Document:

Exhibit 4.2

 

This
Warrant and the Securities issuable upon exercise of this Warrant have not been
registered under the Securities Act of 1933 (the “Securities Act”) or under any
state securities or “Blue Sky” laws (“Blue Sky Laws”). No transfer, sale, assign­ment,
pledge, hypothecation or other disposition of this Warrant or the Securities
issuable upon exercise of this Warrant or any interest therein may be made
except (a) pursuant to an effective registration statement under the
Securities Act and any applicable Blue Sky Laws or (b) if the Company has been
furnished with an opinion of counsel for the holder, which opinion and counsel
shall be reasonably satisfactory to the Company, to the effect that no
registration is required because of the availability of an exemption from
registration under the Securities Act and applicable Blue Sky laws.

WARRANT
NO.               

To Purchase               
Shares of Common Stock

of

BALLISTIC
RECOVERY SYSTEMS, INC.

EXERCISABLE ON OR BEFORE,
AND VOID AFTER

5:00 P.M. MINNEAPOLIS
TIME ON JANUARY 10, 2010

THIS
CERTIFIES THAT, for good and valuable consideration,                                    
(the “Holder”), or registered assigns,  is entitled to subscribe for and purchase from
Ballistic Recovery Systems, Inc., a Minnesota corporation (the “Company”), at
any time after January 10, 2007, to and including January 10, 2010,                                                 
(                )
fully paid and non-assessable shares of the Common Stock of the Company at the
price of $2.00 per share (the “Warrant Exercise Price”), subject to the
anti-dilution provisions of this Warrant.

The
shares that may be acquired upon exercise of this Warrant are referred to herein
as the “Warrant Shares.”  The term “Common
Stock” means the common stock, par value $.01 per share, of the Company, and
shall also include any capital stock of any class of the Company hereafter
authorized which shall not be limited to a fixed sum or percentage in respect
of the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation, dissolu­tion,
or winding up of the Company. The term “Convertible Securities” means any stock
or other securities convertible into, or exchangeable for, Common Stock.

This
Warrant is subject to the following provisions, terms and conditions:

1.             Exercise; Transferability.

(a)           The rights represented by this
Warrant may be exercised by the Holder hereof, in whole or in part (but not as
to a fractional share of Common Stock), by written notice of exercise (in the
form attached hereto) delivered to the Company at the principal office of the
Company prior to the expiration of this Warrant and accompanied or preceded by
the surrender of this Warrant along with a check in payment of the Warrant
Exercise Price for such shares.

(b)           This Warrant may not be sold,
assigned, hypothecated, or otherwise transferred, other than by will or
pursuant to the operation of law, except in a transaction in compliance with
the provisions of Section 7 hereof.

2.             Exchange and Replacement.
Subject to Sections 1 and 7 hereof, this Warrant is exchangeable upon the
surrender hereof by the Holder to the Company at its office for new Warrants of

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like tenor and
date representing in the aggregate the right to purchase the number of Warrant
Shares purchasable hereunder, each of such new Warrants to represent the right
to purchase such number of Warrant Shares (not to exceed the aggregate total
number purchasable hereunder) as shall be designated by the Holder at the time
of such surrender. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will make and deliver a new Warrant of like
tenor, in lieu of this Warrant.  This
Warrant shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange or replacement. The Company shall pay all
expenses, taxes (other than stock transfer taxes), and other charges payable in
connection with the preparation, execution, and delivery of Warrants pursuant
to this Section 2.

3.             Issuance
of the Warrant Shares.

(a)           The Company agrees that the shares of
Common Stock purchased upon exercise of this Warrant shall be and are deemed to
be issued to the Holder as of the close of business on the date on which this
Warrant shall have been surrendered and the payment made for such Warrant
Shares as aforesaid. Subject to the provisions of paragraph (b) of this
Section 3, certificates for the Warrant Shares so purchased shall be
delivered to the Holder within a reasonable time, not exceeding fifteen (15)
days after the rights represented by this Warrant shall have been so exercised,
and, unless this Warrant has expired, a new Warrant representing the right to
purchase the number of Warrant Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the
Holder within such time.

