Document:

Exhibit 4.1

Execution Version

NEITHER THESE SECURITIES NOR THE
SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

BALLISTIC
RECOVERY SYSTEMS, INC.

Dated: June    ,
2007

Ballistic Recovery Systems,
Inc., a Minnesota corporation (the “Company”),
hereby certifies that, for value received, CIMSA Ingenieria de Sistemas, S.A.
or its registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of 275,735 shares of
common stock, $0.01 par value per share (the “Common
Stock”), of the Company (each such share, a “Warrant Share” and all such shares issuable
hereunder, the “Warrant Shares”)
at an exercise price equal to $2.00 per share (as adjusted from time to time as
provided in Section 9, the “Exercise Price”),
at any time from the date hereof through and including the date that is three
(3) years from the date hereof (the “Expiration
Date”), and subject to the following terms and conditions.  This Warrant (“Warrant”) is issued pursuant to that certain Securities
Purchase Agreement, dated as of June [   ], 2007, by and among
the Company and the Holder (the “Purchase
Agreement”).

1.             Definitions.  In addition to the terms defined elsewhere in
this Warrant, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement.

2.             Registration of
Warrant.  The Company shall register
this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the
name of the record Holder hereof from time to time.  The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes,
absent actual notice to the contrary.

3.             Registration of
Transfers.  No portion of this
Warrant shall be transferable by the Holder without the advance written consent
of the Company.  The Company shall
register any transfer of any portion of this Warrant so consented to by the
Company in the Warrant Register, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly completed and signed, to the Company’s
transfer agent or to the Company at its address specified herein.  Upon any such registration or transfer, a new
warrant to purchase Common Stock, in substantially the form of this Warrant
(any such new warrant, a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring 

Holder.  The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance by such transferee of all of
the rights and obligations of a holder of a Warrant.

4.             Exercise and
Duration of Warrants.

(a)           This Warrant shall be exercisable by the registered Holder
at any time and from time to time commencing on the date hereof to and
including the Expiration Date.  At 6:30
P.M., New York City time on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value.

(b)           The Holder may exercise this Warrant by delivering to the
Company (i) an exercise notice, in the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed,
and (ii) payment of the Exercise Price for the number of Warrant Shares as to
which this Warrant is being exercised, and the date such items are delivered to
the Company (as determined in accordance with the notice provisions hereof) is
an “Exercise Date.”  The Holder shall not be required to deliver
the original Warrant in order to effect an exercise hereunder.  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.

(c)           Exercise Disputes. 
In the case of any dispute with respect to the number of Warrant Shares
to be issued upon exercise of this Warrant, the Company shall promptly issue
such number of Warrant Shares that is not disputed and shall submit the
disputed determinations or arithmetic calculations to the Holder via facsimile
within two (2) Business Days of receipt of the Holder’s election to purchase
Warrant Shares.  If the Holder and the
Company are unable to agree as to the determination of the Exercise Price
within two (2) Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall in accordance
with this Section, submit via facsimile the disputed determination to an
independent reputable accounting firm of national standing, selected jointly by
the Company and the Holder.  The Company
shall cause such accounting firm to perform the determinations or calculations
and notify the Company and the Holder of the results within forty-eight (48)
hours from the time it receives the disputed determinations of
calculations.  Such accounting firm’s
determination shall be binding upon all parties absent manifest error.  The Company shall then on the next business
day issue certificate(s) representing the appropriate number of Warrant Shares
of Common Stock in accordance with such accounting firm’s determination and
this Section.  The prevailing party shall
be entitled to reimbursement of all fees and expenses of such determination and
calculation.

5.             Delivery of
Warrant Shares.

(a)           Upon exercise of this Warrant, the Company shall promptly
(but in no event later than five business days after the Exercise Date) issue
or cause to be issued and cause to be delivered to or upon the written order of
the Holder and in such name or names as the Holder may designate, a certificate
for the Warrant Shares issuable upon such exercise, free of restrictive legends
unless a registration statement covering the resale of the Warrant Shares and
naming the Holder as a selling stockholder thereunder is not then effective and
the Warrant Shares are not freely transferable without volume restrictions
pursuant to Rule 144 under the Securities Act. 
The Holder, or any Person so designated by the Holder to receive Warrant

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Shares, shall be deemed to have become holder
of record of such Warrant Shares as of the Exercise Date.  Unless the Warrant Shares are required to be
certificated with restrictive legends in accordance with this paragraph, the
Company shall, upon request of the Holder, use its best efforts to deliver
Warrant Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions.

(b)           This Warrant is exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares.  Upon surrender of this Warrant following one
or more partial exercises, the Company shall issue or cause to be issued, at
its expense, a New Warrant evidencing the right to purchase the remaining
number of Warrant Shares.

(c)           The Company’s obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or
any violation or alleged violation of law by the Holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares.  Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing Warrant Shares upon exercise of the
Warrant  as required pursuant to the
terms hereof.

6.             Charges, Taxes
and Expenses.  Issuance and delivery
of certificates for Warrant Shares upon exercise of this Warrant shall be made
without charge to the Holder for any issue or transfer tax, withholding tax,
transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder.  The Holder
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.

7.             Replacement of
Warrant.  If this Warrant is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this Warrant, a New Warrant, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable bond or indemnity, if requested.  Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe.

8.             Reservation of
Warrant Shares.  The Company
covenants that it will at all times reserve and keep available out of the
aggregate of its authorized but unissued and otherwise unreserved Common Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise of
this Warrant as herein provided, 100% of the 
Warrant Shares which are then issuable 

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and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (after giving
effect to the adjustments and restrictions of Section 9, if any). The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and non-assessable.  The Company will
take all such action as may be necessary to assure that such Warrant Shares may
be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any securities exchange or automated
quotation system upon which the Common Stock may be listed.

9.             Certain
Adjustments.  The Exercise Price and
number of Warrant Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section 9.

(a)           Stock Dividends and Splits.  If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event.  Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution, and any adjustment pursuant
to clause (ii) or (iii) of this paragraph shall become effective immediately
after the effective date of such subdivision or combination.

(b)           Distributions Made Prior to Exercise.  If the Company, at any time while this
Warrant is outstanding, distributes pro rata to holders of Common Stock (i)
evidences of its indebtedness, (ii) any security (other than a distribution of
Common Stock covered by Section 9(a)), (iii) rights or warrants to subscribe
for or purchase any security (except pursuant to a shareholder rights plan duly
adopted by the Company’s Board of Directors), or (iv) any other asset (in each
case, a “Distribution”),
then, if, but only if, the Company fails to provide written notice of any such
Distribution to the Holder sufficiently in advance thereof to permit the Holder
to exercise this Warrant and be deemed a holder of Common Stock at the record
date fixed for the determination of holders of Common Stock entitled to receive
the Distribution (each a “Distribution Notice”),
in each such case any Exercise Price in effect immediately prior to the close
of business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution shall be reduced, effective as of
the close of business on such record date, to a price determined by multiplying
such Exercise Price by a fraction of which (i) the numerator shall be the
Weighted Average Price(1) of the Common Stock on the trading day 

(1) “Weighted Average
Price" means, for any security as of any date, the dollar volume-weighted
average price for such security on the primary securities exchange or automated
quotation system upon which the security is listed, during the period beginning
at 9:30:01 a.m., New York Time (or such other time as such securities exchange
or automated quotation system  publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New
York Time (or such other time as such securities exchange or automated
quotation system  publicly announces is
the official close of trading) as reported by Bloomberg (means Bloomberg
Financial Markets) through its "Volume at Price" functions, or, if
the foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York Time (or
such other time as such market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York Time (or such other time as such
market publicly announces is the official close of trading) as reported by
Bloomberg, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the "pink sheets" by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.). 
If the Weighted Average Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Weighted Average Price of
such security on such date shall be the fair market value as determined by the
Company in good faith.  All such
determinations shall be appropriately adjusted for any share dividend, share
split, share combination or other similar transaction during the applicable
calculation period.

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immediately preceding
such record date minus the value of the Distribution (as determined in good
faith by the Company’s Board of Directors) applicable to one share of Common
Stock, and (ii) the denominator shall be the Weighted Average Price of the
Common Stock on the Trading Day immediately preceding such record date.

(c)           Notwithstanding the provisions set forth in Section
9(b) above, if the Company, at any time while this Warrant is outstanding,
makes a Distribution to the holders of Common Stock, and the Company fails to
provide a Distribution Notice to the Holder in accordance with Section 9(b)
above, then in each such case the Holder shall have the option to receive such
Distribution which would have been made to the Holder had such Holder been the
holder of such Warrant Shares on the record date for the determination of
stockholders entitled to such Distribution; provided, however, if
the Holder elects to receive such Distribution, it will not be entitled to
receive the adjustment to the Exercise Price specified in clause (b) above.

