Stock Options). It is the intention of the parties that the options so assumed by SWAT following the Effective Time will remain incentive stock options as defined in Section 422 of the Code to the extent such options qualified as incentive stock options prior to the Effective Time, and the parties hereto shall use their commercially reasonable efforts to carry out such intention. Within 10 business days after the Effective Time, SWAT will issue to each Person who, immediately prior to the Effective Time was a holder of an outstanding option under the Company Option Plans a document in form and substance reasonably satisfactory to the Company evidencing the foregoing assumption of such option by SWAT. SWAT agrees to take such action as is necessary to include the shares of SWAT Common Stock issuable pursuant to the Assumed Stock Options in SWAT’s previously filed registration statement on Form S-8. In the event the shares of SWAT Common Stock issuable pursuant to the Assumed Stock Options cannot be included in SWAT’s previously filed registration statement on Form S-8, SWAT will prepare and file with the Securities and Exchange Commission (“SEC”) another registration statement on Form S-8 to include the shares of SWAT Common Stock issuable pursuant to the Assumed Stock Options and the Company will cooperate with and assist SWAT in the preparation thereof.

(b) At the Effective Time the Company Warrants will be assumed by SWAT Warrants”). The Company represents and the Company Disclosure Schedule sets forth a true date hereof of all holders of outstanding warrants Company Common Stock or other securities convertible or of Company Common Stock (“Company number of shares of Company Common Stock or exchangeable for shares of Company Common Stock the exercise price per share and the term of each Date, the Company shall deliver to SWAT an Company Disclosure Schedule current as of such assumed by SWAT under this Agreement shall continue the same terms and conditions set forth in the warrant immediately prior to the Effective Time, warrant will be exercisable for that number of whole Stock equal to the product of the number of shares of other securities convertible or exchangeable for shares that were issuable upon exercise of such warrant Effective Time multiplied by the Exchange Ratio and whole number of shares of SWAT Common Stock, price for the shares of SWAT Common Stock assumed warrant will be equal to the quotient exercise price per share of Company Common Stock or convertible or exchangeable for shares of Company Common Stock warrant was exercisable immediately prior Ratio, rounded up to the nearest whole cent and (c) any exercisability of such Company Warrant shall continue in full and the term, exercisability and other provisions of such remain unchanged. Within 10 business days after the issue to each Person who, immediately prior to the of an outstanding Company Warrant a document in form satisfactory to the Company evidencing the foregoing by SWAT. (“Assumed warrants that Section 2.2(b) of and complete list as of the to purchase shares of exchangeable for shares Warrants”), including the other securities convertible or subject to each such warrant, such warrant. On the Closing updated Section 2.2(b) of the date. Each such warrant so to have, and be subject to, document(s) governing such except that (a) such shares of SWAT Common Company Common Stock or of Company Common Stock immediately prior to the rounded down to the nearest (b) the per share exercise issuable upon exercise of such determined by dividing the other securities at which such to the Effective Time by the Exchange restriction on the force and effect, Company Warrant shall Effective Time, SWAT will Effective Time was a holder and substance reasonably assumption of such warrant

Section 2.3 Exchange Fund. Unless the parties otherwise agree, prior to the Effective Time, SWAT shall appoint its transfer agent, Corporate Stock Transfer, Inc., to act as exchange agent hereunder for the purpose of exchanging Shares for the Merger Consideration (the “Exchange Agent”). At or prior to the Effective Time, SWAT shall deposit with the Exchange Agent, in trust for the benefit of holders of Shares, certificates representing the SWAT Common Stock issuable pursuant to Section 2.1 in exchange for outstanding Shares. SWAT agrees to make available to the Exchange Agent from time to time as needed, any dividends and other distributions pursuant to Section 2.5. Any certificates of SWAT Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the “Exchange Fund.”

Section 2.4 Exchange Procedures. As soon as reasonably practicable after the Effective Time (and in any event within three business days after the Effective Time), SWAT and the Surviving Corporation shall use their commercially reasonable efforts to cause the Exchange Agent to mail to each holder of a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (the “Certificates”) (a) a letter of transmittal which shall specify that delivery shall be effective, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent, and which letter shall be in customary form and have such other provisions as SWAT may reasonably specify; and (b) instructions for effecting the surrender of such Certificates in exchange for the Merger Consideration in accordance with the terms of this Agreement. Upon surrender of a Certificate to the Exchange Agent together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor (i) shares of SWAT Common Stock representing, in the aggregate, the whole number of shares that such holder has the right to receive pursuant to Section 2.1 (after taking into account all Shares then held by such holder) and (ii) a check in the amount equal to the cash that such holder has the right to receive pursuant to the provisions of this ARTICLE II, including cash in lieu of any dividends and other distributions pursuant to Section 2.5, and the Shares formerly represented by such Certificate and the Certificate so surrendered shall forthwith be canceled. Until surrendered as contemplated by this ARTICLE II, each Certificate shall be deemed at any time after the Effective Date to represent only the right to receive the Merger Consideration payable upon surrender of the Certificates. No interest will be paid or will accrue on any cash payable pursuant to Section 2.5 or Section 2.7. In the event of a transfer of ownership of Shares which is not registered in the transfer records of the Company, shares of SWAT Common Stock evidencing, in the aggregate, the proper number of shares of SWAT Common Stock and any dividends or other distributions to which such holder is entitled pursuant to Section 2.5, may be issued with respect to such Shares to such a transferee if the Certificate representing such Shares is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable Transfer Taxes have been paid.

Section 2.5 Distributions with Respect to Unsurrendered Certificates. No dividends or other distributions declared or made with respect to shares of SWAT Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of SWAT Common Stock that such holder would be entitled to receive upon surrender of such Certificate until such holder shall surrender such Certificate in accordance with Section 2.4. Subject to the effect of applicable Laws (as hereinafter defined), following surrender of any such Certificate, there shall be paid to such holder of shares of SWAT Common Stock issuable in exchange therefor, without interest, (a) promptly after the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of SWAT Common Stock, and (b) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and a payment date subsequent to such surrender payable with respect to such shares of SWAT Common Stock.

Section 2.6 No Further Ownership Rights in Company Common Stock. All shares of SWAT Common Stock issued and cash paid upon conversion of the Shares in accordance with the terms of ARTICLE I and this ARTICLE II (including any cash paid pursuant to Section 2.5 and Section 2.7) shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to the Shares.

Section 2.7 Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the holders of Certificates for six months after the Effective Time shall be delivered to the Surviving Corporation or otherwise on the instruction of the Surviving Corporation, and any holders of the Certificates who have not theretofore complied with this ARTICLE II shall thereafter look only to SWAT for the Merger Consideration with respect to the Shares formerly represented thereby to which such holders are entitled pursuant to Section 2.1 and Section 2.4, any dividends or distributions with respect to shares of SWAT Common Stock to which such holders are entitled pursuant to Section 2.5. Any such portion of the Exchange Fund remaining unclaimed by holders of Shares five years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity) shall, to the extent permitted by Law, become the property of SWAT free and clear of any claims or interest of any Person previously entitled thereto.

Section 2.8 No Liability. None of SWAT, Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

Section 2.9 Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity by such Person against any claim that may be made against the Surviving Corporation with respect to such Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect to the Shares formerly represented thereby and any unpaid dividends and distributions on shares of SWAT Common Stock deliverable in respect thereof, pursuant to this Agreement.

Section 2.10 Tax Consequences. It is intended by the parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368(a) of the Code. Each party hereto shall use its commercially reasonable efforts to cause the Merger to be so qualified, shall report the transactions contemplated by this Agreement in a manner consistent with such reorganization treatment and will not take any position inconsistent therewith in any Tax Return (as hereinafter defined), refund claim, litigation or otherwise unless required to do so by Law.

Section 2.11 Stock Transfer Books. The stock transfer books of the Company shall be closed immediately upon the Effective Time and there shall be no further registration of transfers of Shares thereafter on the records of the Company. On or after the Effective Time, any Certificates presented to the Exchange Agent or SWAT for any reason shall be converted into the Merger Consideration with respect to the Shares formerly represented thereby and any dividends or other distributions to which the holders thereof are entitled pursuant to Section 2.5.

Section 2.12 Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by stockholders who did not vote in favor of the Merger (the “Dissenting Shares”), which stockholders comply with all of the relevant provisions of Delaware Law (the “Dissenting Stockholders”), shall not be converted into or be exchangeable for the right to receive the Merger Consideration, unless and until such holders shall have failed to perfect or shall have effectively withdrawn or lost their rights to appraisal under Delaware Law. If any Dissenting Shareholder shall have failed to perfect or shall have effectively withdrawn or lost such right, such holder’s Shares shall thereupon be converted into and become exchangeable for the right to receive, as of the Effective Time, the Merger Consideration without any interest thereon. The Company shall give SWAT (a) prompt notice of any written demands for appraisal of any Shares, attempted withdrawals of such demands and any other instruments served pursuant to Delaware Law and received by the Company relating to stockholders’ rights of appraisal, and (b) the opportunity to direct, in its reasonable business judgment, all negotiations and proceedings with respect to demands for appraisal under Delaware Law. Neither the Company nor the Surviving Corporation shall, except with the prior written consent of SWAT, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Shareholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent, the Shares held by such Dissenting Shareholder shall thereupon be treated as though such Shares had been converted into the right to receive the Merger Consideration pursuant to Section 2.1.

Section 2.13 Exchange of Notes. The parties agree that, upon the Closing, each holder of the promissory notes listed in Section 2.13 of the Company Disclosure Schedule (the “Company Notes”) shall exchange his, her or its Company Note for a promissory note with the same principal amount issued by SWAT (the “New SWAT Notes”). The New SWAT Notes shall be unsecured, bear interest at the rate of 10% per annum and shall mature 15 months from the Closing Date. Interest on the New SWAT Notes shall accrue to maturity. At the option of the holder of each New SWAT Note, the principal amount and all accrued interest under such note shall be convertible at any time into shares of SWAT’s Common Stock, based upon the average closing price of SWAT’s Common Stock on the Nasdaq Capital Market (“Nasdaq”) (or such other exchange or quotation service on which SWAT Common Stock is listed or quoted at such time, as the case may be) for the six month period ended on the trading day immediately prior to the date such holder requests to convert such note; provided that SWAT shall not be required to honor any such conversion request that relates to the conversion of less than the lesser of (i) $100,000, or (ii) the full amount of principal and accrued interest under such note.

Section 2.14 Anti-Dilution Protection. If within nine months of the Closing Date SWAT raises additional financing through the sale of SWAT Common Stock or securities convertible or exchangeable for shares of SWAT Common Stock (a “Subsequent Equity Financing”), then the holders of Company Common Stock at the Effective Time shall be entitled to receive additional shares of SWAT Common Stock upon the closing of the Subsequent Equity Financing. The number of additional shares of SWAT Common Stock issuable pursuant to this Section 2.14 shall be determined in accordance with the following formula:


E =		$2,505,000 - (X + Y) Z

Where E =

the number of shares of SWAT Common Stock to be issued

X =

the amount of SWAT cash on hand at the Closing, plus the amount of any payments made to Dissenting Stockholders of the Company

Y =

the total cash payments made by SWAT between the execution of this Agreement and the Closing for professional fees incurred by SWAT in connection with the Merger

Z =

the price per share of the securities issued in the Subsequent Equity Financing or the price per share at which such securities are convertible or exchangeable for shares of SWAT Common Stock (as applicable)

Such shares shall be issued pro rata to the holders of Company Common Stock at the Effective Time on the same basis as the shares of SWAT Common Stock were distributed at the Closing. This Section 2.14 shall only apply to the first Subsequent Equity Financing during the nine month period following the Closing. Any holder of Company Common Stock may bring an action or proceeding to enforce the provisions of this Section 2.14.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Except as set forth on the schedule delivered by the Company to SWAT and Merger Sub in connection with the execution and delivery of this Agreement (the “Company Disclosure Schedule”) the Company hereby represents and warrants to SWAT and Merger Sub, and except as set forth in the disclosure schedule delivered by SWAT and Merger Sub to the Company in connection with the execution and delivery of this Agreement (the “SWAT Disclosure Schedule”), SWAT and Merger Sub hereby represent and warrant to the Company, in each case as set forth in this ARTICLE III, with the party making such representations and warranties being referred to as the “Representing Party” and such Representing Party’s Disclosure Schedule as the “Representing Party’s Disclosure Schedule.” Notwithstanding the foregoing, any representation or warranty which expressly refers to SWAT or its Subsidiaries is being made solely by SWAT and Merger Sub and any representation or warranty which expressly refers to the Company or its Subsidiaries is being made solely by the Company.