(b)           Notwithstanding the foregoing,
however, the Company shall not be required to deliver any certificate for
Warrant Shares upon exercise of this Warrant except in accordance with
exemptions from the applicable securities registration requirements or
registrations under applicable securities laws. Nothing herein, however, shall
obligate the Company to effect registrations under federal or state securities
laws, except as provided in Section 9. If registrations are not in effect
and if exemptions are not available when the Holder seeks to exercise the
Warrant, the Warrant exercise period will be extended, if need be, to prevent
the Warrant from expiring, until such time as either registrations become
effective or exemptions are availa­ble, and the Warrant shall then remain
exercisable for a period of at least 30 calendar days from the date the Company
delivers to the Holder written notice of the availability of such registrations
or exemptions. The Holder agrees to execute such documents and make such
representations, warranties, and agreements as may be required solely to comply
with the exemptions relied upon by the Company, or the registrations made, for
the issuance of the Warrant Shares.

4.             Covenants of the Company.
The Company covenants and agrees that all Warrant Shares will, upon issuance,
be duly authorized and issued, fully paid, non-assessable and free from all
taxes, liens and charges with respect to the issue thereof. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this
Warrant.

5.             Anti-Dilution Adjustments.
The provisions of this Warrant are subject to adjustment as provided in this
Section 5.

(a)           The Warrant Exercise Price shall be
adjusted from time to time such that in case the Company shall hereafter:

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(i)            pay any dividends on any class of
stock of the Company payable in Common Stock or securities convertible into Common
Stock;

(ii)           subdivide its then outstanding shares
of Common Stock into a greater number of shares; or

(iii)          combine outstanding shares of Common
Stock, by reclassification or otherwise;

then, in any such
event, the Warrant Exercise Price in effect immediately prior to such event
shall (until adjusted again pursuant hereto) be adjusted immediately after such
event to a price (calculated to the nearest full cent) determined by dividing
(A) the number of shares of Common Stock outstanding immediately prior to
such event, multiplied by the then existing Warrant Exercise Price, by
(B) the total number of shares of Common Stock outstanding immediately
after such event (including in each case the maximum number of shares of Common
Stock issuable in respect of any securities convertible into Common Stock), and
the resulting quotient shall be the adjusted Warrant Exercise Price per share.
An adjustment made pursuant to this Subsection shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of a
subdivision, combina­tion or reclassification. If, as a result of an adjustment
made pursuant to this Subsection, the Holder of any Warrant thereafter surrendered
for exercise shall become entitled to receive shares of two or more classes of
capital stock or shares of Common Stock and other capital stock of the Company,
the Board of Directors (whose determination shall be conclusive) shall
determine the allocation of the adjusted Warrant Exercise Price between or
among shares of such classes of capital stock or shares of Common Stock and
other capital stock. All calculations under this Subsection shall be made to
the nearest cent or to the nearest 1/100 of a share, as the case may be. In the
event that at any time as a result of an adjustment made pursuant to this Sub­section,
the holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive any shares of the Company other than shares of Common
Stock, thereafter the Warrant Exercise Price of such other shares so receivable
upon exercise of any Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in this Section.

(b)           Upon each adjustment of the Warrant
Exercise Price pursuant to Section 5(a) above, the Holder of each Warrant
shall thereafter (until another such adjustment) be entitled to purchase at the
adjusted Warrant Exercise Price the number of shares, calculated to the nearest
full share, obtained by multiplying the number of shares specified in such
Warrant (as adjusted as a result of all adjustments in the Warrant Exercise
Price in effect prior to such adjustment) by the Warrant Exercise Price in
effect prior to such adjustment and dividing the product so obtained by the
adjusted Warrant Exercise Price.