(d)           Fundamental Transactions.  (1) If, at any time while this Warrant is
outstanding, (i) the Company effects any merger or consolidation of the Company
with or into (whether or not the Company is the surviving corporation) another
Person, (ii) the Company effects any sale, assignment, transfer, conveyance or
other disposition of all or substantially all of its assets in one or a series
of related transactions; provided, however, that for avoidance of doubt, the
granting of a lien on all or substantially all of the Company’s assets as
collateral shall not be deemed a Fundamental Transaction (as such term is
hereinafter defined) hereunder, (iii) the Company allows another Person to make
a purchase, tender or exchange offer that is not contested by the Company and
is accepted by the holders of more than the 50% of either the outstanding
shares of Common Stock (not including any shares of Common Stock held by the
Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), (iv) the
Company consummates a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another Person whereby such other Person acquires
more than the 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party
to, such stock purchase agreement or other business combination), or (v) the
Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (other than as a result of
a subdivision or combination of shares of Common Stock covered by Section
9(a) above) (in any such case, a “Fundamental
Transaction”), then the Holder shall have the right thereafter to receive,
upon exercise of this Warrant, the same amount and kind of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of

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Warrant Shares then issuable upon exercise in
full of this Warrant (the “Alternate
Consideration”).  The
aggregate Exercise Price for this Warrant will not be affected by any such
Fundamental Transaction, but the Company shall apportion such aggregate
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common
Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. 
At the Holder’s request, any successor to the Company or surviving
entity in such Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the Holder’s right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof.  The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this paragraph (d) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

(2)           Notwithstanding
the foregoing and the provisions of Section 9(b) above, in the event of a
Fundamental Transaction in which (i) the surviving entity in the Fundamental
Transaction is not a publicly traded company and (ii) the consideration to be
delivered to the holders of Common Stock upon the occurrence of such
Fundamental Transaction does not consist of publicly traded securities
representing at least eighty percent (80%) of the value of such consideration,
if the Holder has not exercised the Warrant in full prior to the consummation
of such Fundamental Transaction, then the Holder shall have the right to
require any successor to the Company or surviving entity in such Fundamental
Transaction to purchase this Warrant from the Holder by paying to the
Holder, simultaneously with the consummation of such Fundamental Transaction
and in lieu of the warrant referred to in Section 9(d)(1), cash in an amount
equal to the value of the remaining unexercised portion of this Warrant on the
date of such consummation, which value shall be determined by use of the Black
and Scholes Option Pricing Model reflecting (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining
term of this Warrant as of such date of request and (ii) an expected volatility
equal to the lesser of 60% and the 100 day volatility obtained from the HVT function
on Bloomberg.

(e)           Adjustment Upon Issuance of Shares of Common Stock.  If and whenever on or after the issuance date
of this Warrant through the first one hundred eighty days (180) thereof, the
Company issues or sells, or in accordance with this Section 9 is deemed to have
issued or sold, any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the Company) for
a consideration per share (the “New Issuance
Price”) less than a price (the “Applicable Price”)
equal to the Exercise Price in effect immediately prior to such issue or sale
or deemed issuance or sale (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the
Exercise Price then in effect shall be reduced to an amount equal to the New
Issuance Price.  If and whenever after
such one hundred eightieth day, the Company issues or sells, or in accordance
with this Section 9 is deemed to have issued or sold, any shares of Common
Stock (including the issuance or sale of shares of Common Stock owned or held
by or for the account of the Company) in a Dilutive Issuance, then immediately
after such Dilutive Issuance, the Exercise Price then in effect shall be
reduced to an amount equal to the product of (A) the Exercise Price

 6
 

in effect immediately prior to such Dilutive
Issuance and (B) the quotient determined by dividing (1) the sum of (I) the
product derived by multiplying the Exercise Price in effect immediately prior
to such Dilutive Issuance and the number of shares of Common Stock Deemed
Outstanding immediately prior to such Dilutive Issuance plus (II) the
consideration, if any, received by the Company upon such Dilutive Issuance, by
(2) the product derived by multiplying (I) the Exercise Price in effect immediately
prior to such Dilutive Issuance by (II) the number of shares of Common Stock
Deemed Outstanding immediately after such Dilutive Issuance.  Upon each such adjustment of the Exercise
Price hereunder, the number of Warrant Shares shall be adjusted to the number
of shares of Common Stock determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
acquirable upon exercise of this Warrant immediately prior to such adjustment
and dividing the product thereof by the Exercise Price resulting from such
adjustment.  For purposes of determining
the adjusted Exercise Price under this Section 9(e), the following shall be
applicable:

(i)            Issuance
of Options.  If the Company in any
manner grants any Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option (as defined
below) or upon conversion, exercise or exchange of any Convertible Securities
(as defined below) issuable upon exercise of any such Option is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
Section 9(e)(i), the “lowest price per share for which one share of Common
Stock is issuable upon exercise of such Options or upon conversion, exercise or
exchange of such Convertible Securities” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the granting or sale of the
Option, upon exercise of the Option and upon conversion, exercise or exchange
of any Convertible Security issuable upon exercise of such Option.  No further adjustment of the Exercise Price
or number of Warrant Shares shall be made upon the actual issuance of such
shares of Common Stock or of such Convertible Securities upon the exercise of
such Options or upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities.

(ii)           Issuance
of Convertible Securities.  If the
Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share.  For the purposes of this Section 9(e)(ii),
the “lowest price per share for which one share of Common Stock is issuable
upon the conversion, exercise or exchange” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to one share of

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Common Stock upon the issuance or sale of the
Convertible Security and upon conversion, exercise or exchange of such Convertible
Security.  No further adjustment of the
Exercise Price or number of Warrant Shares shall be made upon the actual
issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustment of this Warrant has been or is to be made pursuant to other
provisions of this Section 9(e), no further adjustment of the Exercise Price or
number of Warrant Shares shall be made by reason of such issue or sale.

(iii)          Change
in Option Price or Rate of Conversion. 
If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise or exchange
of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock
increases or decreases at any time, the Exercise Price and the number of
Warrant Shares in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price and the number of Warrant Shares which would
have been in effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be, at
the time initially granted, issued or sold. 
For purposes of this Section 9(e)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the date of issuance of this
Warrant are increased or decreased in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the shares of
Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease.  No adjustment pursuant to this Section 9(e)
shall be made if such adjustment would result in an increase of the Exercise
Price then in effect or a decrease in the number of Warrant Shares.

(iv)          Calculation
of Consideration Received.  In case
any Option is issued in connection with the issue or sale of other securities
of the Company, together comprising one integrated transaction in which no
specific consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for a consideration of $0.01.  If any shares of Common Stock, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor will be deemed to be the net
amount received by the Company therefor. 
If any shares of Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of securities which are
listed on a securities

 8
 

exchange or stock market, in which case the amount of
consideration received by the Company will be the Share Purchase Price of such
security on the date of receipt.  If any
shares of Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such shares of Common Stock,
Options or Convertible Securities, as the case may be.  The fair value of any consideration other
than cash or securities will be determined jointly by the Board of Directors of
the Company and the Required Holders.  If
such parties are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Business Days
after the tenth day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Required Holders.  The determination of such appraiser shall be
final and binding upon all parties absent manifest error and the fees and
expenses of such appraiser shall be borne by the Company.

(v)           Record
Date.  If the Company takes a record
of the holders of shares of Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in shares of
Common Stock, Options or in Convertible Securities or (B) to subscribe for
or purchase shares of Common Stock, Options or Convertible Securities, then
such record date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.

(vi)          Notwithstanding the foregoing, no adjustment will be made
under this Section 9(e) upon the issuance of any Common Stock,
Convertible Securities and/or Options  (a)
in connection with employee benefit plans, stock option plans or other plans
approved by the Board of Directors of the Company for the benefit of employees,
consultants or directors of the Company or its subsidiaries, (b) stock
dividends or other events to which Section 9(a) applies, or in
connection with Options or Convertible Securities outstanding immediately prior
to the Closing; provided that the terms of such Options or Convertible
Securities are not amended, modified or changed after the date hereof, (c)
issued under the Purchase Agreement, (d) in connection with a bona fide
acquisition by the Company or to strategic partners in a transaction the
primary purpose of which is not to raise equity funds, or (f) pursuant to a
firm commitment underwritten public offering with a nationally recognized
underwriter which generates gross proceeds in excess of $5 million.

(vii)         For purposes of this Warrant, (A) “Common Stock Deemed Outstanding” means, at
any given time, the number of shares of Common Stock actually outstanding at
such time, plus the number of shares of Common Stock deemed to be outstanding

 9
 

pursuant to Sections 9(e)(i) and 9(e)(ii)
hereof regardless of whether the Options or Convertible Securities are actually
exercisable at such time, but excluding any shares of Common Stock owned or
held by or for the account of the Company or issuable upon conversion and
exercise, as applicable, of the Warrants; (B) “Convertible Securities” means any stock or securities (other
than Options) directly or indirectly convertible into or exercisable or
exchangeable for shares of Common Stock; and (C) “Options” means any rights, warrants or options to subscribe
for or purchase shares of Common Stock or Convertible Securities.

(f)            Number of Warrant Shares.  Simultaneously with any adjustment to the
Exercise Price pursuant to paragraph (a) of this Section, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased
or decreased proportionately, as applicable, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased or decreased, as
applicable, number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.

(g)           Calculations. 
All calculations under this Section 9 shall be made to the
nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.

(h)           Notice of Adjustments.  Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment, including a statement of
the adjusted Exercise Price and adjusted number or type of Warrant Shares or
other securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and showing in
detail the facts upon which such adjustment is based.  Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company’s transfer agent.

(i)            Notice of Corporate Events.  If the Company (i) declares a dividend or any
other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants
to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental Transaction
or (iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Company, then the Company shall deliver to the Holder a notice
describing the material terms and conditions of such transaction, at least ten
calendar days prior to the applicable record or effective date on which a
Person would need to hold Common Stock in order to participate in or vote with
respect to such transaction, and the Company will take all steps reasonably
necessary in order to insure that the Holder is given the practical opportunity
to exercise this Warrant prior to such time so as to participate in or vote
with respect to such transaction; provided, however, that the failure to
deliver such notice or any defect therein shall not affect the validity of the
corporate action required to be described in such notice.

10.           Payment of
Exercise Price.  The Holder shall pay
the Exercise Price in immediately available funds.

 10
 

11.           Fractional Shares.  The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this
Warrant.  If any fraction of a Warrant
Share would, except for the provisions of this Section, be issuable upon
exercise of this Warrant, the number of Warrant Shares to be issued will be
rounded up to the nearest whole share.