Section 3.1 Organization, Qualification.

(a) The Representing Party is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has the corporate power and authority required for it to own its properties and assets and to carry on its business as it is now being conducted. The Representing Party is duly qualified to do business and is in good standing in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or in good standing would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Representing Party or substantially delay consummation of the transactions contemplated by this Agreement or otherwise prevent the Representing Party from performing its obligations hereunder. As used in this Agreement, “Material Adverse Effect” means any change, effect, event, occurrence, state of facts or development that (i) materially adversely affects the assets, liabilities, business, results of operations or condition (financial or otherwise) of the Representing Party and its Subsidiaries, taken as a whole or (ii) adversely affects or delays the ability of the Representing Party to consummate the transactions contemplated by this Agreement, provided, however, that none of the following shall be deemed in themselves, either alone or in combination, to constitute a Material Adverse Effect on a Representing Party: (A) any adverse change, effect, event, occurrence, state of facts or development directly caused by the announcement or pendency of the Merger (including any cancellations of or delays in customer orders, any reduction in sales, any disruption in supplier, distributor, partner or similar relationships or any loss of employees); or (B) any adverse change, effect, event, occurrence, state of facts or development directly caused by, resulting from or attributable to conditions affecting the industries in which the Representing Parties operate as a whole or the U.S. or world economies as a whole. Each Representing Party has made available to the other a copy of its certificate or articles of incorporation and bylaws (or similar organizational documents). Such copy of each Representing Party’s certificate or articles of incorporation and bylaws (or similar organizational documents) are complete and correct and in full force and effect, and the Representing Party is not in violation of any of the provisions of its certificate or articles of incorporation and bylaws (or similar organizational documents).

(b) Each of the Representing Party’s Subsidiaries is listed in Section 3.1 of the Representing Party’s Disclosure Schedule and is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization. Each of the Representing Party’s Subsidiaries has the corporate power and authority required for it to own its properties and assets and to carry on its business as it is now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or in good standing would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Representing Party, taken as a whole. All the outstanding shares of capital stock of, or other ownership interests in, the Representing Party’s Subsidiaries are duly authorized, validly issued, fully paid and non-assessable and, with respect to such shares or ownership interests that are owned by the Representing Party and its Subsidiaries, are owned free and clear of any Liens. All the outstanding shares of capital stock of, or other ownership interests in, the Representing Party’s Subsidiaries are wholly owned by the Representing Party, directly or indirectly.

Section 3.2 Capital Stock.

(a) Section 3.2(a) of the Representing Party’s Disclosure Schedule sets forth as of the date hereof: (i) the number of authorized shares of each class or series of capital stock of the Representing Party; (ii) the number of shares of each class or series of capital stock of the Representing Party which are issued and outstanding; (iii) the number of shares of each class or series of capital stock which are held in the treasury of such Representing Party; (iv) the number of shares of each class or series of capital stock of the Representing Party which are reserved for issuance upon the exercise of outstanding warrants or otherwise, indicating each specific reservation; and (v) the number of shares of each class or series of capital stock of such Representing Party which are subject to employee stock options or other rights to purchase or receive capital stock granted under such Person’s stock option or other stock based employee or non-employee director benefit plans, indicating the name of the plan, the date of grant, the number of shares and the exercise price thereof.

(b) All the outstanding shares of capital stock of the Representing Party are, and all shares of SWAT Common Stock to be issued in the Merger will be when issued in accordance with the terms of this Agreement, duly authorized, validly issued, fully paid and non-assessable and issued in compliance with all applicable U.S. state and federal securities Laws. Except for the transactions contemplated by this Agreement and as disclosed in Section 3.2(a) of the Representing Party’s Disclosure Schedule, (i) as of the date of this Agreement there are no authorized or outstanding options, warrants, calls, preemptive rights, subscriptions or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Representing Party or any of its Subsidiaries, obligating the Representing Party or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or other equity interest in the Representing Party or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, or obligating the Representing Party or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment, (ii) there are no outstanding contractual obligations of the Representing Party or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Representing Party or any Subsidiary of the Representing Party or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary of the Representing Party or other entity, and (iii) there are no shareholder agreements, voting trusts or other agreements to which the Representing Party is a party or to which it is bound relating to the voting of any shares of the capital stock of the Representing Party (other than the Voting Agreements).

Section 3.3 Corporate Authority Relative to this Agreement; No Violation.

(a) The Company has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company and, except for obtaining the requisite approval of the stockholders of the Company (the “Company Stockholder Approval”), as contemplated in Section 5.2 and the filing of the Certificate of Merger, no other corporate proceedings on the part of the Company are necessary to authorize the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming this Agreement constitutes a valid and binding agreement of SWAT, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as may be limited by (i) bankruptcy Laws and other similar Laws affecting creditor’s rights generally and (ii) general principles of equity.

(b) SWAT has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of SWAT, and other than obtaining the requisite approval of the stockholders of SWAT (the “SWAT Stockholder Approval”) as contemplated in Section 5.3 and the filing of the Certificate of Merger no other corporate proceedings on the part of SWAT are necessary to authorize the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by SWAT and, assuming this Agreement constitutes a valid and binding agreement of the Company, constitutes a valid and binding agreement of SWAT, enforceable against SWAT in accordance with its terms, except as may be limited by (i) bankruptcy Laws and other similar Laws affecting creditor’s rights generally and (ii) general principles of equity.

(c) Except as may be required under, and other applicable requirements of, the Securities Act, the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), state securities or blue sky Laws, and the rules and regulations of Nasdaq, and the filing of the Certificate of Merger under Delaware Law, none of the execution, delivery or performance of this Agreement by the Representing Party, the consummation by the Representing Party of the transactions contemplated hereby or compliance by the Representing Party with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the certificate or articles of incorporation, bylaws or similar organizational documents of the Representing Party or any of its Subsidiaries, (ii) require any filing with, or permit, authorization, consent or approval of, any federal, regional, state or local court, arbitrator, tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, whether U.S. or foreign (a “Governmental Entity”), (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Representing Party or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound, or (iv) violate any order, writ, injunction, decree, judgment, permit, license, ordinance, law, statute, rule or regulation (“Law”) applicable to the Representing Party, any of its Subsidiaries or any of their properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv) such filings, permits, authorizations, consents, approvals, violations, breaches or defaults which are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on the Representing Party or prevent or substantially delay the consummation of the transactions contemplated hereby.

Section 3.4 Reports and Financial Statements.

(a) As of their respective dates, all reports, proxy statements, registration statements and prospectuses filed with the SEC by SWAT since January 1, 2006 (collectively with, and giving effect to, all amendments, supplements and exhibits thereto, the “SEC Reports”) (i) complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. None of SWAT’s Subsidiaries is required to file any forms, reports or other documents with the SEC. The audited consolidated financial statements and unaudited consolidated interim financial statements included in the SEC Reports (including any related notes and schedules) fairly present in all material respects the financial position of SWAT and its consolidated Subsidiaries as of the dates thereof and the results of operations and cash flows for the periods or as of the dates then ended (subject, in the case of the unaudited interim financial statements, to normal recurring adjustments), in each case in accordance with past practice and generally accepted accounting principles in the United States (“GAAP”) consistently applied during the periods involved (except as otherwise disclosed in the notes thereto). Since January 1, 2006, SWAT has timely filed all reports, registration statements and other filings required to be filed by it with the SEC under the rules and regulations of the SEC.

(b) The Company has delivered to SWAT copies of the audited balance sheet of the Company as of December 31, 2007, together with the related audited statements of income, stockholders’ equity and changes in cash flow for the fiscal year ended December 31, 2007 (such audited financial statements being hereinafter referred to as the “Financial Statements”). The Financial Statements, including the notes thereto, present fairly in all material respects the financial position, results of operations and changes in cash flow of the Company and its consolidated Subsidiaries as of such dates and for the periods then ended.

(c) The accounts receivable of the Representing Party set forth on the balance sheet of the Representing Party (i) arose from bona fide sales or contract billing transactions in the ordinary course of the Representing Party’s business and are payable on ordinary trade terms, (ii) to the knowledge of the Representing Party, are legal, valid and binding obligations of the respective debtors enforceable in accordance with their terms (except as the enforceability thereof may be limited by any applicable bankruptcy, reorganization, insolvency or other laws affecting creditors’ rights generally or by general principles of equity), (iii) are not subject to any valid set-off or counterclaim by the debtor, (iv) do not represent obligations for goods sold on consignment, on approval or on a sale-or-return basis or subject to any other repurchase or return arrangement, (v) to Representing Party’s knowledge, are collectible in the ordinary course of the Representing Party’s business in the aggregate recorded amounts thereof, net of any applicable reserve reflected in the Representing Party’s financial statements, (vi) are not owned by any Affiliate of the Representing Party, and (vii) are not the subject of any legal proceeding brought by or on behalf of the Representing Party. The Representing Party has not received any written notice from any account debtor regarding any dispute over any of the accounts receivable. None of the accounts receivable constitutes duplicate xxxxxxxx of other accounts receivable. There are no security arrangements or collateral securing the repayment or other satisfaction of the accounts receivable.

Section 3.5 No Undisclosed Liabilities. Neither the Representing Party nor any of its Subsidiaries has any liabilities or obligations of any nature required to be set forth on a balance sheet of the Representing Party under GAAP, whether or not accrued, contingent or otherwise, and there is no existing condition, situation or set of circumstances which would be expected to result in such a liability or obligation, except (a) liabilities or obligations with respect to SWAT reflected in the SEC Reports and with respect to the Company reflected in the Financial Statements or (b) liabilities and obligations which are not, individually or in the aggregate, reasonably expected to have a Material Adverse Effect on the Representing Party.

Section 3.6 No Default; Compliance with Applicable Laws. The businesses of the Representing Party and each of its Subsidiaries is not in conflict with, or in default or violation of, any term, condition or provision of (i) its respective certificate or articles of incorporation or bylaws or similar organizational documents, (ii) any Company Material Contracts or SWAT Material Contracts, as applicable, or (iii) any federal, state, local or foreign statute, Law, concession, grant, franchise, Permit or other governmental authorization or approval applicable to the Representing Party or any of its Subsidiaries, excluding from the foregoing clauses (ii) and (iii), defaults or violations which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Representing Party.

Section 3.7 Environmental Matters.

(a) Representing Party is and has been in compliance with all Environmental Laws relating to the properties or facilities used, leased or occupied by Representing Party at any time, and no discharge, emission, release, leak or spill of Hazardous Materials has occurred at any of Representing Party’s Facilities that may or will give rise to liability of Representing Party under Environmental Laws. To Representing Party’s knowledge, there are no Hazardous Materials (including without limitation asbestos) present in the surface waters, structures, groundwaters or soils of or beneath any of Representing Party’s facilities. To Representing Party’s knowledge, there neither are nor have been any aboveground or underground storage tanks for Hazardous Materials at Representing Party’s facilities. To Representing Party’s knowledge, no Representing Party employee or other Person has claimed that Representing Party is liable for alleged injury or illness resulting from an alleged exposure to a Hazardous Material. No civil, criminal or administrative action, proceeding or investigation is pending against Representing Party, or, to Representing Party’s knowledge, threatened against Representing Party, with respect to Hazardous Materials or Environmental Laws; and Representing Party is not aware of any facts or circumstances that could form the basis for assertion of a claim against Representing Party or that could form the basis for liability of Representing Party, regarding Hazardous Materials or regarding actual or potential noncompliance with Environmental Laws.

(b) As used in this Agreement: (i) “Environmental Law” means any Law or order of any Governmental Entity relating to (A) the generation, treatment, storage, disposal, use, handling, manufacturing, transportation or shipment of, or (B) the environment or to emissions, discharges, releases or threatened releases of, Hazardous Materials, into the environment; and (ii) “Hazardous Materials” means (A) any petroleum or petroleum products, radioactive materials or friable asbestos; (B) any chemicals or other materials or substances which are now defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” or “toxic pollutants” under any Environmental Law; and (C) any pesticides.

Section 3.8 Litigation. There is no suit, claim, action, proceeding or investigation pending or, to the Representing Party’s knowledge, threatened against the Representing Party, its Subsidiaries or any of its assets or properties which (a) has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Representing Party or its Subsidiaries, or (b) questions the validity of this Agreement or any action to be taken by the Representing Party in connection with the consummation of the transactions contemplated hereby or could otherwise prevent or materially delay the consummation of the transactions contemplated by this Agreement. The Representing Party and its Subsidiaries are not subject to any outstanding order, writ, injunction or decree which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Representing Party and its Subsidiaries. There is no suit, claim, action, proceeding or investigation pending or, to the Representing Party’s knowledge, threatened against any current or former officer, director, employee, consultant, contractor or agent of the Representing Party (in his or her capacity as such) which gives rise or could reasonably be expected to give rise to a claim for contribution or indemnification against the Representing Party.