(c)           In case of any consolidation or
merger to which the Company is a party other than a merger or consolidation in
which the Company is the continuing corporation, or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, or in the case of any statutory exchange of
securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Company), there shall
be no adjustment under Section 5(a) above but the Holder of each Warrant
then outstanding shall have the right thereafter to convert such Warrant into
the kind and amount of shares of stock and other securities and property which
he would have owned or have been entitled to receive immediately after such
consolidation, merger, statutory exchange, sale, or conveyance had such Warrant
been converted immediately prior to the effective date of such consolidation,
merger, statutory exchange, sale, or conveyance and in any such case, if
necessary, appropriate adjustment shall be made in the application of the
provisions set forth in this Section with respect to the rights and interests
thereafter of any Holders of the Warrant, to the end that the provisions set
forth in this Section shall thereafter correspondingly be

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made applicable,
as nearly as may reasonably be, in relation to any shares of stock and other
securities and property thereafter deliverable on the exercise of the Warrant.
The provisions of this Subsection shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances.

(d)           Upon any adjustment of the Warrant
Exercise Price, then and in each such case, the Company shall give written
notice thereof, by First-class mail, postage prepaid, addressed to the Holder
as shown on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares of Common Stock purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.

6.             No Voting Rights. This
Warrant shall not entitle the Holder to any voting rights or other rights as a
shareholder of the Company.

7.             Notice
of Transfer of Warrant or Resale of the Warrant Shares.

(a)           Subject to the sale, assignment,
hypothecation, or other transfer restrictions set forth in Section 1
hereof, the Holder, by acceptance hereof, agrees to give written notice to the
Company before transferring this Warrant or transferring any Warrant Shares of
such Holder’s intention to do so, describing briefly the manner of any proposed
transfer. Promptly upon receiving such written notice, the Company shall
present copies thereof to the Company’s counsel and to counsel to the original
purchaser of this Warrant. If in the opinion of each such counsel the proposed
transfer may be effected without registra­tion or qualification (under any
federal or state securities laws), the Company, as promptly as practicable,
shall notify the Holder of such opinion, whereupon the Holder shall be entitled
to transfer this Warrant or to dispose of Warrant Shares received upon the
previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by the Holder to the Company; provided that an appropriate legend
may be endorsed on this Warrant or the certificates for such Warrant Shares
respecting restrictions upon transfer thereof necessary or advisable in the
opinion of counsel and satisfactory to the Company to prevent further transfers
which would be in violation of Section 5 of the Securities Act of 1933, as
amended (the “1933 Act”) and applicable state securities laws; and provided
further that the prospective transferee or purchaser shall execute such
documents and make such representations, warranties, and agree­ments as may be
required solely to comply with the exemptions relied upon by the Company for
the transfer or disposition of the Warrant or Warrant Shares.

(b)           If in the opinion of either of the
counsel referred to in this Section 7, the proposed transfer or
disposition of this Warrant or such Warrant Shares described in the written
notice given pursuant to this Section 7 may not be effected without
registration or qualification of this Warrant or such Warrant Shares the
Company shall promptly give written notice thereof to the Holder, and the
Holder will limit its activities in respect to such transfer or disposition as,
in the opinion of both such counsel, are permitted by law.

8.             Fractional
Shares.

(a)           Fractional shares shall not be issued
upon the exercise of this Warrant, but in any case where the holder would,
except for the provisions of this Section, be entitled under the terms hereof
to receive a fractional share, the Company shall, upon the exercise of this
Warrant for the largest number of whole shares then called for, pay a sum in
cash equal to the sum of (a) the excess, if any, of the Fair Market Value
of such fractional share over the proportional part of the Warrant Exercise
Price represented by such fractional share, plus (b) the proportional part
of the Warrant Exercise Price represented by such fractional share.