12.           Notices.  Any and all notices or other communications
or deliveries hereunder (including without limitation any Exercise Notice)
shall be in writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in the Purchase Agreement prior to
5:00 p.m. (New York City time) on a business day, (ii) the next business day
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in the Purchase Agreement on a day
that is not a business day or later than 5:00 p.m. (New York City time) on any
business day, or (iii) the business day following the date of mailing, if sent
by an internationally recognized overnight courier service.

13.           Warrant Agent.  The Company shall serve as warrant agent
under this Warrant.  Upon 30 days’ notice
to the Holder, the Company may appoint a new warrant agent.  Any corporation into which the Company or any
new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or stockholders services business
shall be a successor warrant agent under this Warrant without any further
act.  Any such successor warrant agent
shall promptly cause notice of its succession as warrant agent to be mailed (by
first class mail, postage prepaid) to the Holder at the Holder’s last address
as shown on the Warrant Register.

14.           Registration of
Warrant Shares.  The Holder is
entitled to the benefits of the Purchase Agreement with respect to the
registration of the Warrant Shares under the Securities Act.

15.           Miscellaneous.

(a)           Subject to the restrictions on transfer set forth on the
first page hereof, this Warrant may be assigned by the Holder.  This Warrant may not be assigned by the
Company, except to a successor in the event of a Fundamental Transaction.  This Warrant shall be binding on and inure to
the benefit of the parties hereto and their respective successors and
assigns.  Subject to the preceding
sentence, nothing in this Warrant shall be construed to give to any Person
other than the Company and the Holder any legal or equitable right, remedy or
cause of action under this Warrant.

(b)           The Company will not, by amendment of the Company
Organizational Documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, seek to call or redeem this Warrant or avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder against dilution or other impairment.  Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any Warrant
Shares above the amount payable therefor on such

 11
 

exercise, (ii) will take all such action as
may be reasonably necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable Warrant Shares, free
from all taxes, liens, security interests, encumbrances, preemptive or similar
rights and charges of stockholders, on the exercise of the Warrant, and (iii)
will not close its stockholder books or records in any manner which interferes
with the timely exercise of this Warrant.

(c)           Remedies; Specific Performance.  The Company acknowledges and agrees that
there would be no adequate remedy at law to the Holder of this Warrant in the
event of any default or threatened default by the Company in the performance of
or compliance with any of the terms of this Warrant and accordingly, the
Company agrees that, in addition to any other remedy to which the Holder may be
entitled at law or in equity, the Holder shall be entitled to seek to compel
specific performance of the obligations of the Company under this Warrant,
without the posting of any bond, in accordance with the terms and conditions of
this Warrant in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Warrant, the Company shall not raise the defense that
there is an adequate remedy at law. 
Except as otherwise provided by law, a delay or omission by the Holder
hereof in exercising any right or remedy accruing upon any such breach shall
not impair the right or remedy or constitute a waiver of or acquiescence in any
such breach.  No remedy shall be
exclusive of any other remedy.  All
available remedies shall be cumulative.

(d)           Amendments and Waivers.  The Company may, without the consent of the
Holder, by supplemental agreement or otherwise, (i) make any changes or
corrections in this Agreement that are required to cure any ambiguity or to
correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein or (ii) add to the covenants and
agreements of the Company for the benefit of the Holder (including, without
limitation, reduce the Exercise Price or extend the Expiration Date), or surrender
any rights or power reserved to or conferred upon the Company in this
Agreement; provided that, in the case of (i) or (ii), such changes or
corrections shall not adversely affect the interests of the Holder in any
material respect.  This Warrant may also
be amended or waived with the consent of the Company and the Holder.  If a new Warrant Agent is appointed by the
Company, it shall at the request of the Company, and without need of
independent inquiry as to whether such supplemental agreement is permitted by
the terms of this Section 15(d), join with the Company in the execution
and delivery of any such supplemental agreements, but shall not be required to
join in such execution and delivery for such supplemental agreement to become
effective.

(e)           GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.  THE CORPORATE LAWS OF THE STATE OF MINNESOTA
SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS.  ALL QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF MINNESOTA.  THE COMPANY AND
THE HOLDER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE FEDERAL COURTS
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA IN THE STATE
OF MINNESOTA OR, IF SUCH FEDERAL COURTS ARE UNAVAILABLE TO THE PARTIES, THE
COURTS OF THE STATE OF MINNESOTA IN RAMSEY COUNTY,

 12
 

MINNESOTA IN RESPECT OF THE INTERPRETATION
AND ENFORCEMENT OF THE PROVISIONS OF THIS WARRANT. THE COMPANY AND HOLDER
HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

(f)            The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect
any of the provisions hereof.

(g)           In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE
FOLLOWS]

 13

IN WITNESS WHEREOF, the Company has caused this
Warrant to be duly executed by its authorized officer as of the date first
indicated above.

	
   

  
	
   

  	
  BALLISTIC RECOVERY
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

FORM OF
EXERCISE NOTICE

(To be executed by the Holder to exercise the right to
purchase shares of Common Stock under the foregoing Warrant)

To:  Ballistic Recovery Systems, Inc.

The undersigned is the Holder of the Warrant issued on
June [     ], 2007 (the “Warrant”) by Ballistic Recovery Systems, Inc., a
Minnesota corporation (the “Company”). 
Capitalized terms used herein and not otherwise defined have the
respective meanings set forth in the Warrant.

	
   

  	
  (a)

  	
  The Warrant is currently exercisable to purchase a
  total of               
  Warrant Shares.

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  The undersigned Holder hereby exercises its right to
  purchase              
  Warrant Shares pursuant to the Warrant.

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  As payment of the Exercise Price, the holder shall
  pay the sum of $             to the Company in accordance with the terms of the Warrant.

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Pursuant to this exercise, the Company shall deliver
  to the holder              
  Warrant Shares in accordance with the terms of the Warrant.

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Following this exercise, the Warrant shall be exercisable
  to purchase a total of              
  Warrant Shares.

  

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
  Name of Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform in all respects to name of 

  holder as specified on the face of the Warrant)

  
												

 

FORM OF
ASSIGNMENT

[To be completed
and signed only upon transfer of Warrant]

FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers unto                               
the right represented by the within Warrant to purchase              
shares of Common Stock of Ballistic
Recovery Systems, Inc. to which the within Warrant relates and appoints
                    
attorney to transfer said right on the books of Ballistic Recovery Systems, Inc. with full power of substitution
in the premises.

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform in all respects to name of
  holder 

  as specified on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address of Transferee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  In the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

MIA 179642458v4Exhibit
10.1

EXECUTION VERSION

SECURITIES
PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”)
is made as of the 22nd day of June, 2007, by and between Ballistic
Recovery Systems, Inc., a Minnesota corporation (the “Company”), and
CIMSA Ingenieria de Sistemas, S.A., a 

corporation organized under the laws of Spain (“CIMSA”).

For and in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:

1.                                       Purchase
and Sale of Securities.

1.1                                 Sale
and Issuance of Securities.

Subject to the terms and conditions of this Agreement,
CIMSA agrees to purchase at the Closing (as defined below), and the Company
agrees to sell and issue to CIMSA at the Closing, 1,102,941 shares of common
stock, par value $0.01 per share, of the Company (“Common Shares”) for
an aggregate purchase price of US $1,500,000.00 (such number of Common Shares
being referred to as the “Purchased Shares”), together with a common
stock purchase warrant, in the form of Exhibit A attached hereto (the “Warrant”),
to purchase up to 275,735 Common Shares (as such number of Common Shares as may
be adjusted from time to time in accordance with the terms of the Warrant, the “Warrant
Shares”), exercisable for a period of three-years following the date of
issuance, at an exercise price of US $2.00 per Common Share.  The Purchased Shares, the Warrant and the
Warrant Shares are collectively referred to herein as the “Purchased
Securities”.

1.2                                 Closing.

(a)                                  Closing. The
closing (the “Closing”) of the purchase and sale of the Purchased
Securities shall take place on June 22, 2007 or at such other time as shall be
mutually agreed upon between CIMSA and the Company (the actual date on which
the Closing occurs being referred to as the “Closing Date”).

(b)                                 Closing
Deliverables.

(i) At the Closing, the Company shall deliver or cause to be delivered
to CIMSA (or its designee) the following:

(a)                                  a
stock certificate evidencing the Purchased Shares registered in the name of
CIMSA (which shall be delivered to CIMSA in care of its legal counsel named in
Section 16.8 below);

(b)                                 the
Warrant registered in the name of CIMSA duly executed by the Company (which
shall be delivered to CIMSA in care of its legal counsel named in Section 16.8
below);

(c)                                  a
certificate of the Company signed by the Chief Executive Officer of the Company
that (x) each of the representations and warranties of the Company contained in
this Agreement that is qualified as to Material Adverse Effect shall be true
and correct, and each of the representations and warranties of the Company
contained in this Agreement that is not so qualified shall be true and correct
in all material respects, in each case as of the date when made and as of the
Closing Date as though made on and as of such date and (y) the Company has
performed or satisfied and complied in all material respects with all
covenants, agreements and conditions required hereby to be performed, satisfied
or complied with by it at or prior to the Closing;

(d)                                 copies
of each of the following, in each case, certified to be in full force and
effect on the Closing Date by the Secretary of the Company:

(1)                                  the
Articles of Incorporation of the Company;

(2)                                  a
good standing certificate with respect to the Company certified by the
Secretary of State of the State of Minnesota as of a date not more than five
(5) days prior to the Closing Date;

(3)                                  the
By-Laws of the Company; and

(4)                                  resolutions
of the Board of Directors of the Company authorizing the execution, delivery
and performance of this Agreement and the other Transaction Documents (as
defined in Section 2.3 below), the issuance and sale of the Purchase
Securities, and the reservation of the Warrant Shares issuable upon the
exercise of the Warrant.