Section 3.9 Permits. The Representing Party holds, and has at all times held, all permits, licenses, variances, exemptions, orders, and approvals of all Governmental Entities necessary for the lawful conduct of its business (the “Permits”), except for such Permits the absence of which would not reasonably be expected to have a Material Adverse Effect on the Representing Party. The Representing Party is in material compliance with the terms of the Representing Party Permits. No investigation or review by any Governmental Entity in respect of the Representing Party is pending or, to the Representing Party’s knowledge, threatened, nor has the Representing Party received notice from any Governmental Entity of its intention to conduct the same.

Section 3.10 Employee Plans.

(a) Section 3.10(a) of the Representing Party’s Disclosure Schedule sets forth a true, correct and complete list of: (i) all “employee benefit plans,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), under which the Representing Party has any obligation or liability, contingent or otherwise (the “Benefit Plans”); (ii) all employees, consultants and independent contractors of the Representing Party; and (iii) all employment, consulting, termination, profit sharing, severance, change of control, individual compensation or indemnification agreements, and all bonus or other incentive compensation, deferred compensation, salary continuation, disability, severance, stock award, stock option, stock purchase, educational assistance, legal assistance, club membership, employee discount, employee loan, credit union or vacation agreements, policies or arrangements under which the Representing Party has any obligation or liability (contingent or otherwise) in respect of any current or former officer, director, employee, consultant or contractor of the Representing Party (the “Employee Arrangements”).

(b) All contributions or other payments required to have been made by the Representing Party to or under any Benefit Plan or Employee Arrangement by applicable Law or the terms of such Benefit Plan or Employee Arrangement (or any agreement relating thereto) have been timely and properly made. The Benefit Plans and Employee Arrangements have been maintained and administered in all material respects in accordance with their terms and applicable Laws.

Section 3.11 Labor Matters. The Representing Party is not a party to any labor or collective bargaining agreement, and no employees of the Representing Party are represented by any labor organization. Within the preceding three years, there have been no representation or certification proceedings, or petitions seeking a representation proceeding, pending or, to the Representing Party’s knowledge, threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. Within the preceding three years, to the Representing Party’s knowledge, there have been no organizing activities involving the Representing Party in respect of any group of employees of the Representing Party. There are no strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances or other material labor disputes pending or, to the knowledge of the Representing Party, threatened against or involving the Representing Party. There are no unfair labor practice charges, grievances or complaints pending or, to the Representing Party’s knowledge, threatened by or on behalf of any employee or group of employees of the Representing Party and, to the knowledge of the Representing Party, there are no facts or circumstances which could form the basis for any of the foregoing. There are no complaints, charges or claims against the Representing Party pending or, to the Representing Party’s knowledge, threatened to be brought or filed with any Governmental Entity or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any individual by the Representing Party, and, to the knowledge of the Representing Party, there are no facts or circumstances which could form the basis for any of the foregoing. The Representing Party is in material compliance with all Laws relating to the employment of labor, including all such Laws relating to wages, hours, the Worker Adjustment and Retraining Notification Act, as amended (“WARN”), collective bargaining, discrimination, civil rights, safety and health, workers’compensation and the collection and payment of withholding and/or Social Security Taxes and any similar Tax. There has been no “mass layoff” or “plant closing” as defined by WARN in respect of the Representing Party within the six months prior to the date hereof. No employee of the Representing Party is utilizing or is eligible to utilize COBRA health insurance.

Section 3.12 Absence of Certain Changes or Events. Since December 31, 2007 (a) the businesses of the Representing Party and its Subsidiaries have been conducted in all material respects in the ordinary course and (b) there has not been a material adverse change in the assets, liabilities, business, results of operations or condition (financial or otherwise) of the Representing Party and its Subsidiaries, taken as a whole, or any event, occurrence or development which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Representing Party and its Subsidiaries, taken as a whole.

Section 3.13 Registration Statement; Joint Proxy Statement/Prospectus.

(a) The information supplied by the Representing Party for inclusion in the registration statement on Form S-4 pursuant to which shares of SWAT Common Stock issued in the Merger and shares of SWAT Common Stock issuable pursuant to Section 2.14 of this Agreement will be registered with the SEC (the “Registration Statement”) shall not contain, at the time the Registration Statement is declared effective by the SEC, any untrue statement of a material fact or omit to state any material fact required to be stated in the Registration Statement or necessary in order to make the statements in the Registration Statement, in light of the circumstances under which they were made, not misleading. The information supplied by the Representing Party for inclusion in the joint proxy statement/prospectus (the “Joint Proxy Statement”) to be sent to the stockholders of the Company in connection with the special meeting of the Company’s stockholders to consider this Agreement and the Merger (the “Company Stockholders Meeting”) and to the stockholders of SWAT in connection with the special meeting of SWAT’s stockholders to consider the issuance of SWAT Common Stock in connection with the Merger (the “SWAT Stockholders Meeting”) shall not, on the date the Joint Proxy Statement is first mailed to stockholders of SWAT and the Company, at the time of the Company Stockholders Meeting, at the time of the SWAT Stockholders Meeting and at the Effective Time, contain any statement which, at such time and in light of the circumstances under which it was made, is false or misleading with respect to any matter or omit to state any material fact necessary in order to make the statements contained in the Joint Proxy Statement not false or misleading or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the SWAT Stockholders Meeting or the Company Stockholders Meeting which has become false or misleading.

Section 3.14 Tax Matters.

(a) For purposes of this Agreement: (i) “Taxes” means any and all federal, state, local, foreign or other taxes of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth, and taxes or other charges in the nature of excise, withholding, ad valorem or value added, and (ii) “Tax Return” means any return, report or similar statement (including the attached schedules) required to be filed with respect to any Tax, including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax.

(b) All federal, state, local and foreign Tax Returns required to be filed by or on behalf of the Representing Party and each affiliated, combined, consolidated or unitary group of which the Representing Party is a member (an “Affiliated Group”) have been timely filed or requests for extensions have been timely filed and any such extension has been granted and has not expired, and all such filed Tax Returns are complete and accurate except to the extent any failure to file or any inaccuracies in filed Tax Returns would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Representing Party. All Taxes due and owing by the Representing Party or any Representing Party’s Affiliated Group, including estimates and withheld Taxes, have been paid, or adequately reserved for in accordance with GAAP, except to the extent any failure to pay or reserve for would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Representing Party. There is no audit or examination in process or pending and there has been no notification of any request for such audit or other examination and there is no deficiency, refund litigation, proposed adjustment or matter in controversy with respect to any Taxes due and owing by the Representing Party or any Representing Party’s Affiliated Group which if determined adversely would, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Representing Party. All assessments for Taxes due and owing by the Representing Party or any Representing Party’s Affiliated Group with respect to completed and settled examinations or concluded litigation have been paid, except to the extent that any failures to pay would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Representing Party.

(c) Neither the Representing Party nor any member of any Affiliated Group has any employment, severance or termination agreements, other compensation arrangements, or Benefit Plans currently in effect which provide for the payment of any amount (whether in cash or property or the vesting of property) as a result of any of the transactions contemplated by this Agreement that individually or collectively (either alone or upon the occurrence of any additional or subsequent event), could give rise to a payment which is nondeductible by reason of Section 280G of the Code.

Section 3.15 Absence of Questionable Payments. Neither the Representing Party nor, to the Representing Party’s knowledge, any director, officer, agent, employee, consultant, contractor or other Person acting on behalf of the Representing Party, has used any corporate or other funds for unlawful contributions, payments, gifts, or entertainment, or made any unlawful expenditures relating to political activity to government officials or others or established or maintained any unlawful or unrecorded funds in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any other domestic or foreign Law. Neither the Representing Party nor, to the Representing Party’s knowledge, any director, officer, agent, employee, consultant, contractor or other Person acting on behalf of the Representing Party, has accepted or received any unlawful contributions, payments, gifts or expenditures.

Section 3.16 Title and Related Matters. The Representing Party or one of its Subsidiaries has good and valid title to, or a valid leasehold or contractual interest in, all of the properties and assets reflected in the latest balance sheet included, in the case of the Company in the Financial Statements and in the case of SWAT in the SEC Reports, or acquired after the date thereof (except for properties or assets sold or otherwise disposed of since the date thereof), free and clear of all Liens, other than Permitted Liens, and such imperfections or irregularities in title that do not materially and adversely affect the current use of the properties or assets subject thereto or affected thereby, affect the ability to convey title thereto or otherwise materially impair the business operations currently conducted at such properties. As of the date hereof, Section 3.16 of the Representing Party’s Disclosure Schedule contains a complete and correct list of all real property owned or leased by the Representing Party or any of its Subsidiaries, and a complete and correct list of each title insurance policy insuring title to any of such real properties.

Section 3.17 Material Contracts.

(a) Company Contracts. Section 3.17(a) of the Company Disclosure Schedule sets forth a list of all agreements the Company would be required to file as material contracts under Item 601 of Regulation S-K were the Company subject to the Exchange Act and the disclosure requirements of Regulation S-K (the “Company Material Contracts”). The Company has heretofore made available to SWAT true, correct and complete copies of all such Company Material Contracts. The Company is not a party to nor bound by any severance or other agreement with any employee, consultant or contractor pursuant to which such Person would be entitled to receive any additional compensation or an accelerated payment of compensation as a result of the consummation of the transactions contemplated hereby. Each of the Company Material Contracts constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms, and is in full force and effect, except as may be limited by (A) bankruptcy Laws and other similar Laws affecting creditors’ rights generally and (B) general principles of equity. The Company is not in breach or default in any material respects of any provisions of any Company Material Contract and, to the Company’s knowledge, no event has occurred which with notice or lapse of time would constitute a material breach or default by the Company or permit termination, modification or acceleration thereunder, and which with respect to each of the foregoing, could not be timely cured by the Company. The Company does not have any knowledge of any termination or material breach or anticipated termination or material breach by the other parties to any Company Material Contract or commitment to which it is a party or to which any of its assets are subject. No party to any such Company Material Contract has given notice to the Company of or made a claim against the Company in respect of any breach or default thereunder. No terms and conditions of any Company Material Contract or other arrangement or understanding between the Company and any other Person in effect on the date of this Agreement prevent, delay or materially restrict the Company’s ability to deploy any material portion of its assets or resources as it deems appropriate, and after the Closing shall prevent, delay or materially restrict the Company’s ability to deploy any material portion of its assets or resources as it deems appropriate.

(b) SWAT Contracts. The SEC Reports contain true and accurate copies of all of the agreements required to filed as material contracts under Item 601 of Regulation S-K under the Securities Act (the “SWAT Material Contracts”). SWAT is not a party to nor bound by any severance or other agreement with any employee, consultant or contractor pursuant to which such Person would be entitled to receive any additional compensation or an accelerated payment of compensation as a result of the consummation of the transactions contemplated hereby. Each of the SWAT Material Contracts constitutes the valid and legally binding obligation of SWAT, enforceable in accordance with its terms, and is in full force and effect, except as may be limited by (A) bankruptcy Laws and other similar Laws affecting creditors’ rights generally and (B) general principles of equity. SWAT is not in breach or default in any material respects of any provisions of any SWAT Material Contract and, to SWAT’s knowledge, no event has occurred which with notice or lapse of time would constitute a material breach or default by SWAT or permit termination, modification or acceleration thereunder, and which with respect to each of the foregoing, could not be timely cured by SWAT. SWAT does not have any knowledge of any termination or material breach or anticipated termination or material breach by the other parties to any SWAT Material Contract or commitment to which it is a party or to which any of its assets are subject. No party to any such SWAT Material Contract has given notice to SWAT of or made a claim against SWAT in respect of any breach or default thereunder. No terms and conditions of any SWAT Material Contract or other arrangement or understanding between SWAT and any other Person in effect on the date of this Agreement prevent, delay or materially restrict SWAT’s ability to deploy any material portion of its assets or resources as it deems appropriate, and after the Closing shall prevent, delay or materially restrict SWAT’s ability to deploy any material portion of its assets or resources as it deems appropriate.