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(b)           For purposes of this Section, the
term “Fair Market Value” with respect to shares of Common Stock as of a
particular date (the “Determination Date”) shall mean:

(i)            If the Company’s Common Stock is
traded on an exchange or is quoted on The Nasdaq National Market, then the
average closing or last sale prices, respectively, reported for the ten (10)
business days immediately preceding the Determination Date;

(ii)           If the Company’s Common Stock is not
traded on an exchange or on The Nasdaq National Market but is traded on The
Nasdaq Small-Cap Market or the local over-the-counter market, then the average
closing bid and asked prices reported for the ten (10) business days immediately
preceding the Determination Date; and

(iii)          If the Company’s Common Stock is not
traded on an exchange, on The Nasdaq National Market, The Nasdaq Small-Cap
Market or on the local over-the-counter market, then the fair market value of
Common Stock as determined in good faith by the Board of Directors of the
Company.

9.             Registration
Rights.

(a)           Required
Registration.  Pursuant to a
Registration Rights Agreement of even date herewith, the Company shall include
the Warrant Shares in the Registration Statement that it is required to file
within forty-five (45) days of the final closing of the private offering,
pursuant to which this Warrant was issued.   

(b)           Piggyback Registration. If the
Company at any time within two (2) years after complete exercise of this
Warrant, but no more than seven (7) years from the date of this Warrant,
proposes to register under the 1933 Act (except by a Form S-4 or
Form S-8 Registration Statement or any successor forms thereto) or qualify
for a public distribution under Section 3(b) of the 1933 Act, any of its
securities, it will give written notice to all Holders of this Warrant, any
Warrants issued pursuant to Section 2 and/or Section 3(a) hereof, and
any Warrant Shares of its intention to do so and, on the written request of any
such Holder given within twenty (20) days after receipt of any such notice
(which request shall specify the Warrant Shares intended to be sold or disposed
of by such Holder and describe the nature of any proposed sale or other
disposition thereof), the Company will use its best efforts to cause all such
Warrant Shares, the Holders of which shall have requested the registration or
qualification thereof, to be included in such registration statement proposed
to be filed by the Company; provided, however, that if a greater number of
Warrant Shares is offered for participation in the proposed offering than in
the reasonable opinion of the managing underwriter of the proposed offering
(which opinion shall be in writing and delivered to the Holders) can be accommodated
without adversely affecting the proposed offering, then the amount of Warrant
Shares proposed to be offered by such Holders for registration, as well as the
number of securities of any other selling shareholders participating in the
registration, shall not be included or shall be proportionately reduced to a
number deemed satisfactory by the managing underwriter. With respect to each
inclusion of securities in a registration statement pursuant to this
Section 9(a), the selling Holders shall pay the fees and disbursements of
special counsel and accountants for the selling Holders, and underwriting
discounts or commissions and transfer taxes applicable to the selling Holders’
shares, and the Company shall pay all other costs and expenses of the registration,
including but not limited to all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the Company,
all internal expenses, and legal fees and disbursements and other expenses of
complying with state securities laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. The Company need
not maintain the effectiveness of any such registration, qualification,
notification or approval, whether or not at the request of the Holders, more
than six (6) months following the effective date thereof.

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(c)           Indemnification. The Company
hereby indemnifies each of the Holders of this Warrant and of any Warrant
Shares, and the officers and directors, if any, who control such Holders,
within the meaning of Section 15 of the 1933 Act, against all losses,
claims, damages, and liabilities caused by (1) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (and as amended or supplemented if the Company shall
have furnished any amendments thereof or supplements thereto), any Preliminary
Prospectus (not corrected in the final, amended or supplemented prospectus
furnished to such Holders for distribution) or any state securities law
filings; (2) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading except insofar as such losses, claims, damages, or liabilities
are caused by any untrue statement or omission contained in information
furnished in writing to the Company by such Holder expressly for use therein;
and each such Holder by its acceptance hereof severally agrees that it will
indemnify and hold harmless the Company, each of its officers who signs such
Registration Statement, and each person, if any, who controls the Company,
within the meaning of Section 15 of the 1933 Act, with respect to losses,
claims, damages, or liabilities which are caused by any untrue statement or
omission contained in information furnished in writing to the Company by such
Holder expressly for use therein.