(ii)                                  At
the Closing, CIMSA shall deliver or cause to be delivered to the Company:

(a)                                  the
sum of One Million Five Hundred Thousand and NO/100ths Dollars
(US$1,500,000.00) in United States dollars and in immediately available funds
by wire transfer to an account designated in writing to CIMSA by the Company
for such purpose;

(b)                                 a
certificate of the CIMSA signed by the President of CIMSA that (a) the
representations and warranties of CIMSA contained herein are true and correct
in all material respects as of the date when made and as of the Closing as
though made on and as of such date and (b) CIMSA has performed or satisfied and
complied in all material respects with all covenants, agreements and conditions
required hereby to be performed, satisfied or complied with by it at or prior
to the Closing; and

(c)                                  copies
of the resolutions of the Board of Directors of CIMSA authorizing the
execution, delivery and performance of this 

 2
 

Agreement and
the other Transaction Documents by CIMSA, certified to be in full force and
effect on the Closing Date by the Secretary of CIMSA.

2.                                       Representations
and Warranties of the Company.  The
Company hereby represents and warrants to CIMSA (which representations and
warranties shall be deemed to apply where appropriate to each direct or direct
consolidated subsidiary of the Company (each a “Subsidiary”)) that:

2.1                                 Subsidiaries.  Except as disclosed in the SEC Reports (as
defined in Section 2.7  below), the
Company owns, directly or indirectly, all of the capital stock or comparable
equity interests of each Subsidiary free and clear of any lien, charge, claim,
security interest, encumbrance, right of first refusal or other restriction
(collectively, “Liens”) and all the issued and outstanding shares of
capital stock or comparable equity interest of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights.

2.2                                 Organization
and Qualification. Each of the Company and the Subsidiaries is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite legal authority to own and use its properties and assets and to carry
on its business as currently conducted. 
Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws
or other organizational or charter documents, except where any such violation
would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect (as defined below).  Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.  
For purposes of this Agreement, the term “Material Adverse Effect”
means (i) a material adverse effect on the results of operations, assets,
business or financial condition of the Company and the Subsidiaries, taken as a
whole on a consolidated basis, or (ii) an event or occurrence that
materially and adversely impairs the Company’s ability to perform its
obligations under this Agreement and/or the Warrant, provided, that none of the
following alone shall be deemed, in and of itself, to constitute a Material
Adverse Effect:  (x) a change in the
market price or trading volume of the Common Shares or (y) changes in general
economic conditions or changes affecting the industry in which the Company
operates generally (as opposed to Company-specific changes).

2.3                                 Authorization;
Enforcement.  The Company has the
requisite corporate authority to enter into and to consummate the transactions
contemplated by each of this Agreement, the Warrant and the Subsequent
Agreements (as defined in Section 13 below) (together with this Agreement and
the Warrant, the “Transaction Documents”) otherwise to carry out its
obligations hereunder and thereunder. 
The execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly 

 3
 

authorized by all necessary action on the
part of the Company and no further consent or action is required by the
Company, its Board of Directors or its stockholders. Each of the Transaction
Documents has been, or upon delivery will be, duly executed by the Company and
is, or when delivered in accordance with the terms hereof, will constitute, the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors rights generally, and
(ii) the effect of rules of law governing the availability of specific performance
and other equitable remedies.

2.4                                 No
Conflicts.  The execution, delivery
and performance of this Agreement and the other Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby do not, and will not, (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound, or
affected, except to the extent that such conflict, default, termination,
amendment, acceleration or cancellation right would not reasonably be expected
to have a Material Adverse Effect, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary is
subject (including, assuming the accuracy of the representations and warranties
of CIMSA set forth in Section 3.2 hereof, federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected, except to the extent that such violation would not
reasonably be expected to have a Material Adverse Effect.  The Company has provided CIMSA with true and
complete copies of the Company’s Articles of Incorporation and By-Laws as in
effect as of the date hereof (collectively, the “Company Organizational
Documents”).

2.5                                 The
Purchased Securities.  The Purchased
Securities are duly authorized and, when issued and paid for in accordance with
this Agreement and the Warrant, as applicable, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens except for
restrictions on transfer imposed by applicable federal and state securities
laws, and will not be subject to preemptive or similar rights of
stockholders.  The Company has reserved
from its duly authorized capital stock the maximum number of Common Shares
issuable upon exercise of the Warrant. 
The offer, issuance and sale to CIMSA of the Purchased Securities are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”).

2.6                                 Capitalization.   The aggregate number of shares and type of
all authorized, issued and outstanding classes of capital stock, options and
other Securities of the Company (whether or not presently convertible into or
exercisable or exchangeable 

 4
 

for shares of capital stock of the Company)
as of May 31, 2007 is set forth in Schedule 2.6 hereto.  All outstanding shares of capital stock are
duly authorized, validly issued, fully paid and nonassessable and have been
issued in compliance in all material respects with all applicable securities
laws.  Except as disclosed in Schedule 2.6
hereto, the Company did not have outstanding at May 31, 2007 any other options,
warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or entered into any agreement giving any
person or entity any right to subscribe for or acquire, any Common Shares, or
securities or rights convertible or exchangeable into Common Shares.  Except as set forth on Schedule 2.6
hereto, and except for customary adjustments as a result of stock dividends,
stock splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) and the issuance and sale
of the Purchased Securities will not obligate the Company to issue Common
Shares or other securities to any Person (as defined below) and will not result
in a right of any holder of securities to adjust the exercise, conversion,
exchange or reset price under such securities. 
To the knowledge of the Company, except as disclosed in the SEC Reports
and any Schedules filed with the SEC pursuant to Rule 13d-1 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) by reporting
persons or in Schedule 2.6 hereto, no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange
Act), or has the right to acquire, by agreement with or by obligation binding
upon the Company, beneficial ownership of in excess of 5% of the outstanding
Common Shares.  For purposes of this
Agreement, the term “Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company or other legal entity.

2.7                                 SEC
Reports; Financial Statements. The Company has filed all reports required
to be filed by it under the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the 12 months preceding the date hereof on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension and
has filed all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof.  Such reports
required to be filed by the Company under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, together with any materials filed or
furnished by the Company under the Exchange Act, whether or not any such
reports were required being collectively referred to herein as the “SEC
Reports” and, together with this Agreement and the Schedules to this Agreement,
the “Disclosure Materials”.  As of
their respective dates, the SEC Reports filed by the Company complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, and none
of the SEC Reports, when filed by the Company, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.  The financial statements of the Company
included in the SEC Reports comply in all material respects 

 5
 

with applicable accounting requirements and
the rules and regulations of the SEC with respect thereto as in effect at the
time of filing.  Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such
financial statements, the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP or may be condensed
or summary statements, and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments.  All material agreements to which the Company
or any Subsidiary is a party or to which the property or assets of the Company
or any Subsidiary are subject are included as part of or identified in the SEC
Reports, to the extent such agreements are required to be included or
identified pursuant to the rules and regulations of the SEC.

Since the date
of the latest audited financial statements included within the SEC Reports,
except as disclosed in the SEC Reports or in Schedule 2.7 hereto,
(i) there has been no event, occurrence or development that, individually
or in the aggregate, has had or that would result in a Material Adverse Effect,
(ii) the Company has not incurred any material liabilities other than
(A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to
be reflected in the Company’s financial statements pursuant to GAAP or required
to be disclosed in filings made with the SEC, (iii) the Company has not altered
its method of accounting or changed its auditors, except as disclosed in its
SEC Reports, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders, in their capacities
as such, or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock (except for repurchases by the Company of
shares of capital stock held by employees, officers, directors, or consultants
pursuant to an option of the Company to repurchase such shares upon the
termination of employment or services), (v) the Company has not issued
options, warrants, convertible securities or other types of securities or
rights convertible into Common Shares to any officer, director or Affiliate (as
defined below), except pursuant to existing Company stock-based plans, and (vi)
other than in the ordinary course of business, the Company has not sold,
leased, licensed, transferred or assigned any of its assets.  The Company has not taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. 
The Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the applicable Closing, will not
be Insolvent (as defined below).  For
purposes of this Agreement, the term “Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144 promulgated under the Securities Act. For
purposes of this Agreement, the term “Insolvent” means (i) the present
fair saleable value of the Company’s assets is less than the amount required to
pay the Company’s total Indebtedness (as defined in Section 2.23 below), (ii)
the Company is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts 

 6
 

and liabilities become absolute and matured,
or (iii) the Company intends to incur or believes that it will incur debts that
would be beyond its ability to pay as such debts mature.

2.8                                 Absence
of Litigation.  Except as disclosed
in the SEC Reports, there is no action, suit, claim, or proceeding, or, to the
Company’s knowledge, inquiry or investigation, before or by any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries that could, individually or in the aggregate, have a
Material Adverse Effect.

2.9                                 Compliance.
Except as described in Schedule 2.9 hereto, neither the Company nor any
Subsidiary, except in each case as would not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect,
(i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in
a default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received written notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute,
rule or regulation of any governmental authority.

2.10                           Title
to Assets.  The Company and the
Subsidiaries have good and marketable title to all real property owned and used
in the conduct of their business as it is presently conducted, and the Company
and the Subsidiaries and good and marketable title in all personal property
owned and used in the conduct of their business as it is presently conducted,
in each case, other than the security interest described in Schedule 2.10
hereto, free and clear of all Liens, except for Liens that do not,
individually or in the aggregate, have or result in a Material Adverse
Effect.  Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in material compliance.

2.11                           No
General Solicitation; No Agents. 
Neither the Company, nor any of its Affiliates, nor any Person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D promulgated under the
Securities Act) in connection with the offer or sale of the Purchased Securities.  The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commission relating to or arising out of the issuance of the Purchased
Securities pursuant to this Agreement. 
The Company shall pay, and hold CIMSA harmless against, any liability,
loss or expense (including, without limitation, reasonable attorney’s fees and
out-of-pocket expenses) arising in connection with any such claim for fees
arising out of the issuance of the Purchased Securities pursuant to this
Agreement.  The Company has not engaged
any advisor, finder or other agent in connection with the sale of the Purchased
Securities.