Section 3.18 Insurance. The Representing Party has provided the other a true and complete list and brief summary description (including information on the premiums payable in connection therewith and the scope and amount of the coverage provided thereunder) of directors and officers liability and general liability insurance policies maintained by the Representing Party. Such policies have been issued by insurers which, to the Representing Party’s knowledge, are reputable and financially sound and provide coverage for the operations conducted by the Representing Party of a scope and coverage consistent with customary industry practice. Complete and correct copies of each such policy have been delivered by the Company to SWAT and by SWAT to the Company. All such policies are in full force and effect and no notice of cancellation has been given with respect to any such policy. All premiums due thereon have been paid in a timely manner. There are no pending claims or, to the knowledge of the Representing Party, threatened claims, under any of the Representing Party’s insurance policies.

Section 3.19 Intellectual Property.

(a) For purposes of this Agreement, “Intellectual Property” means: (i) all issued patents, reissued or reexamined patents, revivals of patents, utility models, certificates of invention, registrations of patents and extensions thereof, regardless of country or formal name (collectively, “Issued Patents”); (ii) all published or unpublished nonprovisional and provisional patent applications, reexamination proceedings, invention disclosures and records of invention (collectively “Patent Applications” and, with the Issued Patents, the “Patents”); (iii) all copyrights, including in and to works of authorship and all other rights corresponding thereto throughout the world, whether published or unpublished, including rights to prepare, reproduce, perform, display and distribute copyrighted works and copies, compilations and derivative works thereof (collectively, “Copyrights”); (iv) common Law trademarks, registered trademarks, applications for registration of trademarks, common Law service marks, registered service marks, applications for registration of service marks, trade names, registered trade names and applications for registrations of trade names and trade dress (collectively, “Trademarks”); (v) all technology, ideas, inventions, designs, proprietary information, manufacturing and operating specifications, know-how, formulae, trade secrets, technical data, computer programs, hardware, software and processes related to the business of the Representing Party as such business is currently conducted and as its business is proposed to be conducted; (vi) all domain names registered by the Representing Party; and (vii) all other intangible intellectual property assets, properties and rights (whether or not appropriate steps have been taken to protect, under applicable Law, such other intangible assets, properties or rights).

(b) The Representing Party owns and has good and marketable title to, or possesses legally enforceable rights to use, all Intellectual Property used or currently proposed to be used in the business of the Representing Party as currently conducted or as proposed to be conducted by the Representing Party (the “Representing Party’s Intellectual Property”), free and clear of all Liens. The Representing Party’s Intellectual Property constitutes all of the Intellectual Property necessary to enable the Representing Party to conduct its business as such business is currently being conducted and as its business is proposed to be conducted. No current or former officer, director, stockholder, employee, consultant or independent contractor has asserted any right, claim or interest in or with respect to any Representing Party Intellectual Property and the Representing Party is not aware of a basis for any such claim. There is no unauthorized use, disclosure or misappropriation of any Representing Party Intellectual Property by any employee or, to the Representing Party’s knowledge, former employee of the Representing Party or, to the Representing Party’s knowledge, by any other third party. There are no royalties, fees or other payments payable by the Representing Party to any third Person under any written or oral contract or understanding by reason of the ownership, use, sale or disposition of Representing Party Intellectual Property.

(c) With respect to each item of Representing Party Intellectual Property incorporated into any product of the Representing Party or otherwise used in the business of the Representing Party (except “off the shelf” or other software widely available through regular commercial distribution channels on standard terms and conditions, as modified for the Representing Party’s operations) the Representing Party Disclosure Schedule lists all Patents and Patent Applications, Trademarks, and Copyrights, including the jurisdictions in which each such Intellectual Property has been issued or registered or in which any such application for such issuance and registration has been filed.

(d) Section 3.19(d) of the Representing Party Disclosure Schedule contains an accurate list as of the date of this Agreement of all material licenses, sublicenses and other agreements to which the Representing Party is a party and pursuant to which the Representing Party is authorized to use any Intellectual Property owned by any third party, excluding “off the shelf” or other software widely available through regular commercial distribution channels on standard terms and conditions (“Third Party Intellectual Property”).

(e) To the knowledge of the Representing Party, there is no unauthorized use, disclosure, infringement or misappropriation of any Representing Party Intellectual Property, including any Third Party Intellectual Property by any third party, including any employee or former employee of the Representing Party. The Representing Party has not entered into any agreement to indemnify any other Person against any charge of infringement of any Intellectual Property, other than indemnification provisions contained in standard sales or agreements to end users arising in the ordinary course of business. There are no royalties, fees or other payments payable by the Representing Party to any Person by reason of the ownership, use, sale or disposition of Intellectual Property.

(f) All Patents, registered Trademarks, registered service marks and registered Copyrights held by the Representing Party are valid and subsisting. All maintenance and annual fees have been fully paid and all fees paid during prosecution and after issuance of any patent comprising or relating to such item have been paid in the correct entity status amounts. The Representing Party is not infringing, misappropriating or making unlawful use of, or received any notice or other communication (in writing or otherwise) of any actual, alleged, possible or potential infringement, misappropriation or unlawful use of any proprietary asset owned or used by any third party. There is no proceeding pending or, to the Representing Party’s knowledge, threatened nor has any claim or demand been made, which challenges the legality, validity, enforceability or ownership of any item of the Representing Party Intellectual Property or Third Party Intellectual Property or alleges a claim of infringement of any Patents, Trademarks, service marks, Copyrights or violation of any trade secret or other proprietary right of any third party. The Representing Party has not brought a proceeding alleging infringement of the Representing Party Intellectual Property or breach of any license or agreement involving Intellectual Property against any third party.

(g) All current and former officers and employees of the Representing Party have executed and delivered to the Representing Party an agreement regarding the protection of proprietary information and the assignment to the Representing Party of any Intellectual Property arising from services performed for the Representing Party by such Persons. All current and former consultants and independent contractors to the Representing Party involved in the development, modification, marketing and servicing of the Representing Party’s products, and/or the Representing Party Intellectual Property have executed and delivered to the Representing Party an agreement regarding the protection of proprietary information and the assignment to the Representing Party of any Intellectual Property arising from services performed for the Representing Party by such Persons. To the Representing Party’s knowledge, no employee or independent contractor of the Representing Party is in violation of any term of any patent disclosure agreement or employment contract or any other contract or agreement relating to the relationship of any such employee or independent contractor with the Representing Party.

(h) The Representing Party has taken all commercially reasonable and customary measures and precautions necessary to protect and maintain the confidentiality of all the Representing Party Intellectual Property (except such Representing Party Intellectual Property whose value would be unimpaired by public disclosure) and otherwise to maintain and protect the full value of all Intellectual Property it owns or uses. All Intellectual Property not otherwise protected by Patents or Copyrights (“Confidential Information”) owned by the Representing Party used by or disclosed to a third party has been pursuant to the terms of a written agreement between the Representing Party and such third party.

(i) No product liability claims have been communicated in writing to or, to the Representing Party’s knowledge, threatened against the Representing Party.

Section 3.20 Minute Books; Stock Record Books. True and correct copies of the Representing Party’s minute books and, in the case of the Company, stock record books have been made available to the other. The minute books of the Representing Party contain true and complete originals or copies of all minutes of meetings of and actions by the stockholders, Board of Directors and all committees of the Board of Directors of the Representing Party, and accurately reflect in all material respects all corporate actions of the Representing Party which are required by Law to be passed upon by the Board of Directors or stockholders of the Representing Party. The stock record books accurately reflect all transactions in shares of the Company’s capital stock.

Section 3.21 Bank Accounts; Powers of Attorney. The Representing Party has provided the other a complete and correct list showing: (a) all banks in which the Representing Party maintains a bank account or safe deposit box (collectively, “Bank Accounts”), together with, as to each such Bank Account, the account number, the names of all signatories thereof and the authorized powers of each such signatory and, with respect to each such safe deposit box, the number thereof and the names of all Persons having access thereto; and (b) the names of all Persons holding powers of attorney from the Representing Party, true and correct copies thereof which have been delivered to the other.

Section 3.22 Disclosure. The representations and warranties by the Representing Party in this Agreement and the statements contained in the schedules, certificates and other writings furnished and to be furnished by the Representing Party to the other party pursuant to this Agreement, when considered as a whole and giving effect to any supplements or amendments thereof prior to the time of signing on the date hereof, do not and will not contain any untrue statement of a material fact and do not and will not omit to state any material fact necessary to make the statements herein, in light of the circumstances under which they were or shall be made, not misleading, it being understood that as used in this Section 3.22“material” means material to the Representing Party and its Subsidiaries, taken as a whole. The Representing Party has provided to the other copies of all contracts and agreements that can be reasonably construed as material to the business of the Representing Party.

Section 3.23 SWAT Share Ownership. As of the date hereof, SWAT does not own any securities of the Company.

Section 3.24 Brokers or Finders. The Company represents, as to itself, its Subsidiaries and its Affiliates, that no agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any brokers’ or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement. SWAT represents, as to itself, its Subsidiaries and its Affiliates, that no agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any brokers’ or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement.

Section 3.25 No Prior Activities. Except for obligations incurred in connection with its incorporation or organization or the negotiation and consummation of this Agreement and the transactions contemplated hereby, SWAT represents and warrants that Merger Sub has neither incurred any obligation or liability nor engaged in any business or activity of any type or kind whatsoever or entered into any agreement or arrangement with any Person.

Section 3.26 Affiliate Interests. The Representing Party is not a party to any transaction with: (a) any employee, officer or director of such Representing Party, (b) any relative of any such employee, officer or director, or (c) any Affiliate of the Representing Party or any employee, officer, director or relative of an Affiliate of such Representing Party, including without limitation any contract, agreement or other arrangement (i) providing for the furnishing of services by such Person, (ii) providing for the rental of real or personal property from or to such Person, (iii) providing for the guaranty of any obligation of such Person, (iv) requiring any payment to such Person which will continue beyond the Closing Date, or (v) establishing any right or interest of such Person in any of the assets of such Representing Party.

Section 3.27 Product Warranties. Section 3.27 of the Representing Party’s disclosure schedule sets forth the Representing Party’s standard terms, conditions and warranties for products of the Representing Party’s business sold by the Representing Party prior to the Closing Date. The Representing Party has not made any other written representations or warranties relating to the products of the Representing Party’s business that would materially increase the warranty obligations of the Representing Party’s business taken as a whole. There are no pending claims against the Representing Party on account of product warranties or with respect to the sale by the Representing Party of defective or inferior products that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Representing Party.

ARTICLE IV

COVENANTS RELATED TO CONDUCT OF BUSINESS

Section 4.1 Conduct of Business of the Company. Except as contemplated by this Agreement, during the period from the date hereof to the Effective Time, the Company will conduct its operations in the ordinary and usual course of business consistent with past practice and, to the extent consistent therewith, with no less diligence and effort than would be applied in the absence of this Agreement, use commercially reasonable efforts to preserve intact its current business organizations, keep available the service of its current officers and employees, preserve its relationships with customers, suppliers and others having business dealings with it and preserve the goodwill of the Company through the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement or in Schedule 4.1, prior to the Effective Time, the Company will not, without the prior written consent of SWAT:

(a) amend its certificate of incorporation or bylaws (or other similar organizational or governing instruments), as each such document is in effect on the date hereof;

(c) (i) split, combine or reclassify any shares of its capital stock; (ii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock; (iii) make any other actual, constructive or deemed distribution in respect of any shares of its capital stock or otherwise make any payments to stockholders in their capacity as such; or (iv) redeem, repurchase or otherwise acquire, directly or indirectly, any of its securities;

(d) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company (other than the Merger);

(e) (i) incur or assume any long-term or short-term debt or issue any debt securities; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; (iii) make any loans, advances or capital contributions to, or investments in, any other Person (other than customary loans or advances to employees, consultants or contractors in the ordinary and usual course of business consistent with past practice and in amounts not material to the maker of such loan or advance); (iv) pledge or otherwise encumber shares of capital stock of the Company; or (v) mortgage or pledge any of its material assets, tangible or intangible, or create or suffer to exist any Lien thereupon, other than as disclosed in the schedules hereto and Permitted Liens;

(f) (i) except as may be required by Law or as contemplated by this Agreement, enter into, adopt or amend or terminate (partially or completely) any Benefit Plan, Employee Arrangement (including, the repricing of any stock options or the acceleration or vesting of any stock options), stock appreciation right, restricted stock, performance unit, stock equivalent or stock purchase agreement for the benefit or welfare of any director, officer, employee, consultant or contractor in any manner, (ii) except as required under existing agreements, increase in any manner the compensation or fringe benefits of any director, officer, employee, consultant or contractor or pay any benefit not required by any plan and arrangement as in effect as of the date hereof (including, the granting of stock appreciation rights or performance units) or grant any completion bonuses or change of control payments in respect of the Merger or that will be affected thereby; or (iii) hire, promote or change the classification or status in respect of any employee or individual, except in the ordinary course of the Company’s business; provided, however, that SWAT shall not unreasonably withhold or delay any consent sought to hire, promote or change the classification or status of any employee or individual.