(d)           Cooperation. Upon the exercise
of registration rights pursuant hereto, each holder agrees to supply the
Company with such information as may be required by the Company to register or
qualify the shares to be registered.

IN WITNESS WHEREOF, Ballistic Recovery Systems, Inc.
has caused this Warrant to be signed by its duly authorized officer and this
Warrant to be dated January 10, 2007.

	
   

  	
  BALLISTIC RECOVERY SYSTEMS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Don Hedquist

  
	
   

  	
   

  	
  Its Chief
  Financial Officer

  

Signature
Page

Ballistic Recovery Systems, Inc.

Warrant
No.               

 6

Warrant
No.                  

 

SUBSCRIPTION FORM

(To be
signed upon exercise of Warrant)

The
undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder,                          
                           
of the shares of Common Stock of BALLISTIC RECOVERY SYSTEMS, INC to which such
Warrant relates and herewith makes payment of $                           
therefor in cash or by certified check and requests that the certificate for
such shares be issued in the name of, and be delivered to,                          ,
the address for which is set forth below the signature of the undersigned.

Dated:                             

	
  

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security or Tax Ident. No.

  

 

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Warrant
No.                     

 

ASSIGNMENT FORM

(To be
signed upon authorized transfer of Warrant)

FOR
VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto                             
the right 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                     
with full power of substitution in the premises.

Dated:                                

	
  

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security or Tax Ident. No.

  

 

 8Exhibit 4.3

This
Warrant and the Securities issuable upon exercise of this Warrant have not been
registered under the Securities Act of 1933 (the “Securities Act”) or under any
state securities or “Blue Sky” laws (“Blue Sky Laws”). No transfer, sale, assign­ment,
pledge, hypothecation or other disposition of this Warrant or the Securities
issuable upon exercise of this Warrant or any interest therein may be made
except (a) pursuant to an effective registration statement under the
Securities Act and any applicable Blue Sky Laws or (b) if the Company has been
furnished with an opinion of counsel for the holder, which opinion and counsel
shall be reasonably satisfactory to the Company, to the effect that no
registration is required because of the availability of an exemption from
registration under the Securities Act and applicable Blue Sky laws.

WARRANT
NO.                  

To Purchase               
Shares of Common Stock

of

BALLISTIC
RECOVERY SYSTEMS, INC.

EXERCISABLE ON OR BEFORE,
AND VOID AFTER

5:00 P.M. MINNEAPOLIS
TIME ON JANUARY 10, 2010

THIS
CERTIFIES THAT, for good and valuable consideration,                                    
(the “Placement Agent”), or its registered assigns,  is entitled to subscribe for and purchase from
Ballistic Recovery Systems, Inc., a Minnesota corporation (the “Company”), at
any time after January 10, 2007, to and including January 10, 2010,                                          
(                   )
fully paid and non-assessable shares of the Common Stock of the Company at the
price of $2.00 per share (the “Warrant Exercise Price”), subject to the
anti-dilution provisions of this Warrant. This Warrant is one of the “Agents’
Warrants” referred to in the Agency Agreement dated June 23, 2006, by and
between the Placement Agent, and the Company (as amended, the “Engagement
Agreement”).

The
shares that may be acquired upon exercise of this Warrant are referred to
herein as the “Warrant Shares.” As used herein, the term “Holder” means the
Placement Agent, any party who acquires all or a part of this Warrant as a
registered transferee of the Placement Agent, or any record holder or holders
of the Warrant Shares issued upon exercise, whether in whole or in part, of the
Warrant. The term “Common Stock” means the common stock, par value $.01 per
share, of the Company, and shall also include any capital stock of any class of
the Company hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolu­tion, or winding up of the Company. The term “Convertible
Securities” means any stock or other securities convertible into, or
exchangeable for, Common Stock.