 7
 

2.12                           Private
Placement.  Neither the Company nor,
to the best of the Company’s knowledge, any of its Affiliates nor, any Person
acting on the Company’s behalf has, directly or indirectly, at any time within
the past six months, made any offer or sale of any security or solicitation of
any offer to buy any security under circumstances that would (i) eliminate
the availability of the exemption from registration under Regulation D
under the Securities Act in connection with the offer and sale by the Company
of the Purchased Securities as contemplated hereby or (ii) cause the
offering of the Purchased Securities pursuant to this Agreement to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions.

2.13                           Registration
Rights.  Except as described in Schedule
2.13 hereto, the Company has not granted or agreed to grant to any Person
any rights (including “piggy-back” registration rights) to have any securities
of the Company registered with the SEC or any other governmental authority that
have not been satisfied or waived.

2.14                           Application
of Takeover Protections.  There is no
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s charter documents or the laws of its state of incorporation
that is or could become applicable to CIMSA as a result of CIMSA and the
Company fulfilling their obligations or exercising their rights under any of
the Transaction Documents, including, without limitation, as a result of the
Company’s issuance of the Purchased Securities and CIMSA’s ownership of the
Purchased Securities.

2.15                           Disclosure.  All disclosure provided by or on behalf of
the Company to CIMSA (including its representatives and professional advisors)
regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement furnished by or on the behalf of the
Company, are true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.  To the Company’s knowledge, except for the
transactions contemplated by this Agreement, no event or circumstance has
occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, operations or financial
conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.

2.16                           Patents
and Trademarks.  The Company and its
Subsidiaries own all right, title and interest in and to, or possess adequate
rights or licenses to use, all registered and unregistered trademarks, trade
names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, applications for registrations of copyrights and
trademarks (“Intellectual Property Rights”) reasonably necessary to
conduct their respective businesses as now conducted.  Except as set forth in Schedule 2.16
hereto, none of the Company’s Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate, within three years from the
date of this 

 8
 

Agreement. 
The Company does not have any knowledge of any infringement on or
misappropriation by the Company or its Subsidiaries of Intellectual Property
Rights of others or the infringement on or misappropriation by others of the
Intellectual Property Rights of the Company. 
Except as disclosed in the SEC Reports, there is no claim, action or
proceeding being made or brought, or to the knowledge of the Company, being
threatened, against the Company or its Subsidiaries regarding its Intellectual
Property Rights. Except for anti-pirating and confidentiality obligations of
certain employees to their former employers pre-dating their commencement of
employment by the Company or any of its Subsidiaries, no employee of the
Company or any of its Subsidiaries is obligated under any contract (including
licenses, covenants or legal commitments or any nature) or any agreement, or
subject to any judgment, decree or order of any court or administrative agency,
that would interfere with the use of his or her best efforts to promote the
interests of the Company or any of its Subsidiaries in the operation of the
Company’s business as conducted on the date hereof or that would conflict with
the operation of the Company’s business as conducted on the date hereof. Title
and ownership of any and all rights with respect to any inventions of the
Company’s and its Subsidiaries’ employees during employment vests in the
Company or its Subsidiaries, as applicable, (except to the extent that
applicable local law provides otherwise). All inventors named in patent
applications or in issued patents have entered into agreements with the Company
or a Subsidiary, as applicable, assigning the Company or any such Subsidiary,
as applicable, all of the inventors’ right, title and interest in and to such
patent application(s) and patents describing and claiming their
inventions(s).  All Persons involved in
the conception, making, development and work related to the Company’s
Intellectual Property Rights have entered into agreements with the Company or a
Subsidiary, as applicable, assigning to the Company or any such Subsidiary, to
the extent deemed necessary or appropriate by the Company, all of such Persons’
right, title and interest in and to the Company’s Intellectual Property Rights.
All licenses or other material rights or permission to use any third party
intellectual property used by the Company or any Subsidiary in the operation of
the business have been obtained by the Company or any such Subsidiary, as
applicable, and all license fees, royalties and any other amounts (if any) due
and payable under such license agreements have been paid.

2.17                           Insurance.  The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as indicated in Schedule 2.17 hereto.

2.18                           Regulatory
Permits.  The Company and the
Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary
to conduct their respective businesses as described in the SEC Reports (“Material
Permits”), except where the
failure to possess such permits does not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, and neither
the Company nor any Subsidiary has received any written notice of proceedings
relating to the revocation or modification of any Material Permit.

2.19                           Transactions
With Affiliates and Employees. 
Except as set forth or incorporated by reference in the Company’s SEC
Reports, none of the officers, 

 9
 

directors or employees of the Company is
presently a party to any transaction that would be required to be reported on
Form 10-KSB with the Company or any of its Subsidiaries (other than for
ordinary course services as employees, officers or directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any such officer, director or
employee or, to the Company’s knowledge, any corporation, partnership, trust or
other entity in which any such officer, director, or employee has a substantial
interest or is an officer, director, trustee or partner.

2.20                           Internal
Accounting Controls.  The Company and
the Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

2.21                           Sarbanes-Oxley
Act. The Company is in compliance in all material respects with
applicable  requirements of the
Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated by
the Securities and Exchange Commission (“SEC”) thereunder, except where
such noncompliance would not have, individually or in the aggregate, a Material
Adverse Effect.

2.22                           Foreign
Corrupt Practices.  Neither the
Company nor any of its Subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or other Person acting on behalf of the
Company or any of its Subsidiaries has, in the course of its actions for, or on
behalf of, the Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

2.23                           Indebtedness.  Except as disclosed in Schedule 2.23
hereto or the SEC Reports, neither the Company nor any of its Subsidiaries
(i) has any outstanding Indebtedness (as defined below), (ii) is in violation
of any term of or in default under any contract, agreement or instrument
relating to any Indebtedness, except where such violations and defaults would
not result, individually or in the aggregate, in a Material Adverse Effect, or
(iii) is a party to any contract, agreement or instrument relating to any
Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect.  Schedule 2.23 hereto provides a
detailed description of the material terms of any such outstanding
Indebtedness.  For purposes of this
Agreement:  (x) “Indebtedness” of
any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, 

 10
 

undertaken or assumed as the deferred
purchase price of property or services (other than trade payables entered into
in the ordinary course of business), (C) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any
property or assets acquired with the proceeds of such indebtedness (even though
the rights and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of such indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; and (y) “Contingent Obligation” means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
of such liability will be protected (in whole or in part) against loss with
respect thereto.

2.24                           Employee
Relations.  Neither Company nor any
of its Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union.  The
Company believes that its relations with its employees are as disclosed in the
SEC Reports.  Except as disclosed in the
SEC Reports, during the period covered by the SEC Reports, no executive officer
of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the Securities
Act) has notified the Company or any such Subsidiary that such officer intends
to leave the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. To the knowledge of the
Company or any such Subsidiary, no executive officer of the Company or any of
its Subsidiaries is in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any such Subsidiary to any liability
with respect to any of the foregoing matters.

2.25                           Labor
Matters.  The Company and its Subsidiaries are in compliance in
all material respects with all federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure to
be in 

 11
 

compliance would not, either individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect

2.26                           Environmental
Laws.  The Company and its
Subsidiaries (i) have complied and are in compliance in all material respects
with any and all Environmental Laws (as defined below), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in compliance
in all material respects with all terms and conditions of any such permit,
license or approval where, in each of the foregoing clauses (i), (ii) and
(iii), the failure to so comply would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.  The Company has not received any written
notice, report or other information regarding any actual or alleged violation
of Environmental Laws, or any liabilities or potential liabilities, including
any investigatory, remedial or corrective obligations, relating to any of them
or its facilities. To its knowledge, the Company has not treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled,
or released any substance, including any hazardous substance,  or owned or operated any property or facility
in a manner that has given rise or would give rise to any liabilities pursuant
to any Environmental Laws. No aboveground or underground storage tanks are
currently or have been located at any real property now or previously owned,
leased or otherwise used by the Company, and to the Company’s knowledge, no
real property owned, leased or otherwise used by the Company has been at any
time as a gasoline service station or any other facility for storing, pumping,
dispensing, or producing gasoline or other petroleum products or waste. For
purposes of this Agreement, the term “Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.

2.27                           Subsidiary
Rights.  The Company or one of its
Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all
capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.

2.28                           Tax
Status.  The Company and each of its
Subsidiaries (i) has made or filed all foreign, federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns, 

 12
 

reports or declarations apply.  There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.

2.29                           Employee
Benefits. The Company’s SEC Reports contain a true and correct copy of each
equity compensation plan of the Company. The Company maintains standard and
customary severance or termination pay, medical, life or other insurance, a
401(k) pension plan, sponsored, maintained, or contributed to or required to be
contributed to by the Company or by an trade or business, whether or not
incorporated (an “ERISA Affiliate”), that together with the Company
would be deemed a “single employer” within the meaning of Section 4001(b)(1) of
the ERISA, for the benefit of any employee or former employee of the Company
(the “Benefit Plans”). Each of the Benefit Plans has been and is
operated and administered in accordance with its terms and in material
compliance with applicable requirements of the Code, ERISA, and other
applicable legal requirements and may, in accordance with its terms, be amended
or terminated at any time. Neither the Company nor any ERISA Affiliate contributes,
is obligated to contribute, or has ever been obligated to contribute to a
Multiemployer Plans, as such term is defined in ERISA. No Benefit Plan is (i) a
“defined benefit plan” (within the meaning of Section 3(35) of ERISA) or (ii)
subject to the minimum funding requirements of Section 412 of the Code or Part
3 of Title I of ERISA. Other than claims in the ordinary course for benefits
with respect to the Benefit Plans, there are no pending, anticipate, or to the
Company’s knowledge, threatened claims by or on behalf of any employee or
beneficiary covered under any Benefit Plan with respect to such Benefit Plan
and there are no proceedings by a governmental entity, pending or, to the
Company’s knowledge, threatened with respect to any Benefit Plan, or to the
Company’s knowledge, any circumstances which might give rise to any liability
of the Company under any such proceeding.