(g) acquire, sell, lease or dispose of any assets outside the ordinary and usual course of business consistent with past practice or any assets which in the aggregate are material to the Company, enter into any commitment or transaction outside the ordinary and usual course of business consistent with past practice or grant any exclusive distribution rights;

(h) except as contemplated by this Agreement, acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or any equity interest therein;

(i) settle or compromise any pending or threatened suit, action or claim relating to the transactions contemplated hereby;

(j) take any action (including, any action otherwise permitted by this Section 4.1) that would prevent or impede the Merger from qualifying as a “reorganization” under Section 368(a) of the Code;

(k) fail to comply in any material respect with any Law applicable to the Company or its assets which would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect on the Company;

(l) dispose of or permit to lapse any rights to the use of any patent, trademark, trade name, copyright or other intangible asset that is material to the Company, or dispose of or disclose to any Person any trade secret, formula, process or know-how not theretofore a matter of public knowledge unless, in respect of disclosure, such Person has executed a confidentiality agreement in form acceptable to the Company;

(m) sell or dispose of any Company Intellectual Property;

(n) fail to maintain its books, accounts and records in the usual, regular and ordinary manner on a basis consistent with prior years; or

(o) take, propose to take, or agree in writing or otherwise to take, any of the actions described in Section 4.1(a) through Section 4.1(n) or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue, incomplete or incorrect.

Section 4.2 Conduct of Business of SWAT. Except as contemplated by this Agreement, during the period from the date hereof to the Effective Time, SWAT will conduct its operations in the ordinary and usual course of business consistent with past practice and, to the extent consistent therewith, with no less diligence and effort than would be applied in the absence of this Agreement, use commercially reasonable efforts to preserve intact its current business organizations, keep available the service of its current officers and employees, preserve its relationships with customers, suppliers and others having business dealings with it and preserve the goodwill of SWAT through the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement or in Schedule 4.2, prior to the Effective Time, SWAT will not, without the prior written consent of Company:

(a) amend its articles of incorporation or bylaws (or other similar organizational or governing instruments), as each such document is in effect on the date hereof;

(b) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities convertible into or exchangeable for any stock or any equity equivalents (including, any stock options or stock appreciation rights), except for (i) the issuance or sale of SWAT Common Stock pursuant to outstanding SWAT stock options, (ii) the issuance or sale of SWAT Common Stock pursuant to outstanding SWAT warrants (pursuant the terms of such warrants in effect on the date hereof or as such terms are temporarily modified pursuant to the following sentence), (iii) the temporary re-pricing of outstanding SWAT warrants (provided that any such temporary re-pricing shall (1) be for the sole purpose of inducing the holders thereof to exercise such warrants, and (2) expire with respect to any unexercised SWAT warrants prior to the Effective Time), and (iv) the issuance of SWAT stock options to purchase up to an aggregate of 300,000 shares of SWAT Common Stock to employees, consultants and directors pursuant to the SWAT Stock Plan and consistent with past practices;

(d) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of SWAT (other than the Merger);

(e) (i) incur or assume any long-term or short-term debt or issue any debt securities; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; (iii) make any loans, advances or capital contributions to, or investments in, any other Person (other than customary loans or advances to employees, consultants or contractors in the ordinary and usual course of business consistent with past practice and in amounts not material to the maker of such loan or advance); (iv) pledge or otherwise encumber shares of capital stock of SWAT; or (v) mortgage or pledge any of its material assets, tangible or intangible, or create or suffer to exist any Lien thereupon, other than as disclosed in the schedules hereto and Permitted Liens;

(f) (i) except as may be required by Law or as contemplated by this Agreement, enter into, adopt or amend or terminate (partially or completely) any Benefit Plan, Employee Arrangement (including, the repricing of any stock options or the acceleration or vesting of any stock options), stock appreciation right, restricted stock, performance unit, stock equivalent or stock purchase agreement for the benefit or welfare of any director, officer, employee, consultant or contractor in any manner, (ii) except as required under existing agreements, increase in any manner the compensation or fringe benefits of any director, officer, employee, consultant or contractor or pay any benefit not required by any plan and arrangement as in effect as of the date hereof (including, the granting of stock appreciation rights or performance units) or grant any completion bonuses or change of control payments in respect of the Merger or that will be affected thereby; or (iii) hire, promote or change the classification or status in respect of any employee or individual, except in the ordinary course of SWAT’s business; provided, however, that the Company shall not unreasonably withhold or delay any consent sought to hire, promote or change the classification or status of any employee or individual.

(g) acquire, sell, lease or dispose of any assets outside the ordinary and usual course of business consistent with past practice or any assets which in the aggregate are material to SWAT, enter into any commitment or transaction outside the ordinary and usual course of business consistent with past practice or grant any exclusive distribution rights;

(i) settle or compromise any pending or threatened suit, action or claim relating to the transactions contemplated hereby;

(j) take any action (including, any action otherwise permitted by this Section 4.2) that would prevent or impede the Merger from qualifying as a “reorganization” under Section 368(a) of the Code;

(k) fail to comply in any material respect with any Law applicable to SWAT or its assets which would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect on SWAT;

(l) dispose of or permit to lapse any rights to the use of any patent, trademark, trade name, copyright or other intangible asset that is material to SWAT, or dispose of or disclose to any Person any trade secret, formula, process or know-how not theretofore a matter of public knowledge unless, in respect of such disclosure, such Person has executed a confidentiality agreement in form acceptable to SWAT;

(m) sell or dispose of any SWAT Intellectual Property;

(n) fail to maintain its books, accounts and records in the usual, regular and ordinary manner on a basis consistent with prior years; or

(o) take, propose to take, or agree in writing or otherwise to take, any of the actions described in Section 4.2(a) through Section 4.2(n) or any action which would make any of the representations or warranties of SWAT contained in this Agreement untrue, incomplete or incorrect.

Section 4.3 Access to Information.

(a) Between the date hereof and the Effective Time, the Company, SWAT and Merger Sub will each give the authorized representatives (including, counsel, financial advisors and auditors) of the other reasonable access to all its employees, consultants, contractors, plants, offices, warehouses and other facilities and to all its books and records, will permit the other to make such inspections and investigations as each may require. Each of the Company, SWAT and Merger Sub will cause its officers to furnish the other with such financial and operating data and other information in respect of its business, properties and personnel as each may from time to time reasonably request, provided that no investigation pursuant to this Section 4.3(a) shall affect or be deemed to modify any of the representations or warranties made by each of the Company, SWAT and Merger Sub.

(b) Between the date hereof and the Effective Time, the Company, SWAT and Merger Sub shall each furnish to the other (i) within five business days after the delivery thereof to management, such monthly financial statements and data as are regularly prepared for distribution to Company management, SWAT management and Merger Sub management respectively, and (ii) at the earliest time they are available, such quarterly and annual financial statements as are regularly prepared for the Company Board of Directors, SWAT Board of Directors and Merger Sub Board of Directors, respectively.

(c) Each of SWAT, Merger Sub and the Company will hold and will cause its authorized representatives to hold in confidence all documents and information concerning the other furnished in connection with the transactions contemplated by this Agreement.

Section 4.4 Continuation of Insurance Coverage. From the date hereof to the Closing, each of the Company and SWAT shall keep in full force and effect insurance coverage for its assets, operations and property comparable in amount and scope to the coverage now maintained covering its assets, operations and property.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1 Joint Proxy Statement; Registration Statement.

(a) As promptly as practicable after the date of this Agreement, SWAT and the Company shall prepare and cause to be filed with the SEC the Joint Proxy Statement and SWAT shall prepare and cause to be filed with the SEC the Registration Statement, in which the Joint Proxy Statement will be included as a prospectus, with respect to the issuance of SWAT Common Stock in the Merger. The Joint Proxy Statement will also include (i) a proposal requesting that the SWAT shareholders approve the conversion (pursuant to its terms) of all outstanding SWAT Series B Convertible Preferred Stock into SWAT Common Stock, and (ii) such other proposal(s) as the Company and SWAT shall mutually agree to include therein, including any proposals that may be required pursuant to the terms of this Agreement. Each of SWAT and the Company shall furnish all information concerning it and the holders of its capital stock as the other may reasonably request in connection with the preparation of the Registration Statement and Joint Proxy Statement. Each of SWAT and the Company shall use reasonable efforts to cause the Registration Statement and the Joint Proxy Statement to comply with the rules and regulations promulgated by the SEC, to respond promptly to any comments of the SEC or its staff and to have the Registration Statement declared effective under the Securities Act as promptly as practicable after it is filed with the SEC. SWAT will cause the Joint Proxy Statement to be mailed to SWAT’s stockholders, and the Company will cause the Joint Proxy Statement to be mailed to the Company’s stockholders, as promptly as practicable after the Registration Statement is declared effective under the Securities Act. Each of SWAT and the Company shall also promptly file, use reasonable efforts to cause to become effective as promptly as possible and, if required, mail to its stockholders any amendment to the Registration Statement or Joint Proxy Statement that becomes necessary after the date the Registration Statement is declared effective.

(b) If at any time prior to the Effective Time any event or circumstance relating to SWAT, any SWAT Subsidiary or their respective directors or officers is discovered by SWAT which is required to be set forth in an amendment or supplement to the Registration Statement or Joint Proxy Statement, SWAT shall promptly inform the Company. All documents that SWAT is responsible for filing with the SEC in connection with the transactions contemplated hereby will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the Exchange Act.

(c) If at any time prior to the Effective Time any event or circumstance relating to the Company, any Company Subsidiary or their respective directors or officers is discovered by the Company which is required to be set forth in an amendment or supplement to the Registration Statement or Joint Proxy Statement, the Company shall promptly inform SWAT and provide SWAT with such information as is reasonably necessary for inclusion in the amendment or supplement to the Registration Statement or Joint Proxy Statement. All documents that the Company is responsible for filing with the SEC in connection with the transaction contemplated herein will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the Exchange Act.

(d) Each of SWAT and the Company will advise the other, promptly after it receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment thereto has been filed, the issuance of any stop order, or any request by the SEC for amendment of the Joint Proxy Statement or Registration Statement or comments thereon or responses thereto.

(e) Prior to the Effective Time, SWAT shall use reasonable efforts to obtain all regulatory approvals needed to ensure that the SWAT Common Stock to be issued in the Merger will be registered or qualified under the securities Law of every jurisdiction of the United States in which any registered holder of Company Common Stock has an address of record on the record date for determining the stockholders entitled to notice of and to vote at the Company Stockholders’ Meeting; provided, however, that SWAT shall not be required (i) to qualify to do business as a foreign corporation in any jurisdiction in which it is not now qualified or (ii) to file a general consent to service of process in any jurisdiction.

Section 5.2 Company Stockholders’ Meeting.

(a) The Company shall take all action necessary under all applicable Laws to call, give notice of and hold the Company Stockholders’ Meeting. The Company Stockholders’ Meeting shall be held (on a date selected by the Company in consultation with SWAT) as promptly as practicable after the Registration Statement is declared effective under the Securities Act. The Company shall ensure that all proxies solicited in connection with the Company Stockholders’ Meeting are solicited in compliance with all applicable Laws.

(b) Subject to Section 5.2(c): (i) the Joint Proxy Statement shall include a statement to the effect that the board of directors of the Company recommends that the Company’s stockholders vote to adopt this Agreement at the Company Stockholders’ Meeting (the recommendation of the Company’s board of directors that the Company’s stockholders vote to adopt this Agreement being referred to as the “Company Board Recommendation”); and (ii) the Company Board Recommendation shall not be withdrawn or modified in a manner adverse to SWAT, and no resolution by the board of directors of the Company or any committee thereof to withdraw or modify the Company Board Recommendation in a manner adverse to SWAT shall be adopted or proposed.

(c) Notwithstanding anything to the contrary contained in Section 5.2(b), at any time prior to the adoption of this Agreement by the Company Stockholder Approval, the Company Board Recommendation may be withdrawn or modified in a manner adverse to SWAT if the Company board of directors shall have determined in accordance with Section 5.5(a)(ii) that the withdrawal or modification of such recommendation is necessary.

Section 5.3 SWAT Stockholders’ Meeting.

