OSI SYSTEMS, INC. SMITHS DETECTION, LLC SMITHS DETECTION UNITED KINGDOM LIMITED SMITHS DETECTION (AUSTRALIA) PTY LTD FOR THE PURPOSES OF SECTION 11.07 ONLY, SMITHS DETECTION GROUP LIMITED AND OSI (HOLDINGS) COMPANY LIMITED

agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I
DEFINITIONS AND INTERPRETATION

1.01                        Definitions

As used herein, the following terms have the following meanings:

Accounting Firm means Grant Thornton LLP or, if such firm is unable or unwilling to so act (to the extent required under the provisions of this Agreement), such other internationally recognized firm of independent public accountants as shall be agreed upon in writing by the Purchasers and the Sellers.

Accounting Principles means, the accounting methods and practices set forth on Section 2.04 of the Disclosure Schedule.

Acquired Assets means any “Acquired Assets,” as defined under the form of Restructuring Documents attached to this Agreement, interpreted as though each member of the Seller Group were a “Seller” thereunder.

Acquisition has the meaning set forth in Section 2.01(a).

Active Government Contract means each Government Contract with respect to which performance has not been completed, final payment has not been received, and/or any claims associated with any terms applicable to the release of final payment thereunder have been asserted, are ongoing, and are unresolved.

Affiliate means, with respect to any Person, any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities or otherwise, and will be construed in accordance with the rules promulgated under the Securities Act. As used in this Agreement, the term “Affiliate” (a) with respect to the Seller Parent and the Sellers, for all periods prior to the Closing, shall include each Target Company and (b) with respect to the Purchasers, for all periods after the Closing, shall include each Target Company.

Affiliate Contracts has the meaning set forth in Section 4.21.

Agreement has the meaning set forth in the Preamble.

Ancillary Agreements means the Transition Services Agreement and the IP License Agreement.

Antitrust Conditions has the meaning set forth in Section 8.01(a).

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Antitrust Laws means any antitrust, competition or trade regulatory Applicable Law.

Applicable Law means any supra-national, federal, national, state, municipal or local statute, law, ordinance, regulation, rule, code, order (whether executive, legislative, judicial or otherwise), judgment, injunction, notice, decree or other requirement or rule of law or legal process (including common law), or any other order of, or agreement issued, promulgated or entered into by, any Governmental Authority.

Assumed Employee Benefit Plans has the meaning set forth in Section 6.04(b).

Assumed Liabilities means any “Assumed Liabilities,” as defined under the form of Restructuring Documents attached to this Agreement, interpreted as though each member of the Sellers’ Group were a “Seller” thereunder.

Australian Seller has the meaning set forth in the Preamble.

Australian Target Company has the meaning set forth in the Recitals.

Australian Target Company Equity Interests has the meaning set forth in the Recitals.

Balance Sheet Date means December 31, 2016.

Business means the global explosive trace detection business of Safran USA, Inc., Morpho USA, Inc. and each of their respective Affiliates as it existed immediately prior to the consummation of the Morpho Acquisition, including (i) the business of developing, manufacturing, selling, and providing explosives trace equipment and related aftermarket services, (ii) the Divestiture Assets and (iii) Morpho ETD Devices.

Business Day means a day, other than a Saturday or Sunday or other day on which commercial banks are authorized or required by Applicable Law to close in Los Angeles, California, in New York City, New York,  in London, England, or in Sydney, Australia.

Business Employee means (a) any employee of any Target Company and (b) any employee of any member of the Sellers’ Group who performs services on behalf of the Business, all of whom are set forth in Section 6.04(a)(i) of the Disclosure Schedule.

Cap has the meaning set forth in Section 10.03(a)(iii).

Certification means, with respect to any product or service, any certification, license, approval, evaluation, listing on a qualified product list or qualification for use.

Certifying Authority has the meaning set forth in Section 4.19(c).