3.                                       Representations
and Warranties of CIMSA. CIMSA hereby represents and warrants to the
Company that:

3.1                                 Organization;
Authority. CIMSA is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with the
requisite corporate and authority to enter into and to consummate the
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party and otherwise to carry out its obligations hereunder and
thereunder.  The purchase by CIMSA of the
Purchased Securities hereunder has been duly authorized by all necessary action
on the part of CIMSA.  Each of this
Agreement and the Transaction Documents to which CIMSA is a party has been, or
upon delivery will  be, duly executed and
delivered by CIMSA and is, or when delivered in accordance with the terms
thereof will constitute, the valid and binding obligation of CIMSA, enforceable
against it in accordance with its terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the enforcement of creditors rights
generally, and (ii) the effect of rules of law governing the availability
of specific performance and other equitable remedies.

 13

3.2                                 No Public Sale or Distribution. CIMSA is (i) acquiring the Common
Shares and the Warrant, and (ii) upon exercise of the Warrant will acquire
the Warrant Shares issuable upon exercise thereof, in the ordinary course of
business for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws, and CIMSA does not have a present arrangement to effect any distribution
of the Purchased Securities to or through any Person.

3.3                                 Investor Status.  At
the time CIMSA was offered the Purchased Securities, it was, and at the date
hereof it is, an “accredited investor” as defined in Rule 501(a) under the
Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act.  CIMSA is not a
registered broker dealer registered under Section 15(a) of the Exchange Act, or
a member of the NASD, Inc. or an entity engaged in the business of being a
broker dealer.  CIMSA is not affiliated
with any broker dealer registered under Section 15(a) of the Exchange Act, or a
member of the NASD, Inc. or an entity engaged in the business of being a broker
dealer.

3.4                                 Experience of CIMSA. 
CIMSA, either alone or together with its representatives has such
knowledge, sophistication and experience in business and financial matters so
as to be capable of evaluating the merits and risks of the prospective
investment in the Purchased Securities, and has so evaluated the merits and
risks of such investment.  CIMSA
understands that it must bear the economic risk of this investment in the
Purchased Securities indefinitely, and is able to bear such risk and is able to
afford a complete loss of such investment.

3.5                                 Access to Information. 
CIMSA acknowledges that it has reviewed the Disclosure Materials and has
been afforded:  (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Purchased Securities and the merits and risks of investing in
the Purchased Securities; (ii) access to information about the Company and
the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. 
Neither such inquiries nor any other investigation conducted by or on
behalf of CIMSA or its representatives or counsel shall modify, amend or affect
CIMSA’s right to rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company’s representations and warranties contained in the
Transaction Documents.  CIMSA acknowledges
that it has been afforded full and complete access to copies of the SEC
Reports.

3.6                                 No Governmental Review. 
CIMSA understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any recommendation
or endorsement of the Purchased Securities or

 14
 

the
fairness or suitability of the investment in the Purchased Securities nor have
such authorities passed upon or endorsed the merits of the offering of the
Purchased Securities.

3.7                                 No Conflicts.  The
execution, delivery and performance by CIMSA of this Agreement and the other
Transaction Documents to which CIMAS is a party and the consummation by CIMSA
of the transactions contemplated hereby and thereby will not (i) result in
a violation of the organizational documents of CIMSA or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which CIMSA is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to CIMSA, except in the case of
clauses (ii) and (iii) above, for such that are not material and do not
otherwise affect the ability of CIMSA to consummate the transactions
contemplated hereby or perform its obligations under the Subsequent Documents.

3.8                                 Restricted Securities.                                CIMSA understands that the Purchased
Securities are characterized as “restricted securities” under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances

3.9                                 Finders’ Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of CIMSA who might be entitled to any fee or commission from the
Company or CIMSA upon consummation of the transactions contemplated by this
Agreement and the other Transaction Documents.

3.10                           Legends. It is understood that the certificates evidencing the Common Shares
and the Warrant will bear the following legends:

(a)                                  THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT TO THE SECURITIES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE
EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH APPLICABLE
STATE SECURITIES LAWS, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER
SUCH ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

(b)                                 Any legend required by the Blue Sky laws of any
state.

 15
 

The legend
referred to in clause (a) above shall be removed by the Company from any
certificate at such time as the holder of the securities represented by the
certificate delivers an opinion of counsel reasonably satisfactory to the
Company to the effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act, or at such time as the
holder of such shares satisfies the requirements of Rule 144(k) or such other
substantially similar rule promulgated under the Securities Act then in effect
under the Securities Act; provided, that the Company has received from the
holder a written representation that (i) such holder is not an affiliate of the
Company and has not been an affiliate during the preceding three (3) months,
(ii) such holder has beneficially owned the shares represented by the
certificate for a period of at least two (2) years (or the period of time then
required by Rule 144(k) or such other substantially similar rule promulgated
under the Securities Act then in effect), and (iii) such holder otherwise
satisfies the requirements of Rule 144(k) as then in effect with respect to
such shares.

4.                                       Conditions
of CIMSA’s Obligations at Closing. The obligation of CIMSA to acquire the
Purchased Securities at the Closing is subject to the satisfaction or waiver by
CIMSA, at or before the Closing, of each of the following conditions:

4.1                                 Representations and Warranties. Each of the representations and warranties
of the Company contained in this Agreement that is qualified as to Material
Adverse Effect shall be true and correct, and each of the representations and
warranties of the Company contained in this Agreement that is not so qualified
shall be true and correct in all material respects, in each case as of the date
when made and as of the Closing Date as though made on and as of such date.

4.2                                 Performance. The Company shall have performed, satisfied and complied in all
material respects with all agreements, obligations, and conditions contained in
this Agreement and the other Transaction Documents that are required to be
performed, satisfied or complied with by it on or before the Closing.

4.3                                 Deliverables. The Company shall have delivered or caused
to be delivered to CIMSA the Closing deliverables specified in Section
1.2(b)(i) hereof.

5.                                       Conditions
of the Company’s Obligations at Closing. The obligations of the Company to
sell the Purchased Securities at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the following
conditions:

5.1                                 Representations and Warranties. The representations and warranties of CIMSA
contained in this Agreement shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made on and as of
such date.

5.2                                 Performance.   CIMSA shall have performed,
satisfied and complied in all material respects with all agreements,
obligations, and conditions contained in this Agreement and the other
Transaction Documents to which it is a party

 16
 

that
are required to be performed, satisfied or complied with by it on or before the
Closing.

5.3                                 Deliverables. 
CIMSA shall have delivered or caused to be delivered to the Company the
Closing deliveries specified in Section 1.2(b)(ii) hereof.

6.                                       Use
of Proceeds. The Company will use the net proceeds from the sale of the
Purchased Securities (w) to expand the Company’s United States based
manufacturing capabilities, (x) to invest in appropriate tooling, for product
development, (y) to prepay in full the currently outstanding secured promissory
note in favor of Parsons reported in the SEC Reports and (z) for general
working capital purposes, including the Company exerting best efforts to obtain
products liability insurance for the Company’s general aviation products (other
than those for Cirrus Design Corporation).

7.                                       Reservation
of Securities.  The Company shall
maintain a reserve from its duly authorized Common Shares for issuance pursuant
to the Transaction Documents in such amount as may be required to fulfill its
obligations to issue such Common Shares under the Transaction Documents.  In the event that at any time the then
authorized Common Shares are insufficient for the Company to satisfy its
obligations to issue such Common Shares under the Transaction Documents, the
Company shall promptly take such actions as may be required to increase the
number of authorized shares.

8.                                       Furnishing
of Information.  Until the date that
CIMSA may sell all of the Purchased Securities under Rule 144(k) of the
Securities Act (or any successor provision), the Company covenants to use its
best efforts to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act.

9.                                       Integration.  The Company shall not, and shall use its best
efforts to ensure that no Affiliate thereof shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with
the offer or sale of the Purchased Securities in a manner that would require
the registration under the Securities Act of the sale of the Purchased
Securities to CIMSA.

10.                                 Securities
Laws Disclosure; Publicity.  The
Company shall within two (2) business days following the date of this
Agreement, issue a press release reasonably acceptable to CIMSA disclosing the
transactions contemplated hereby.  Within
four (4) business days following the date of this Agreement, the Company shall
file a Current Report on Form 8-K with the SEC describing the terms of the
transactions contemplated by this Agreement. Thereafter, the Company shall
timely file or furnish any filings and notices required by the SEC or applicable
law with respect to the transactions contemplated by the Transaction
Documents.  The Company shall make a
confidential treatment request to the SEC in connection with the Subsequent
Agreements (other than the Consulting Agreement), and in any event timely file
copies of the Transaction Documents as required by applicable SEC rules and
regulations.