(a) SWAT shall take all action necessary under all applicable Laws to call, give notice of and hold the SWAT Stockholders’ Meeting. The SWAT Stockholders’ Meeting will be held on the same date as the Company Stockholders’ Meeting is held. SWAT shall ensure that all proxies solicited in connection with the SWAT Stockholders’ Meeting are solicited in compliance with all applicable Laws.

(b) Subject to Section 5.3(c), the Joint Proxy Statement shall include a statement to the effect that the board of directors of SWAT recommends that SWAT’s stockholders vote to approve the issuance of SWAT Common Stock in the Merger (the recommendation of SWAT’s board of directors that SWAT’s stockholders vote to approve the issuance of SWAT Common Stock in the Merger being referred to as the “SWAT Board Recommendation”). The SWAT Board Recommendation shall not be withdrawn or modified in a manner adverse to the Company, and no resolution by the board of directors of SWAT or any committee thereof to withdraw or modify the SWAT Board Recommendation in a manner adverse to the Company shall be adopted or proposed.

(c) Notwithstanding anything to the contrary contained in Section 5.3(b), at any time prior to the adoption of this Agreement by the SWAT Stockholder Approval, the SWAT Board Recommendation may be withdrawn or modified in a manner adverse to the Company if the SWAT board of directors shall have determined in accordance with Section 5.5(b)(ii), that the withdrawal or modification of such recommendation is necessary.

Section 5.4 Commercially Reasonable Efforts.

(a) Subject to the terms and conditions of this Agreement, each party will use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate the Merger and the other transactions contemplated by this Agreement. Neither the Company, SWAT nor Merger Sub will take, agree to take or knowingly permit to be taken any action or do or knowingly permit to be done anything in the conduct of the business of the companies, or otherwise, which would be contrary to or in breach of any of the terms or provisions of this Agreement.

(b) In furtherance and not in limitation of the covenants of the parties contained in Section 5.2 and Section 5.3, each of SWAT, Merger Sub and the Company shall use commercially reasonable efforts to resolve such objections if any, as may be asserted by a Governmental Entity or other Person in respect of the transactions contemplated hereby, including, without limitation, under any antitrust or other Law, or by any Dissenting Stockholder in respect of Dissenting Shares. In connection with the foregoing, if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement, each of SWAT, Merger Sub and the Company shall cooperate in all respects with each other and use its respective commercially reasonable efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction, or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing or any other provision of this Agreement, nothing in this Section 5.4(b) shall (i) limit a party’s right to terminate this Agreement pursuant to Section 7.2 so long as such party has at all times complied in all material respects with its obligations under this Section 5.4(b), or (ii) require SWAT to dispose or hold separate any part of its or the Company’s business or operations (or a combination of SWAT’s and the Company’s business or operations), or comply with any other material restriction affecting its business or operations.

(c) The Company and SWAT agree that in connection with any litigation which may be brought against the Company or its directors or SWAT or its directors relating to the transactions contemplated hereby, the party subject to such litigation will keep the other, and any counsel which the other may retain at its own expense, informed of the course of such litigation, to the extent the other is not also a party thereto. The parties agree that they will consult with each other prior to entering into any settlement or compromise of any such litigation, and that no such settlement or compromise will be entered into by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld.

Section 5.5 Acquisition Proposals.

(a) Restrictions on the Company.

(i) The Company and its Subsidiaries will not, nor will they authorize or permit any officer, director, employee, consultant or contractor of or any investment banker, attorney, accountant or other advisor or representative of, the Company or its Subsidiaries to, directly or indirectly, (A) solicit, initiate or encourage the submission of any Company Acquisition Proposal (as hereinafter defined) or (B) participate in any discussions or negotiations regarding, or furnish to any Person any information in respect of, or take any other action to facilitate, any Company Acquisition Proposal or any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Company Acquisition Proposal. Notwithstanding the foregoing, in the event that the Company receives an unsolicited Company Acquisition Proposal, prior to the adoption of this Agreement by the Company Stockholder Approval, this Section 5.5(a) shall not prohibit the Company from furnishing nonpublic information regarding the Company to, or entering into discussions with, any Person in response to a bona fide Company Acquisition Proposal that can reasonably be expected to lead to a Superior Proposal that is submitted to the Company by such Person (and not withdrawn) if (1) neither the Company, its Subsidiaries nor any representative of any of the Company or its Subsidiaries shall have violated any of the restrictions set forth in this Section 5.5(a), (2) the board of directors of the Company concludes in good faith, after having taken into account the advice of its outside legal counsel, that failure to take such action would be inconsistent with fiduciary duties of the board of directors of the Company to the Company’s stockholders, (3) at least two business days prior to furnishing any such nonpublic information to, or entering into

discussions with, such Person, the Company gives SWAT written notice of the identity of such Person and of the Company’s intention to furnish nonpublic information to, or enter into discussions with, such Person, and the Company receives from such Person an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such Person by or on behalf of the Company, and (4) at least two business days prior to furnishing any such nonpublic information to such Person, the Company furnishes such nonpublic information to SWAT (to the extent such nonpublic information has not been previously furnished by the Company to SWAT). Immediately after the execution and delivery of this Agreement, the Company and its Subsidiaries will, and will use their commercially reasonable efforts to cause their affiliates, and their respective officers, directors, employees, consultants, contractors, investment bankers, attorneys, accountants and other agents and representatives to, cease and terminate any existing activities, discussions or negotiations with any parties conducted heretofore in respect of any possible Company Acquisition Proposal and shall immediately inform SWAT of the receipt by the Company of any subsequent Company Acquisition Proposal. The Company and its Subsidiaries shall take all necessary steps to promptly inform the individuals or entities referred to in the first sentence of this Section 5.5(a) of the obligations undertaken in this Section 5.5(a). “Company Acquisition Proposal” means an inquiry, offer or proposal regarding any of the following (other than the transactions contemplated by this Agreement) involving the Company: (v) any merger, consolidation, share exchange, recapitalization, business combination or other similar transaction; (w) any sale of shares of capital stock of the Company after which stockholders of the Company immediately prior to such sale would hold less than a majority of the issued and outstanding capital stock of the Company, (x) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or substantially all the assets of the Company in a single transaction or series of related transactions; (y) any tender offer or exchange offer for 20% or more of the outstanding Shares or the filing of a registration statement under the Securities Act in connection therewith; or (z) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. “Company Superior Proposal” shall mean an unsolicited, bona fide written offer made by a third party to purchase all of the outstanding Company Common Stock and Company Preferred Stock on terms that the board of directors of the Company determines, in its reasonable judgment, to be more favorable to the Company and its stockholders (taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal and identity of the offeror) as compared to the transactions contemplated hereby and which is reasonably capable of being consummated; provided, however, that any such offer shall not be deemed to be a Company Superior Proposal if any financing required to consummate the transaction contemplated by such offer is not committed and is not reasonably capable of being obtained by such third party.

(ii) The Company board of directors will not withdraw or modify, or propose to withdraw or modify, in a manner adverse to SWAT, its approval or recommendation of this Agreement or the Merger unless the Company board of directors, after consultation with independent legal counsel, determines in good faith that such action is necessary to avoid a breach by the Company board of directors of its fiduciary duties to the Company’s stockholders. Nothing contained in this Section 5.5(a) shall prohibit the Company from making any disclosure to the Company’s stockholders which, in the good faith reasonable judgment of the Company board of directors, after consultation with independent legal counsel, is required under applicable Law; provided, that except as otherwise permitted in this Section 5.5(a), the Company may not withdraw or modify, or propose to withdraw or modify, its position with respect to the Merger or approve or recommend, or propose to approve or recommend, a Company Acquisition Proposal. Nothing in this Section 5.5(a) shall (A) permit the Company to terminate this Agreement or (B) affect any other obligations of the Company under this Agreement.

(b) Restrictions on SWAT.

(i) SWAT and its Subsidiaries will not, nor will they authorize or permit any officer, director, employee, consultant or contractor of or any investment banker, attorney, accountant or other advisor or representative of, SWAT or its Subsidiaries to, directly or indirectly, (A) solicit, initiate or encourage the submission of any SWAT Acquisition Proposal (as hereinafter defined) or (B) participate in any discussions or negotiations regarding, or furnish to any Person any information in respect of, or take any other action to facilitate, any SWAT Acquisition Proposal or any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any SWAT Acquisition Proposal. Notwithstanding the foregoing, in the event that SWAT receives an unsolicited SWAT Acquisition Proposal, prior to the adoption of this Agreement by the SWAT Stockholder Approval, this Section 5.5(b) shall not prohibit SWAT from furnishing nonpublic information regarding SWAT to, or entering into discussions with, any Person in response to a bona fide SWAT Acquisition Proposal that can reasonably be expected to lead to a Superior Proposal that is submitted to SWAT by such Person (and not withdrawn) if (1) neither SWAT, its Subsidiaries, nor any representative of SWAT or its Subsidiaries shall have violated any of the restrictions set forth in this Section 5.5(b), (2) the board of directors of SWAT concludes in good faith, after having taken into account the advice of its outside legal counsel, that failure to take such action would be inconsistent with fiduciary duties of the board of directors of SWAT to the Company’s stockholders, (3) at least two business days prior to furnishing any such nonpublic information to, or entering into discussions with, such Person, SWAT gives the Company written notice of the identity of such Person and of SWAT’s intention to furnish nonpublic information to, or enter into discussions with, such Person, and SWAT receives from such Person an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such Person by or on behalf of SWAT, and (4) at least two business days prior to furnishing any such nonpublic information to such Person, SWAT furnishes such nonpublic information to the Company (to the extent such nonpublic information has not been previously furnished by SWAT to the Company). Immediately after the execution and delivery of this Agreement, SWAT and its Subsidiaries will, and will use their commercially reasonable efforts to cause their affiliates, and their respective officers, directors, employees, consultants, contractors, investment bankers, attorneys, accountants and other agents and representatives to, cease and terminate any existing activities, discussions or negotiations with any parties conducted heretofore in respect of any possible SWAT Acquisition Proposal and shall immediately inform the Company of the receipt by SWAT of any subsequent SWAT Acquisition Proposal. SWAT and its Subsidiaries shall take all necessary steps to promptly inform the individuals or entities referred to in the first sentence of this Section 5.5(b) of the obligations undertaken in this Section 5.5(b). “SWAT Acquisition Proposal” means an inquiry, offer or proposal regarding any of the following (other than the transactions contemplated by this Agreement) involving SWAT: (v) any merger, consolidation, share exchange, recapitalization, business combination or other similar transaction; (w) any sale of shares of capital stock of SWAT after which stockholders of SWAT immediately prior to such sale would hold less than a majority of the outstanding capital stock of SWAT, (x) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or substantially all the assets of SWAT in a single transaction or series of related transactions, (y) any tender offer or exchange offer for 20% or more of the outstanding SWAT Common Stock or the filing of a registration statement under the Securities Act in connection therewith, or (z) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. “SWAT Superior Proposal” shall mean an unsolicited, bona fide written offer made by a third party to purchase all of outstanding SWAT Common Stock on terms that the board of directors of SWAT determines, in its reasonable judgment, to be more favorable to SWAT and its stockholders (taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal and identity of the offeror) as compared to the transactions contemplated hereby and which is reasonably capable of being consummated; provided, however, that any such offer shall not be deemed to be a SWAT Superior Proposal if any financing required to consummate the transaction contemplated by such offer is not committed and is not reasonably capable of being obtained by such third party.

(ii) The SWAT board of directors will not withdraw or modify, or propose to withdraw or modify, in a manner adverse to the Company, its approval or recommendation of this Agreement or the Merger unless the SWAT board of directors, after consultation with independent legal counsel, determines in good faith that such action is necessary to avoid a breach by the SWAT board of directors of its fiduciary duties to the SWAT stockholders under applicable Law. Nothing contained in this Section 5.5(b) shall prohibit SWAT from making any disclosure to the SWAT stockholders which, in the good faith reasonable judgment of the SWAT board of directors, after consultation with independent legal counsel, is required under applicable Law; provided, that except as otherwise permitted in this Section 5.5(b), SWAT may not withdraw or modify, or propose to withdraw or modify, its position with respect to the Merger or approve or recommend, or propose to approve or recommend, a SWAT Acquisition Proposal. Nothing in this Section 5.5(b) shall (A) permit SWAT to terminate this Agreement or (B) affect any other obligations of SWAT under this Agreement.