Change of Control Payments means (a) all change of control, transaction bonus and other payments or compensation that are payable by a Seller or a Target Company to any officer, director, employee, consultant or independent contractor of any member of the Sellers’ Group or a Target Company or to any Business Employee as a result of or in connection with the Morpho Acquisition or the transactions contemplated by this Agreement (alone or in combination with

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any other event, including any termination of employment occurring on the closing date of the Morpho Acquisition or on the Closing Date), including the amounts payable under the transaction success bonus letter, retention benefit letters and guarantees of employment identified on Section 4.11(a)(xi) of the Disclosure Schedule, but not including any other amounts that would have otherwise been payable upon termination of employment or in connection with any other event if the Morpho Acquisition had not occurred or the consummation of the Acquisition as contemplated hereunder does not occur; and (b) any portion of any employment and payroll Taxes related to any payments made under clause (a) above for which such Target Company has any Liability.

Closing has the meaning set forth in Section 2.02.

Closing Date has the meaning set forth in Section 2.02.

Closing Date Cash means the aggregate amount of cash and cash equivalents held by or on behalf of the Target Companies as of the Effective Closing Time.

Closing Date Indebtedness means Indebtedness of the Target Companies as of the Effective Closing Time; provided that Closing Date Indebtedness shall not include: (i) any item of Indebtedness which is repaid, capitalized, cancelled or otherwise extinguished prior to Closing, including any items of Indebtedness owed by any Target Company to any member of the Sellers’ Group pursuant to Section 6.07(b); or (ii) any Current Liability to the extent such liability is reflected in Closing Date Net Working Capital.

Closing Date Net Working Capital means Net Working Capital as of the Effective Closing Time.

Closing Date Seller Transaction Expenses means Seller Transaction Expenses as of the Effective Closing Time; provided that Closing Date Seller Transaction Expenses shall not include any Seller Transaction Expense which is paid by the Sellers prior to Closing and provided further that no Seller Transaction Expenses actually paid by the Sellers at the Closing, satisfactory evidence of which is provided by the Sellers to the Purchasers at the Closing, shall be included in the Closing Date Net Working Capital or Closing Date Indebtedness.

COBRA has the meaning set forth in Section 6.04(c)(i).

Combined Pro-Forma Financial Statements has the meaning set forth in Section 4.06.

Commitments means the commitments given by Smiths Group plc to the European Commission and attached to the clearance decision dated 18 January 2017 issued by the European Commission in Case M.8087 pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation (EC) No 139/2004.

Code means the United States Internal Revenue Code of 1986, as amended.

Confidentiality Agreement has the meaning set forth in Section 6.02.

Contract means any binding contract, agreement, instrument, lease, license or commitment.

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Contracting Officer means a Person with the actual or apparent authority to enter into, administer or terminate a Government Contract and make related determinations and findings for a Governmental Authority with respect to a Government Contract.

Current Assets means those items identified as “Current Assets” on Annex 2.04.

Current Liabilities means those items identified as “Current Liabilities” on Annex 2.04.

Data Room means the RR Donnelley Beckett virtual data room as of 10:00 AM New York time, May 31, 2017, an index of which is attached as Annex A to the Disclosure Schedule.

D&O Indemnified Parties has the meaning set forth in Section 6.06(a).

D&O Release has the meaning set forth in Section 6.06(b).

De minimis has the meaning set forth in Section 10.03(a)(ii).

Deductible has the meaning set forth in Section 10.03(a)(i).

Deficiency means absence, failure to obtain, non-existence, non-availability, reduction, nullification, disallowance or claw-back for whatever reason.

Disclosure Schedule means that certain disclosure schedule delivered by the Sellers to the Purchasers concurrently herewith.

Divestiture Assets has the meaning set forth in the Orders.

DCAA has the meaning set forth in Section 4.12(b)(iii).

DFARS has the meaning set forth in Section 4.10(m).

DOJ means the United States Department of Justice.

DSS has the meaning set forth in Section 6.03(b).

Effective Closing Time has the meaning set forth in Section 2.02.

Employee Benefit Plan means any “employee benefit plans” (within the meaning of Section 3(3) of ERISA whether or not subject to ERISA), and all other material written compensation and benefit plans, Contracts, agreements, policies or arrangements (i) established, maintained, sponsored or contributed to (or with respect to which any obligation to contribute has been undertaken) by the Target Companies, the Sellers, or their respective Affiliates, on behalf of any of the Business Employees or their beneficiaries, or (ii) with respect to which any Seller or any Target Company could reasonably be expected to have any Liability on behalf of any such Business Employee or beneficiary.