 17
 

11.                                 Board
Representation.  So long as CIMSA
beneficially owns at least seventy-five percent (75%) of the Purchased Shares
(as determined pursuant to Rule 13d-3 under the Exchange Act), the Company’s
Board of Directors (the “Board”) shall take all actions necessary under
the Company Organizational Documents to cause one individual designated by
CIMSA to be appointed as a member of the Board and to be nominated for election
at each meeting of shareholders of the Company pursuant to which directors are
elected (each such designated individual, a “CIMSA Designee”). At all
times during which a CIMSA Designee is subject to the election of shareholders
of the Company, the Company and the Board shall provide such CIMSA Designee
with such reasonable support as is normally afforded to director nominees of
the Company recommended to shareholders. 
The CIMSA Designee shall be subject to the reasonable and good faith approval
of the Board; provided, however, that if the Board does not
approve any CIMSA Designee, CIMSA shall be entitled to submit additional
designees as required to obtain the Board’s approval.  In the event that the CIMSA Designee ceases
to serve as a member of the Board prior to the completion of his or her term
after being appointed by the Board or elected by the Company’s shareholders,
the resulting vacancy on the Board shall be filled by a person designated by
CIMSA, subject to such aforesaid approval of the Board.  The CIMSA Designee shall resign from the
Board during his or her term within twenty-four (24) hours of such time that
CIMSA ceases to beneficially own at least 75% of the Purchased Shares (as
determined pursuant to Rule 13d-3 under the Exchange Act).  The Company covenants and agrees to provide
each such CIMSA Designee with indemnification identical to that then enjoyed by
the other members of the Board.

12.                                 Registration
Rights.  The Company covenants to
CIMSA that it shall prepare and file a registration statement on Form SB-2, or
such other applicable form (the “Registration Statement”), with the SEC
under the Securities Act within 90 days from the Closing Date for the purpose
of registering the resale of the Registrable Securities (as defined
below).  The Company shall use its best
efforts to cause the SEC to declare such Registration Statement effective under
the Securities Act as promptly as practicable but not later than 180 days after
the Closing. CIMSA shall furnish the Company with such information as may be
required in connection with such Registration Statement and will cooperate to
cause such Registration Statement to become effective at the earliest
practicable time.  The Company shall use
its best efforts to keep the Registration Statement continuously effective
until the earlier of the date on which all the Purchased Shares and Warrant
Shares covered thereby have been sold or can be sold publicly under Rule 144(k)
of the Securities Act.  Not less than
five (5) business days prior to the filing of the Registration Statement or any
related prospectus or any amendment or supplement thereto, the Company shall
furnish via e-mail to CIMSA copies of all such documents proposed to be filed,
which documents (other than any document that is incorporated or deemed to be
incorporated by reference therein)  will
be subject to the review of CIMSA.  The
Company shall reflect in each such document when so filed with the SEC such
comments regarding CIMSA and the plan of distribution as CIMSA may reasonably
and promptly propose no later than two business days after CIMSA has been so
furnished with copies of such documents as aforesaid.  Prior to any public offering of Registrable
Securities, the Company shall use its best efforts to register or qualify or
cooperate with CIMSA in connection with the registration or qualification (or
exemption from such

 18
 

registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
CIMSA requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective for so long as required, and to do any and all
other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation
in respect of doing business in any jurisdiction in which it is not otherwise
so subject. The Company shall cooperate with CIMSA to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement (or any
other registration statement covering the resale of the Registrable
Securities), which certificates shall be free, to the extent permitted by this
Agreement and under law, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names
as CIMSA may reasonably request. The Company shall pay all fees and expenses
incident to the performance of or compliance with this Section by the Company,
including without limitation (a) all registration and filing fees and
expenses, including without limitation those related to filings with the SEC,
any trading market on which the Common Shares are listed or traded and in
connection with applicable state securities or blue sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of legal counsel for the Company, (e) fees and
expenses of the Company’s independent registered public accounting firm and all
other Persons retained by the Company in connection with performing or complying
with its obligations under this Section, and (f) all listing fees of any
trading market on which the Common Shares are listed or traded.  CIMSA shall be responsible for all of its own
legal and accounting fees incurred in connection with the Company’s registration
of the Registrable Securities. For purposes of this Agreement, the term “Registrable
Securities” means the Purchased Shares and the Warrant Shares, together
with any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event affecting the Common Shares
with respect to the foregoing.

13.                                 Subsequent
Agreements.  The parties agree to
negotiate in good faith to enter into three agreements:  (1) a Manufacturing Agreement pursuant to
which CIMSA shall subcontract certain manufacturing to the Company for a three
year period (the “Manufacturing Agreement”); (2) a Development Agreement
pursuant to which the Company shall subcontract certain development and design
services to CIMSA for a three year period (the “Development Agreement”);
and (3) a Consulting Agreement by and between the Company and Fernando Caralt
for a minimum term of one year pursuant to which Mr. Caralt shall provide
certain consulting services to the Company at the reasonable and good faith
direction of the Company’s Chief Executive Officer for cash compensation not to
exceed US$50,000.00 per annum (the “Consulting Agreement” and
collectively with the Manufacturing Agreement and the Development Agreement,
the “Subsequent Agreements”).  The
parties agree to use their best efforts to negotiate and execute the definitive
Subsequent Agreements by August 31, 2007.

 19
 

14.                                 Right
of First Refusal for Private Sale

14.1                           Rights on Transfer. 
Before any Private Transfer (as defined below) of all or any portion of
the Purchased Shares for value by CIMSA to any Person other than an Affiliate
of CIMSA, the Company will have the right (but not the obligation) to purchase
at least, but not less than, twenty-five percent (25%) of the Purchased Shares
subject to such transfer (the “Transfer Shares”).  For purposes of this Agreement, the term “Private
Transfer” shall  mean any sale,
transfer or other disposition of any Purchased Shares in any transaction other
than a transaction pursuant to (x) the Registration Statement or any other
registration statement covering the resale of the Purchased Shares or (y) Rule
144 of the Securities Act (or any successor rule thereto).

14.2                           Delivery of Transfer Notice.  At
such time that CIMSA proposes to effect a Private Transfer of the Transfer
Shares as contemplated by Section 14.1 hereof, CIMSA shall give prompt written
notice (the “Transfer Notice”) to the Company of such proposed Private
Transfer.  The Transfer Notice shall
specify the material terms of the proposed Private Transfer (the “Transfer
Terms”), including without limitation, (a) the name of the proposed
transferee; (b) the number of Transfer Shares involved; (c) the per share
purchase price or other consideration (the “Purchase Price”) to be
received by CIMSA in connection therewith; and (d) the terms and conditions
upon which such Private Transfer is to take place, including the terms of any
deferred payment for the Transfer Shares.

14.3                           The Company’s Right.  For
a period of thirty (30) days after receipt of the Transfer Notice (the “Company’s
Purchase Period”), the Company will be entitled to purchase at least, but
not less than, twenty-five percent (25%) of the Transfer Shares, upon the
Transfer Terms set forth in the Transfer Notice.  The Company shall exercise its right by
giving irrevocable written notice to CIMSA (the “Company Acceptance Notice”),
within the Company’s Purchase Period, of its intent to purchase at least, but
not less than, twenty-five percent (25%) of the Transfer Shares.  Delivery of the Company Acceptance Notice to
CIMSA shall be deemed to constitute a binding contract between the Company and
CIMSA.  The Company’s failure to deliver
to CIMSA the Company Acceptance Notice within the Company’s Purchase Period
will be deemed an election by the Company not to purchase the Transfer Shares.

14.4                           Shares Not Purchased. 
CIMSA may effect the Private Transfer of the Transfer Shares at any time
within ninety (90) days after the expiration of the Company Purchase Period for
which the Company has not delivered to CIMSA in a timely manner a Company
Acceptance Notice; provided, however, that (a) such Private
Transfer must be in accordance with the Transfer Terms specified in the
Transfer Notice, (b) CIMSA has obtained the Company’s consent with respect
to the proposed transferee, which consent will not be unreasonably withheld,
delayed or conditioned and (c) CIMSA has agreed to indemnify and hold the
Company harmless from any claims made by the proposed transferee against the
Company based on any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact about the Company made by CIMSA
to the proposed transferee in connection with the Private Transfer.

 20
 

15.                                 Indemnity.
The Company shall indemnify, defend and hold harmless CIMSA (and its
shareholders, directors, officers, employees, partners, agents, Affiliates,
each Person who controls CIMSA (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act) and the officers, directors,
owners, partners, agents and employees of each such Controlling Person (each,
in this Section an “Indemnified Party”), to the fullest extent permitted
by applicable law, from and against all liabilities, losses, claims, damages,
settlement costs and expenses, including, without limitation, legal and
accounting fees and expenses (collectively, “Losses”), as incurred,
arising out of or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement or the Warrant,
(ii) any breach of any covenant, agreement or obligation of the Company
contained in this Agreement or the Warrant, (iii) any cause of action, suit or
claim brought or made against such Indemnified Party by a third party
(including for these purposes a derivative action brought on behalf of the
Company), arising out of or resulting from (x) execution, delivery, performance
or enforcement of this Agreement or the Warrant or (y) the status of
Indemnified Party as holder of the Purchased Securities so long as at least
twenty-five percent (25%) of the Purchased Securities are still then
beneficially owned by CIMSA or (iv) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement (or any other
registration statement covering the resale of the Registrable Securities), any
prospectus or any form of Company prospectus or in any amendment or supplement
thereto or in any Company preliminary prospectus, or arising out of or relating
to any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (A) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based  upon information regarding CIMSA furnished in
writing to the Company by or on behalf of CIMSA for use therein, or to the
extent that such information relates to CIMSA or CIMSA’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
by CIMSA expressly for use in the Registration Statement, or (B) with respect
to any prospectus, if the untrue statement or omission of material fact
contained in such prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented, if such corrected prospectus was timely made
available by the Company to CIMSA, and CIMSA seeking indemnity hereunder was
advised in writing not to use the incorrect prospectus prior to the use giving
rise to Losses. The preceding to the contrary notwithstanding, other than the
obligations of the Company to CIMSA the performance of which is to be made or
continue to be made by the Company on or after the first anniversary of the
Closing Date, all of the other obligations of the Company under clauses (i)
through (iii) of this Section shall terminate and be without further force and
effect on the first anniversary of the Closing Date.  In case any such action is brought against an
Indemnified Party, the Company, at its sole cost and expense, will be entitled
to participate in and assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the Company to
such Indemnified Party of its election to assume the defense thereof, the
Company shall be responsible for any legal or other expenses incurred by the
latter in connection with the defense thereof, provided