Section 5.6 Public Announcements. Each of SWAT, Merger Sub and the Company will consult with one another before issuing any press release or otherwise making any public statements in respect of the transactions contemplated by this Agreement, including the Merger, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law or by obligations pursuant to the Registration Statement or Joint Proxy Statement and any listing agreement with Nasdaq, as determined by SWAT, Merger Sub or the Company, as the case may be, a copy of which shall be sent simultaneously to the other party upon such release.

Section 5.7 Indemnification.

(a) The Company shall, and from and after the Effective Time, the Surviving Corporation and SWAT shall, indemnify, defend and hold harmless the present and former directors and officers of the Company (the “Indemnified Parties”) against all losses, claims, damages, costs, expenses (including reasonable attorneys’ fees and expenses), liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party of or in connection with any threatened or actual claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of or pertaining to the fact that such Person is or was a director or officer of the Company whether pertaining to any matter existing at or prior to the Effective Time and whether asserted or claimed prior to, at or after the Effective Time (“Indemnified Liabilities”), including all Indemnified Liabilities based in whole or in part on, or arising in whole or in part out of, or pertaining to this Agreement or the transactions contemplated hereby, in each case to the fullest extent the Company is permitted under the Company’s certificate of incorporation and/or bylaws in effect immediately prior to the Merger and under Delaware Law as the same exists or may hereafter be amended (but, in the case of any amendment, only to the extent that such amendment permits broader rights than such Law permitted prior to such amendment and only to the extent such amendment is not retroactively applicable) to indemnify its own directors or officers, as the case may be. Without limiting the foregoing, in the event any such claim, action, suit, proceeding or investigation is brought against any Indemnified Parties (whether arising before or after the Effective Time), (a) the Indemnified Parties may retain counsel satisfactory to them and the Company or, from and after the Effective Time, the Surviving Corporation, and the Surviving Corporation or SWAT, as applicable, shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received and otherwise advance to such Indemnified Party upon request reimbursement of reasonable documented expenses incurred, in either case to the fullest extent and in the manner permitted by Delaware Law; and (b) the Company or, after the Effective Time, the Surviving Corporation and SWAT, as applicable, will use reasonable efforts to assist in the vigorous defense of any such matter, provided that none of the Company, SWAT or the Surviving Corporation shall be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld). Any Indemnified Party wishing to claim indemnification under this Section 5.7, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify the Company (or after the Effective Time, the Surviving Corporation and SWAT) (but the failure so to notify shall not relieve a party from any liability which it may have under this Section 5.7 except to the extent such failure materially prejudices such party), and shall to the extent required by the Company’s certificate of incorporation and/or bylaws in effect immediately prior to the Merger and Delaware Law deliver to the Company (or after the Effective Time, the Surviving Corporation and SWAT) the undertaking contemplated by the Company’s certificate of incorporation and/or bylaws in effect immediately prior to the Merger and Delaware Law. Notwithstanding anything to the contrary contained herein, the Indemnified Parties as a group may retain only one law firm to represent them with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties.

(b) SWAT, Merger Sub and the Company agree that all rights to indemnification and all limitations of liability existing in favor of the Indemnified Parties as provided in the Company’s certificate of incorporation and bylaws as in effect as of the date hereof shall survive the Merger and shall continue in full force and effect, without any amendment thereto, for a period of six years from the Effective Time to the extent such rights are consistent with Delaware Law; provided, that in the event any claim or claims are asserted or made within such six-year period all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims; provided further, that any determination required to be made with respect to whether an Indemnified Party’s conduct complies with the standards set forth under Delaware Law, the Company’s certificate of incorporation or bylaws or such agreements, as the case may be, shall be made by independent legal counsel selected by the Indemnified Party and reasonably acceptable to SWAT; and provided further, that nothing in this Section 5.7 shall impair any rights or obligations of any present or former directors or officers of the Company.

(c) SWAT or the Surviving Corporation shall maintain directors’ and officers’ liability insurance (“D&O Insurance”) for a period of not less than six years after the Effective Date; provided, that (i) the Surviving Corporation may substitute therefor policies of substantially similar coverage and amounts containing terms no less advantageous to such former directors or officers and (ii) if the existing D&O Insurance expires or is canceled during such period, SWAT or the Surviving Corporation will use its commercially reasonable efforts to obtain substantially similar D&O Insurance.

Section 5.8 Notification of Certain Matters. The Company shall give prompt notice to SWAT and Merger Sub, and SWAT and Merger Sub shall give prompt notice to the Company, of (a) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Effective Time, (b) any material failure of the Company, SWAT or Merger Sub, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, (c) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, or (d) any facts or circumstances that could reasonably be expected to result in a Material Adverse Effect; provided, however, that the delivery of any notice pursuant to this Section 5.8 shall not cure such breach or non-compliance or limit or otherwise affect the rights, obligations or remedies available hereunder to the party receiving such notice.

Section 5.9 Employee Matters.

(a) SWAT will cause the Surviving Corporation to honor the obligations of the Company under the provisions of all Benefit Plans and Employee Arrangements set forth in the Company’s Disclosure Schedule, subject to SWAT’s right to amend or terminate any such Benefit Plan or Employee Arrangement in accordance with its terms. After the Effective Time, the employees of the Company will be eligible to participate in the Company’s Benefit Plans or, if so determined by SWAT, SWAT’s applicable Benefit Plans, as such plans may be in effect from time to time, and, at SWAT’s sole discretion, will become employees of SWAT. With respect to each such employee of the Company, service with the Company may be counted for purposes of determining periods of eligibility to participate or to vest in benefits under any applicable Benefit Plan of SWAT. At SWAT’s sole discretion, administrative functions, including but not limited to payroll processing, may be transferred to processors of SWAT’s choosing.

Section 5.10 Listing of Stock. SWAT shall use its best efforts to cause the shares of SWAT Common Stock to be issued in connection with the Merger to be approved for listing on the Nasdaq Capital Market on or prior to the Closing Date, subject to official notice of issuance.

Section 5.11 Antitakeover Statutes. If any antitakeover statute is or may become applicable to the Merger, each of SWAT and the Company shall take such actions as are necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any antitakeover statute on the Merger.

Section 5.12 Third Party Consents.

(a) Each of SWAT, Merger Sub and the Company shall use its commercially reasonable efforts to obtain at the earliest practicable date all consents of third parties (including, but not limited to, such as are listed on Section 3.3 of the Company Disclosure Schedule or SWAT Disclosure Schedule, as applicable) and Governmental Entities necessary to the consummation of the transactions contemplated hereby (the “Third Party Consents”) and will provide to the other parties hereto copies of each such Third Party Consent promptly after it is obtained. Each of SWAT, Merger Sub and the Company agrees to cooperate fully with the other parties hereto in connection with the obtaining of the Third Party Consents; provided, however, that no party shall be required to pay any additional sums to secure such Third Party Consents of the other parties hereto.

(b) In furtherance and not in limitation of the covenants of the parties contained in Section 5.12(a), if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement, each of SWAT, Merger Sub and the Company shall cooperate in all respects with each other and use its respective commercially reasonable efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement.

(c) If any objections are asserted with respect to the transactions contemplated hereby or if any suit is instituted by any Governmental Entity or any private party challenging any of the transactions contemplated hereby as violative of any regulatory Law, each of SWAT, Merger Sub and the Company shall use its commercially reasonable efforts to resolve any such objections or challenge as such Governmental Entity or private party may have to such transactions under such regulatory Law so as to permit consummation of the transactions contemplated by this Agreement.

Section 5.13 Qualification as Reorganization. None of the Company, SWAT or Merger Sub has taken or will take any action (other than actions expressly permitted by this Agreement), either before or after the Closing, which could cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.

Section 5.14 Settlement. Following the execution of this Agreement, the Company and SWAT shall enter into a mutual full settlement (with prejudice) agreement relating to the Current Action, which settlement agreement shall become effective, if at all, upon consummation of the Merger and shall be filed no later than 10 days after the Closing.

Section 5.15 Agility. The Company and SWAT agree that all amounts outstanding under the Loan Agreement dated November 18, 2005, as amended, by and between Agility Capital, LLC (“Agility”) and the Company (the “Agility Loan Agreement”) shall be repaid at Closing from SWAT’s cash on hand; provided, however, that SWAT shall not be required to pay any amount under this Section 5.15 in excess of $500,000 of principal plus any accrued but unpaid non-default interest thereon, and any remaining amount shall be paid by the Company prior to the Effective Time (in order to ensure, among other things, that the provisions of Section 7 of the Agility Loan Agreement are inapplicable to the closing of the Merger). In addition, prior to the Effective Time, the Company and SWAT will use their commercially reasonable efforts to cause the April 20, 2007, October 19, 2007 and April 25, 2008 warrants issued to Agility to be amended to the Company’s and SWAT’s reasonable satisfaction.

Section 5.16 Confidentiality. If the transactions contemplated by this Agreement are not consummated (and in any event prior to the Closing Date), the parties hereto will, and will cause their respective representatives and advisors to, maintain the confidentiality of all information and materials obtained from the other parties hereto; provided, however, that the parties may provide information obtained from the other parties to its advisors, agents and employees for the limited purposes of analyzing, negotiating, financing, pursuing and consummating the transactions contemplated by this Agreement and except as required by applicable Law. Upon termination of this Agreement, the parties (and their respective representatives and advisors) will return to the other parties all materials obtained from each such party in connection with the transactions contemplated by this Agreement and all copies thereof.

ARTICLE VI

CONDITIONS TO CONSUMMATION OF THE MERGER

Section 6.1 Conditions to Each Party’s Obligations to Effect the Merger. The respective obligations of each party to consummate the transactions contemplated by this Agreement are subject to the fulfillment at or prior to the Effective Time of each of the following conditions, any or all of which may be waived in whole or in part by the party being benefited thereby, to the extent permitted by applicable Law:

(a) This Agreement shall have been approved and adopted by the Company Stockholder Approval and the SWAT Stockholder Approval.

(b) The Company, SWAT and Merger Sub shall have timely obtained from each Governmental Entity all approvals, waivers and consents, if any, necessary for consummation of or in connection with the transactions contemplated hereby, including such approvals, waivers and consents as may be required under the Securities Act and under blue sky Laws, if any, except for such authorizations, consents or approvals, the failure of which to have been made or obtained does not and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c) There shall not be in effect any Law of any Governmental Entity of competent jurisdiction restraining, enjoining or otherwise preventing consummation of the transactions contemplated by this Agreement and no Governmental Entity shall have instituted any proceeding which continues to be pending seeking any such Law.

(d) The Registration Statement shall have been declared effective by the SEC and shall be effective at the Effective Time, and no stop order suspending effectiveness shall have been issued; no action, suit, proceeding or investigation by the SEC to suspend the effectiveness of the Registration Statement shall have been initiated and be continuing; and all necessary approvals under state securities Laws or the Securities Act or Exchange Act relating to the issuance or trading of the SWAT Common Stock shall have been received.

Section 6.2 Conditions to the Obligations of SWAT and Merger Sub. The respective obligations of SWAT and Merger Sub to consummate the transactions contemplated by this Agreement are subject to the fulfillment at or prior to the Effective Time of each of the following additional conditions, any or all of which may be waived in whole or part by SWAT and Merger Sub to the extent permitted by applicable Law:

(a) The representations and warranties of the Company contained herein shall be true, except where the failure to be true, individually or in the aggregate, has not had or is not reasonably expected to have a Material Adverse Effect on the Company, in each case on and as of the Closing (except for representations and warranties made as of a specified date, which shall speak only as of the specified date).

(b) The Company shall have performed or complied in all material respects with all agreements and conditions contained herein required to be performed or complied with by it prior to or at the time of the Closing.

(c) The Company shall have delivered to SWAT a certificate, dated the date of the Closing, signed by the President of the Company (but without personal liability thereto), certifying as to the fulfillment of the conditions specified in Section 6.2(a) and Section 6.2(b).

(d) Prior to the Closing, there shall not have occurred any Material Adverse Effect on the Company.

(e) All holders of shares of Company Preferred Stock shall have converted such shares into shares of Company Common Stock.

(f) Agility shall have agreed to release all security interests created by the Agility Loan Agreement, subject only to its receipt of payment in full of all amounts outstanding under such agreement.

(g) SWAT shall have entered into a mutually acceptable employment agreement with Xxxx X. Xxxxxx.

(h) Except as contemplated by Section 6.2(f), there shall be no Liens, other than Permitted Liens, on the assets of the Company.