This
Warrant is subject to the following provisions, terms and conditions:

1.             Exercise; Transferability.

(a)           The rights represented by this
Warrant may be exercised by the Holder hereof, in whole or in part (but not as
to a fractional share of Common Stock), by written notice of exercise (in the
form attached hereto) delivered to the Company at the principal office of the
Company prior to the expiration of this Warrant and accompanied or preceded by
the surrender of this Warrant along with a check in payment of the Warrant
Exercise Price for such shares.

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(b)           Until one year from the date hereof,
this Warrant may not be sold, assigned, hypothecated, or otherwise transferred,
other than by will or pursuant to the operation of law, except to a person who
is an officer and shareholder of the Placement Agent or an officer and employee
of the Placement Agent or in compliance with the provisions of Section 7
hereof.

2.             Exchange and Replacement.
Subject to Sections 1 and 7 hereof, this Warrant is exchangeable upon the
surrender hereof by the Holder to the Company at its office for new Warrants of
like tenor and date representing in the aggregate the right to purchase the
number of Warrant Shares purchasable hereunder, each of such new Warrants to
represent the right to purchase such number of Warrant Shares (not to exceed
the aggregate total number purchasable hereunder) as shall be designated by the
Holder at the time of such surrender. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction, or mutilation of
this Warrant, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor, in lieu of this Warrant; provided, however, that if the Placement
Agent shall be such Holder, an agreement of indemnity by such Holder shall be
sufficient for all purposes of this Section 2. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The Company shall pay all expenses, taxes (other
than stock transfer taxes), and other charges payable in connection with the
preparation, execution, and delivery of Warrants pursuant to this
Section 2.

3.             Issuance
of the Warrant Shares.

(a)           The Company agrees that the shares of
Common Stock purchased upon exercise of this Warrant shall be and are deemed to
be issued to the Holder as of the close of business on the date on which this
Warrant shall have been surrendered and the payment made for such Warrant
Shares as aforesaid. Subject to the provisions of paragraph (b) of this
Section 3, certificates for the Warrant Shares so purchased shall be
delivered to the Holder within a reasonable time, not exceeding fifteen (15)
days after the rights represented by this Warrant shall have been so exercised,
and, unless this Warrant has expired, a new Warrant representing the right to
purchase the number of Warrant Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the
Holder within such time.

(b)           Notwithstanding the foregoing,
however, the Company shall not be required to deliver any certificate for
Warrant Shares upon exercise of this Warrant except in accordance with
exemptions from the applicable securities registration requirements or
registrations under applicable securities laws. Nothing herein, however, shall
obligate the Company to effect registrations under federal or state securities
laws, except as provided in Section 9. If registrations are not in effect
and if exemptions are not available when the Holder seeks to exercise the
Warrant, the Warrant exercise period will be extended, if need be, to prevent
the Warrant from expiring, until such time as either registrations become
effective or exemptions are availa­ble, and the Warrant shall then remain
exercisable for a period of at least 30 calendar days from the date the Company
delivers to the Holder written notice of the availability of such registrations
or exemptions. The Holder agrees to execute such documents and make such
representations, warranties, and agreements as may be required solely to comply
with the exemptions relied upon by the Company, or the registrations made, for
the issuance of the Warrant Shares.

4.             Covenants of the Company.
The Company covenants and agrees that all Warrant Shares will, upon issuance,
be duly authorized and issued, fully paid, non-assessable and free from all
taxes, liens and charges with respect to the issue thereof. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved for the purpose of issue or transfer upon exercise of the
subscription

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rights evidenced
by this Warrant a sufficient number of shares of Common Stock to provide for
the exercise of the rights represented by this Warrant.