 21
 

that if any Indemnified
Party shall have reasonably concluded that there may be one or more legal
defenses available to such Indemnified Party that conflict in any material
respect with those available to the Company, or that such claims or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
provided by this Section, the Company shall not have the right to assume the
defense of such action on behalf of such Indemnified Party and the Company
shall reimburse each such Indemnified Party for that portion of the reasonable
fees and expenses of any counsel retained by the Indemnified Party attributable
to matters for which the Indemnified Party is entitled to indemnification under
this Section. The Company shall not, without the prior written consent of the
Indemnified Party or Parties, as applicable, which consent shall not be
unreasonably withheld, make any settlement of any claims indemnified hereunder
unless such settlement includes an unconditional release of such Indemnified
Party or Parties, as applicable, from all liability on claims that are or could
have been the subject matter of such claims. If a claim for indemnification
under this Section is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then the Company, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Company and the Indemnified
Party in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations.  The relative fault of the Company and such
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by or on
behalf of, the Company or such Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission.  The
amount paid or payable by the Company as a result of any Losses shall be deemed
to include any reasonable attorneys’ or other reasonable fees or expenses
incurred by such Indemnified Party in connection with any proceeding to the
extent such Indemnified Party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such Indemnified Party in accordance with its terms.  The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section were determined by
pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in the immediately
preceding paragraph.  The indemnity and
contribution agreements contained in this Section  are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

16.                                 Miscellaneous.

16.1                           Survivability. The representations and warranties of the
Company and CIMSA contained in or made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the Closing for a period of
one (1) year following the Closing Date.

16.2                           Termination.  This Agreement may be
terminated by the Company or CIMSA, by written notice to the other party, if
the Closing has not been consummated

 22
 

by
July 31, 2007; provided that no such termination will affect the right of
either party to sue for any breach of this Agreement by the other party.

16.3                           Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and  permitted
assigns.  Neither party may assign this
Agreement or any rights or delegate any obligations hereunder without the prior
written consent of the other party. In connection with a permitted transfer of
the Purchased Securities, CIMSA may assign its rights under Section 12
(Registration Rights) of this Agreement to any Person to whom CIMSA assigns or
transfers any Purchased Securities in accordance with Section 14 (Right of
First Refusal for Private Sale) of this Agreement or as otherwise not in
contravention of this Agreement, provided (i) such transferor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company after such assignment, (ii) the Company
is furnished with written notice of (x) the name and address of such transferee
or assignee and (y) the Registrable Securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (iv) such transferee agrees in writing to be bound, with
respect to the transferred Purchased Securities, by the provisions hereof that
apply to CIMSA and (v) such transfer shall have been made in accordance with
the applicable requirements of this Agreement and with all laws applicable
thereto.

16.4                           No Third-Party Beneficiaries.  
This Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except that
each Indemnified Party is an intended third party beneficiary of Section 15
(Indemnification) and (in each case) may enforce the provisions of such
Sections directly against the Company.

16.5                           Governing Law; Venue; Waiver of Jury Trial.

(a)                                  This Agreement and the legal relations among
the parties hereto will be governed by and construed in accordance with the
internal substantive laws of the State of Minnesota (without regard to the laws
of conflict that might otherwise apply) as to all matters, including without
limitation matters of validity, construction, effect, performance and remedies.

(b)                                 Subject to Section 16.15 below, the parties
hereby irrevocably submit to the jurisdiction of the federal courts in the
United States District Court for the District of Minnesota in the State of
Minnesota or, if such federal courts are unavailable to the parties, the courts
of the State of Minnesota in Ramsey County, Minnesota in respect of the
interpretation and enforcement of the provisions of this Agreement.

(c)                                  The Company and CIMSA hereby waive all rights
to a trial by jury.

 23
 

16.6               Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  In the event that any signature is delivered
by facsimile transmission or email attachment, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
email-attached signature page were an original thereof.

16.7               Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

16.8               Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section  prior to 5.00 p.m. (New York City time) on a
business day, (b) the next business day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a business day or later than
5:00 p.m. (New York City time) on any business day, or (c) the third
business day following the date of deposit with a internationally recognized
overnight courier service and addressed to the recipient party at the address
specified in this Section.

Any notice to CIMSA shall be sent to:

CIMSA Ingenieria de
Sistemas, S.A.

ES 08520 Las Franquesas
del Vallés (Barcelona) – Spain

Facsimile: +34 938 617
041

Attention: Fernando Caralt, President

or at such other address
as CIMSA may designate by ten (10) days’ advance written notice to the Company.

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

Andrew E. Balog, Esq.

Greenberg Traurig, P.A.

1221 Brickell Avenue

Miami, Florida 33131

Facsimile: 305-961-5642

 24
 

Any notice to the Company shall be sent to:

Ballistic Recovery
Systems, Inc.

Attention:  Larry E. Williams

300 Airport Road

South St. Paul, MN 55075

Facsimile: 
651-457-8651

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

Maslon Edelman Borman
& Brand, LLP

Attention: Douglas T.
Holod, Esq.

3300 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402

Facsimile: 612-642-8313

or at such other address
as the Company may designate by ten (10) days’ advance written notice to CIMSA.

16.9               Entire Agreement; Amendments and Waivers. The Transaction Documents, together with
the Exhibits and Schedules thereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits
and schedules.  Any term of this
Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and CIMSA.  No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right.

16.10                     Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in accordance
with its terms.

16.11                     Confidentiality. Each party hereto agrees that, except with
the prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement,

 25
 

discussions
or negotiations relating to this Agreement, the performance of its obligations
hereunder or the ownership of Shares purchased hereunder. The provisions of
this Section 7.9 shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by the parties
hereto with respect to the transactions contemplated hereby.

16.12                     Expenses. Except as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement and the other Transaction Documents.  The Company shall pay all Transfer Agent
fees, stamp taxes and other taxes and duties levied in connection with the sale
and issuance of the Purchased Securities.

16.13                     Adjustments in Share Numbers and Prices.  In
the event of any stock split, subdivision, dividend or distribution payable in
Common Shares (or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly Common Shares), combination or
other similar recapitalization or event occurring after the date hereof and
prior to the Closing, each reference in any Transaction Document to a number of
Common Shares or a price per share shall be amended to appropriately account
for such event.

16.14                                                         Remedies.  In addition to being entitled
to exercise all rights provided herein or granted by law, including recovery of
damages, each of CIMSA and the Company will be entitled to seek specific
performance under the Transaction Documents. 
The parties agree that monetary damages may not be adequate compensation
for any loss incurred by reason of any breach of obligations described in the
foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation (other than in connection with any action
for temporary restraining order) the defense that a remedy at law would be
adequate.

16.15                                                         Arbitration.  Any controversy, claim or dispute (each a “Dispute”) arising out
of or relating to this Agreement shall be settled according to the following
procedures:

(a)                                  The
Company and CIMSA shall first use best efforts to resolve the Dispute.

(b)                                 If
the Company and CIMSA are unable to resolve such dispute within 20 days of the
commencement of the Dispute, the Dispute shall be settled and determined by
submission to binding arbitration to be conducted in Ramsey County, Minnesota
at a mutually agreed upon facility before a panel of three arbitrators (the “Arbitrators”)
in accordance with the Code of Procedure (the “Rules”) for the National
Arbitration Forum (the “NAF”) and the procedures set forth herein.

 26
 

(c)                                  In
the event of any conflict between the Rules in effect from time to time and the
provisions of this Agreement, the provisions of this Agreement shall prevail
and be controlling.

(d)                                 Either
the Company or CIMSA may commence the arbitration by filing a written
submission with the office of the NAF located in Ramsey County, Minnesota  (or the nearest NAF office) in accordance
with the Rules and the other shall respond in accordance with said Rules (or
any successor provision).  Each of the
Company and CIMSA shall select one Arbitrator from the list provided by the NAF
consistent with Rule 21 (or any successor provision) and the two Arbitrators so
chosen (or the NAF) shall jointly select a third in accordance with Rule 21 (or
any successor provision).

(e)                                  The
Arbitrators’ determination shall be governed by and construed in accordance
with the internal laws of the State of Minnesota. Any determination rendered by
the Arbitrators shall be final, conclusive and binding upon the parties hereto,
and judgment thereon may be entered and enforced in any court of competent
jurisdiction specified in Section 16.5 above, provided that the Arbitrators
shall have no power or authority to grant injunctive relief, specific
performance or other equitable relief although any court enforcing such award
shall specifically be authorized to grant such relief.  Notwithstanding anything set forth within
this Section, the parties may otherwise seek injunctive or other equitable
relief through a court of competent jurisdiction as specifically provided for
in this Agreement.

(f)                                    In
connection with any arbitration proceeding pursuant to this Agreement, unless
the Arbitrators shall determine otherwise, each party shall bear its own costs
and expenses, except that the parties shall jointly bear the fees and costs of
the NAF and the Arbitrators, the costs and expenses of obtaining the facility
where the arbitration hearing is held, and such other costs and expenses as the
Arbitrators may determine to be directly related to the conduct of the
arbitration and appropriately borne jointly by the parties.

16.16                                                         Further Assurances.  Consistent
with the terms and conditions hereof, CIMSA and the Company agree to do and
perform or cause to be done and performed all such further acts and things and
to execute, acknowledge, and deliver such further documents and instruments as
required in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.

***Remainder
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 27

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

	
  BALLISTIC RECOVERY SYSTEMS, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Larry E. Williams

  
	
  Title:

  	
  Chief Executive Officer

  
	
   

  
	
   

  
	
  CIMSA INGENIERIA DE SISTEMAS, S.A.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Fernando Caralt

  
	
  Title:

  	
  President

  
	
   

  
					

 

Exhibit
A

Form
of  Warrant

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]