Employee Personal Data means any information relating to an identified or identifiable individual that (a) the Purchasers obtained from any member of the Sellers’ Group or any of their respective Affiliates or Representatives, (b) is processed by the Purchasers on behalf of the

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Sellers, (c) pertains to the Business Employees and (d) is created by the Purchasers based on the information described in the immediately preceding clauses (a), (b) and (c).

Encumbrance means any charge, security interest, pledge, condition, equitable interest, hypothecation, mortgage, lien (statutory or other), option, conditional sale or other title retention agreement, encumbrance, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

Environmental Applicable Law means any Applicable Law concerning (a) the treatment, disposal, emission, discharge, Release or threatened Release of Hazardous Materials, (b) the protection of the environment (including natural resources, air and surface or subsurface land or waters), or (c) the protection of public or worker health and safety.

Environmental Assessments has the meaning set forth in Section 4.18(a).

Equity Interests has the meaning set forth in the Recitals.

ERISA means the United States Employee Retirement Income Security Act of 1974, as amended.

Estimated Closing Date Cash means the Sellers’ good faith estimate of Closing Date Cash, delivered pursuant to Section 2.01(c).

Estimated Closing Date Indebtedness means the Sellers’ good faith estimate of Closing Date Indebtedness, delivered pursuant to Section 2.01(c).

Estimated Closing Date Net Working Capital means the Sellers’ good faith estimate of Closing Date Net Working Capital, delivered pursuant to Section 2.01(c).

Estimated Closing Date Seller Transaction Expenses means the Sellers’ good faith estimate of Closing Date Seller Transaction Expenses, delivered pursuant to Section 2.01(c).

Excluded Assets means any “Excluded Assets,” as defined under the form of Restructuring Documents attached to this Agreement, interpreted as though each member of the Seller Group were a “Seller” thereunder.

Excluded Liabilities means any “Excluded Liabilities,” as defined under the form of Restructuring Documents attached to this Agreement, interpreted as though each member of the Seller Group were a “Seller” thereunder.

Excluded Trademarks has the meaning set forth in Section 6.11(c).

Export Authorizations means all licenses, permits, certifications, or other approvals relating to export controls issued by a Governmental Authority authorizing the export, reexport, or transfer of items, software, technology, technical data or services.

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Export Authorization Applications means all requests for Export Authorizations currently in process with a Governmental Authority.

FAR has the meaning set forth in Section 4.12(b)(iii).

FAR Rights has the meaning set forth in Section 4.10(m).

Final Closing Statement means a finally determined and binding statement listing the Closing Date Indebtedness, Closing Date Cash, Closing Date Seller Transaction Expenses and Closing Date Net Working Capital, in each case, as calculated in accordance with the provisions of Section 2.04.

Final Global Purchase Price Allocation has the meaning set forth in Section 2.05(b).

Finally Determined Purchase Price means the Initial Purchase Price, as adjusted by the payments made by the Parties pursuant to Section 2.04(d).

FIRPTA Certificate has the meaning set forth in Section 8.02(d).

Freshfields has the meaning set forth in Section 6.10.

GAAP Financial Statements has the meaning set forth in Section 6.23(a).

Governing Documents means the charter, organizational and other documents by which any Person other than an individual establishes its legal existence or which govern its internal affairs, and shall include: (i) in respect of a corporation, its certificate or articles of incorporation or association and its bylaws; (ii) in respect of a partnership, its certificate of partnership and its partnership agreement; and (iii) in respect of a limited liability company, its certificate of formation and operating or limited liability company agreement.

Government Bid means any outstanding quotation, bid or proposal that, if accepted or awarded, would lead to a Government Contract.

Government Contract means any Contract with any United States Governmental Authority, contractor or higher-tier subcontractor where a United States Governmental Authority is the end customer for such Contract.

Government Official has the meaning set forth in Section 4.13(b).

Governmental Authority means any (a) nation, region, state, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department or other entity and any court or other tribunal), (d) multinational or supra-national organization exercising judicial, legislative or regulatory power, including the European Commission, or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, fiscal, legislative, police, regulatory or taxing power of any nature of any federal, state, local, municipal, foreign or other government, in each case, anywhere throughout the world.