Section 6.3 Conditions to the Obligations of the Company. The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the fulfillment at or prior to the Effective Time of each of the following conditions, any or all of which may be waived in whole or in part by the Company to the extent permitted by applicable Law:

(a) The representations and warranties of SWAT and Merger Sub contained herein shall be true, except where the failure to be true, individually or in the aggregate, has not had or is not reasonably expected to have a Material Adverse Effect on SWAT, in each case on and as of the Closing Date (except for representations and warranties made as of a specified date, which shall speak only as of the specified date).

(b) SWAT shall have minimum unrestricted cash on hand of $1,000,000.

(c) SWAT and Merger Sub shall have performed or complied in all material respects with all agreements and conditions contained herein required to be performed or complied with by it prior to or at the time of the Closing.

(d) SWAT shall have delivered to the Company a certificate, dated the date of the Closing, signed by an executive officer of SWAT (but without personal liability thereto), certifying as to the actual cash on hand and fulfillment of the conditions specified in Section 6.3(a), Section 6.3(b) and Section 6.3(c).

(e) Prior to the Closing, there shall not have occurred any Material Adverse Effect on SWAT.

(f) The SWAT Common Stock required to be issued hereunder shall have been approved for listing on the Nasdaq Capital Market, subject only to official notice of issuance.

(g) SWAT’s stockholders shall have approved, in accordance with applicable Law, (i) a proposal to change SWAT’s name to “PepperBall Technologies, Inc.”, (ii) the conversion of SWAT’s Series B Convertible Preferred Stock into shares of SWAT Common Stock, and (iii) such other proposal(s) as the Company and SWAT shall mutually agree to include in the Joint Proxy Statement, including any proposals that may be required pursuant to the terms of this Agreement.

(h) There shall be no Liens, other than Permitted Liens, on the assets of SWAT.

(i) SWAT shall have entered into a mutually acceptable employment agreement with Xxxx X. Xxxxxx.

ARTICLE VII

TERMINATION; AMENDMENT; WAIVER

Section 7.1 Termination by Mutual Agreement. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval of the Merger by the Company Stockholder Approval and SWAT Stockholder Approval referred to in Section 6.1(a), by mutual written consent of the Company and SWAT by action of their respective boards of directors.

Section 7.2 Termination by either SWAT or the Company. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time by action of the board of directors of either SWAT or the Company if:

(a) the Merger shall not have been consummated by February 27, 2009, whether such date is before or after the date of approval of the Merger by the Company Stockholder Approval and SWAT Stockholder Approval (the “Termination Date”);

(b) after the Company convenes and holds the Company Stockholders’ Meeting and certifies the vote with respect to the Merger, the Company Stockholder Approval shall not have been obtained;

(c) after SWAT convenes and holds the SWAT Stockholders’ Meeting and certifies the vote with respect to the Merger, the SWAT Stockholder Approval shall not have been obtained; or

(d) any Law permanently restraining, enjoining or otherwise prohibiting consummation of the Merger shall become final and non-appealable (whether before or after the approval of the Merger by the Company Stockholder Approval and SWAT Stockholder Approval); provided, however, that the right to terminate this Agreement pursuant to this Section 7.2 shall not be available to any party that has breached in any material respect its obligations under this Agreement in any manner that shall have proximately contributed to the occurrence of the failure of the Merger to be consummated.

Section 7.3 Termination by the Company. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval of the Merger by the Company Stockholder Approval and SWAT Stockholder Approval referred to in Section 6.1(a), by action of the Company board of directors, if:

(a) (i) any of SWAT’s representations and warranties shall have been inaccurate as of the date of this Agreement, such that the condition set forth in Section 6.3 would not be satisfied, or (ii) if (A) any of SWAT’s representations and warranties become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 6.3 would not be satisfied and (B) such inaccuracy has not been cured by SWAT within ten business days after its receipt of written notice thereof and remains uncured at the time notice of termination is given, or (iii) any of SWAT’s covenants contained in this Agreement shall have been breached, such that the condition set forth in Section 6.3 would not be satisfied; or

(b) the board of directors of SWAT shall have withdrawn its recommendation of this Agreement or modified the recommendation in a manner adverse to the Company or shall have resolved to do the foregoing.

Section 7.4 Termination by SWAT. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval of the Merger by the Company Stockholder Approval and SWAT Stockholder Approval referred to in Section 6.1(a), by action of the Board of Directors of SWAT, if:

(a) (i) any of the Company’s representations and warranties shall have been inaccurate as of the date of this Agreement, such that the condition set forth in Section 6.2 would not be satisfied, or (ii) if (A) any of the Company’s representations and warranties become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 6.2 would not be satisfied and (B) such inaccuracy has not been cured by the Company within ten business days after its receipt of written notice thereof and remains uncured at the time notice of termination is given, or (iii) any of the Company’s covenants contained in this Agreement shall have been breached, such that the condition set forth in Section 6.2 would not be satisfied; or

(b) the board of directors of the Company shall have withdrawn its recommendation of this Agreement or modified the recommendation in a manner adverse to SWAT or shall have resolved to do the foregoing.

Section 7.5 Effect of Termination and Abandonment. In the event of termination of this Agreement and the abandonment of the Merger pursuant to this ARTICLE VII, this Agreement (other than this Section 7.5, Section 4.3(c), Section 5.16 and Section 8.2(a)) shall become void and of no effect with no liability on the part of any party hereto (or of any of its directors, officers, employees, consultants, contractors, agents, legal and financial advisors, or other representatives); provided, however, that except as otherwise provided herein, no such termination shall relieve any party hereto of any liability or damages resulting from any willful breach of this Agreement.

Section 7.6 Amendment. This Agreement may be amended by action taken by the Company, SWAT and Merger Sub at any time before or after approval of the Merger by the Company Stockholder Approval and SWAT Stockholder Approval but, after any such approvals, no amendment shall be made which changes the amount or form of the Merger Consideration. This Agreement may not be amended except by an instrument in writing signed on behalf of the parties hereto.

Section 7.7 Extension; Waiver. At any time prior to the Effective Time, each party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document, certificate or writing delivered pursuant hereto, or (c) waive compliance by the other party with any of the agreements or conditions contained herein. Any agreement on the part of either party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 No Survival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time.

Section 8.2 Entire Agreement; Assignment.

(a) This Agreement constitutes the entire agreement between the parties hereto in respect of the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties in respect of the subject matter hereof (including, without limitation, the Letter of Intent between the Company and SWAT effective as of April 18, 2008).

(b) Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by operation of Law (including, by merger or consolidation) or otherwise. Any assignment in violation of the preceding sentence shall be void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and permitted assigns.

Section 8.3 Notices. All notices, requests, instructions or other documents to be given under this Agreement shall be in writing and shall be deemed given, (a) five business days following sending by registered or certified mail, postage prepaid, (b) when sent if sent by facsimile; provided, however, that the facsimile is promptly confirmed by telephone confirmation thereof by the intended recipient, (c) when delivered, if delivered personally to the intended recipient, and (d) one business day following sending by overnight delivery via a national courier service, and in each case, addressed to a party at the following address for such party:


	if to Merger Sub or SWAT, to:	Security With Advanced Technology, Inc. 0000 Xxxxxxxx Xx., Xxxxx 000 Xxxxxxxxxx, XX 00000 Attention: Xxxxxxx XxXxxxxxx, CEO Facsimile: (000) 000-0000

	if to the Company, to:	Xxxxxxxxxx Hyatt Xxxxxx Xxxxxxx, LLP 000 00xx Xxxxxx, 00xx Xxxxx Xxxxxx, XX 00000 Attention: Xxxx X. Xxxxx, Esq. Facsimile: (000) 000-0000

	with copies to:	PepperBall Technologies, Inc. 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000 Xxx Xxxxx, XX 00000 Attention: Xxxx X. Xxxxxx, CEO Facsimile: (000) 000-0000


	with a copy to:	Xxxxxxxx & Xxxxxxxx LLP 00000 Xxxx Xxxxx Xxxxx Xxx Xxxxx, XX 00000 Attention: Xxxxx X. Xxxxxxx, Esq. Facsimile: (000) 000-0000

or to such other address or facsimile number as the Person to whom notice is given may have previously furnished to the other in writing in the manner set forth above.

Section 8.4 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of California, without giving effect to the choice of Law principles thereof.

Section 8.5 Expenses. The Company shall be solely responsible for the legal, accounting and other fees and expenses incurred by the Company in connection with the execution of this Agreement and the consummation of the transactions contemplated hereby. SWAT and Merger Sub shall be solely responsible for the legal, accounting and other fees and expenses incurred by SWAT and Merger Sub in connection with execution of this Agreement and the consummation of the transactions contemplated hereby. Any and all Transfer Taxes shall be timely paid by the Company.

Section 8.6 Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

Section 8.7 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns, and, except as provided in Section 2.17 and Section 5.7, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

Section 8.8 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 8.9 Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at Law or in equity.

Section 8.10 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

Section 8.11 Further Assurances. Each party to this Agreement agrees (a) to furnish upon request to the other party such further information, (b) to execute and deliver to the other party such other documents and (c) to do such other acts and things as the other party reasonably requests for the purpose of carrying out the intent of this Agreement and the documents and instruments referred to herein.

Section 8.12 Interpretation.

(a) The words “hereof,” “herein,” “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit, and schedule references are to the articles, sections, paragraphs, exhibits, and schedules of this Agreement unless otherwise specified. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” All terms defined in this Agreement shall have the defined meanings contained herein when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Any agreement, instrument, or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, or statute as from time to time, amended, qualified or supplemented, including (in the case of agreements and instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and all attachments thereto and instruments incorporated therein. References to a Person are also to its successors and permitted assigns.

(b) The phrases “the date of this Agreement,” “the date hereof,” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to May 27, 2008.

(c) The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

Section 8.13 Definitions. As used herein,

(a) “Affiliate” has the meaning given to it in Rule 12b-2 of Regulation 12B under the Exchange Act.

(b) “Beneficial ownership” or “beneficially own” has the meaning provided in Section 13(d) of the Exchange Act and the rules and regulations thereunder.

(c) “Know” or “knowledge” means, (i) in respect of SWAT, the knowledge of SWAT’s executive officers and (ii) in respect of the Company, the knowledge of the Company’s executive officers.

(d) “Lien” means, in respect of any asset (including, any security) any mortgage, lien, pledge, charge, security interest, or encumbrance of any kind in respect of such asset.

(e) “Permitted Lien” means (i) a statutory Lien not yet delinquent; (ii) a purchase money Lien arising in the ordinary course of business consistent with past practices; (iii) a Lien reflected in the financial statements of the applicable party; (iv) a Lien set forth in Section 3.16 of the Representing Party’s Disclosure Schedule; or (v) a Lien which does not materially detract from the value or impair the use of the asset or property in question.

(f) “Person” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in the Exchange Act).

(g) “Subsidiary” means, in respect of any party, any corporation, partnership or other entity or organization, whether incorporated or unincorporated, of which (i) such other party or any other subsidiary of such party is a general partner (excluding such partnerships where such party or any subsidiary of such party does not have a majority of the voting interest in such partnership) or (ii) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions in respect of such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries.

(h) “Transfer Taxes” means any and all state, local, foreign or provincial sales, use, real property, stock transfer or similar taxes (including any interest or penalties with respect thereto, but not including any shareholder level taxes based upon net income) attributable to the transactions contemplated herein.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf as of the date first above written.


	PEPPERBALL TECHNOLOGIES, INC. By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: Chairman and CEO SECURITY WITH ADVANCED TECHNOLOGY, INC. By: /s/ Xxxxxxx XxXxxxxxx Name: Xxxxxxx XxXxxxxxx Title: CEO PTI ACQUISITION CORP. By: /s/ Xxxxxxx XxXxxxxxx Name: Xxxxxxx XxXxxxxxx Title: CEO

[SIGNATURE PAGE TO THE AGREEMENT AND PLAN OF MERGER AND REORGANIZATION]

Document Metadata

Table of Contents

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

Document Metadata

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

THE MERGER; ADVANCE NOTE

ARTICLE II

CONVERSION OF SECURITIES; EXCHANGE OF NOTES; ANTI-DILUTION PROTECTION

ARTICLE III

REPRESENTATIONS AND WARRANTIES

ARTICLE IV

COVENANTS RELATED TO CONDUCT OF BUSINESS

ARTICLE V

ADDITIONAL AGREEMENTS

ARTICLE VI

CONDITIONS TO CONSUMMATION OF THE MERGER

ARTICLE VII

TERMINATION; AMENDMENT; WAIVER

ARTICLE VIII

MISCELLANEOUS

Document Metadata

CONVERSION OF SECURITIES; EXCHANGE OF NOTES;
ANTI-DILUTION PROTECTION