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Guaranteed Seller Obligations has the meaning set forth in Section 11.07(a).

Hazardous Materials means any waste or other substance that is listed, defined, designated or classified or otherwise regulated as a pollutant, contaminant, substance/material of concern, or waste (in each case, whether hazardous, radioactive, toxic or otherwise) under any Environmental Applicable Law, including any admixture or solution thereof, and including petroleum and all derivatives thereof or synthetic substitutes therefor, asbestos or asbestos-containing materials in any form or condition, polychlorinated biphenyls and radionuclides.

IFRS means the International Financial Reporting Standards as issued by the International Accounting Standards Board, the International Accounting Standards (IASs) adopted by the International Accounting Standards Board, the Standing Interpretation Committee interpretations (SICs) and the International Financial Reporting Interpretation Committee interpretations (IFRICs) as adopted or issued by the International Financial Reporting Interpretation Committee.

Indebtedness means, without duplication: (i) the outstanding principal amount and other payment obligations (including any premiums, penalties, make-whole payments, termination fees, breakage costs and other fees and expenses that are due upon prepayment of such obligations), under any obligations (A) for borrowed money; or (B) evidenced by notes, bonds, debentures or similar instruments; (ii) all payment obligations under any interest rate, currency, swap, caps, collars or other hedging agreements; (iii) any lease obligation that is properly characterized as a capitalized lease under IFRS, to the extent of the amount so characterized; (iv) all obligations to pay the deferred purchase price of property or services, except trade accounts payable and other current liabilities arising in the ordinary course of business; (v) all “earn-out”, contingent purchase price, deferred purchase price or similar contingent payment obligations under any Contract that relates to the acquisition of any business; (vi) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property; (vii) all obligations in respect of accrued or declared but unpaid dividends or other distributions; (viii) all obligations (contingent or otherwise), under any letters of credit, performance bonds, surety bonds, corporate guarantees or similar instruments under which advances or other amounts have been drawn; and (ix) the amount of any guaranty of each of the foregoing and all accrued interest in respect of each of the foregoing.

Indemnified Party means either a Purchaser Indemnitee or a Seller Indemnitee, as applicable.

Initial Closing Statement has the meaning set forth in Section 2.01(c).

Initial Global Purchase Price Allocation has the meaning set forth in Section 2.05(a).

Initial Purchase Price has the meaning set forth in Section 2.01(b).

Intellectual Property means all of the following anywhere in the world and all legal rights, title or interest in the following arising under Applicable Law: (i) all patents and applications for patents and all related reissues, reexaminations, divisions, renewals, extensions, provisionals, continuations and continuations in part; (ii) all mask works, mask work registrations and mask work applications and all other corresponding rights; (iii) all registered or unregistered words, devices or symbols that serve as or are capable of serving as an indication of source when used in connection with goods, services or the Business, including trademarks, service marks, trade

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dress, trade names, corporate names, logos, slogans, assumed fictional business names, Internet domain names and registrations and applications for registration of any of the foregoing, including extensions and renewals, together with all translations, adaptations, derivations, and combinations thereof and the goodwill associated therewith; (iv) copyrights, copyright registrations and copyright applications, copyrightable works and all other corresponding rights; (v) all design rights, inventions (whether patentable or unpatentable and whether or not reduced to practice); (vi) trade secrets and know-how, technology, technical data, confidential business information, manufacturing and production processes and techniques, research and development information, financial, marketing and business data, pricing and cost information, business and marketing plans, advertising and promotional materials, customer, distributor, reseller and supplier lists and information, correspondence, records, and other documentation, and other proprietary information of every kind; (vii) all Software, firmware, development tools, algorithms, files, records, technical drawings and related documentation, data and manuals; (viii) all databases and data collections; and (ix) all other intellectual property and proprietary rights, whether registered or unregistered, existing now or in the future in any part of the world.  For purposes of this definition, the term registered includes registrations, applications for registration, intent-to-use applications or other registrations or applications related to trademarks, copyrights and any other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any Governmental Authority.