5.             Anti-Dilution Adjustments.
The provisions of this Warrant are subject to adjustment as provided in this
Section 5.

(a)           The Warrant Exercise Price shall be
adjusted from time to time such that in case the Company shall hereafter:

(i)            pay any dividends on any class of
stock of the Company payable in Common Stock or securities convertible into
Common Stock;

(ii)           subdivide its then outstanding shares
of Common Stock into a greater number of shares; or

(iii)          combine outstanding shares of Common
Stock, by reclassification or otherwise;

then, in any such
event, the Warrant Exercise Price in effect immediately prior to such event
shall (until adjusted again pursuant hereto) be adjusted immediately after such
event to a price (calculated to the nearest full cent) determined by dividing
(A) the number of shares of Common Stock outstanding immediately prior to
such event, multiplied by the then existing Warrant Exercise Price, by
(B) the total number of shares of Common Stock outstanding immediately
after such event (including in each case the maximum number of shares of Common
Stock issuable in respect of any securities convertible into Common Stock), and
the resulting quotient shall be the adjusted Warrant Exercise Price per share.
An adjustment made pursuant to this Subsection shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of a
subdivision, combina­tion or reclassification. If, as a result of an adjustment
made pursuant to this Subsection, the Holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive shares of two or more
classes of capital stock or shares of Common Stock and other capital stock of
the Company, the Board of Directors (whose determination shall be conclusive)
shall determine the allocation of the adjusted Warrant Exercise Price between
or among shares of such classes of capital stock or shares of Common Stock and
other capital stock. All calculations under this Subsection shall be made to
the nearest cent or to the nearest 1/100 of a share, as the case may be. In the
event that at any time as a result of an adjustment made pursuant to this Sub­section,
the holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive any shares of the Company other than shares of Common
Stock, thereafter the Warrant Exercise Price of such other shares so receivable
upon exercise of any Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in this Section.

(b)           Upon each adjustment of the Warrant
Exercise Price pursuant to Section 5(a) above, the Holder of each Warrant
shall thereafter (until another such adjustment) be entitled to purchase at the
adjusted Warrant Exercise Price the number of shares, calculated to the nearest
full share, obtained by multiplying the number of shares specified in such
Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price
in effect prior to such adjustment) by the Warrant Exercise Price in effect
prior to such adjustment and dividing the product so obtained by the adjusted
Warrant Exercise Price.

(c)           In case of any consolidation or
merger to which the Company is a party other than a merger or consolidation in
which the Company is the continuing corporation, or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially

 3
 

as an entirety, or in the
case of any statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a third
corporation into the Company), there shall be no adjustment under
Section 5(a) above but the Holder of each Warrant then outstanding shall
have the right thereafter to convert such Warrant into the kind and amount of
shares of stock and other securities and property which he would have owned or
have been entitled to receive immediately after such consolidation, merger,
statutory exchange, sale, or conveyance had such Warrant been converted
immediately prior to the effective date of such consolidation, merger,
statutory exchange, sale, or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the application of the provisions set
forth in this Section with respect to the rights and interests thereafter of
any Holders of the Warrant, to the end that the provisions set forth in this
Section shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock and other securities and
property thereafter deliverable on the exercise of the Warrant. The provisions
of this Subsection shall similarly apply to successive consolidations, mergers,
statutory exchanges, sales or conveyances.

(d)           Upon any adjustment of the Warrant
Exercise Price, then and in each such case, the Company shall give written
notice thereof, by First-class mail, postage prepaid, addressed to the Holder
as shown on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares of Common Stock purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.

6.             No Voting Rights. This
Warrant shall not entitle the Holder to any voting rights or other rights as a
shareholder of the Company.

7.             Notice
of Transfer of Warrant or Resale of the Warrant Shares.

(a)           Subject to the sale, assignment,
hypothecation, or other transfer restrictions set forth in Section 1
hereof, the Holder, by acceptance hereof, agrees to give written notice to the
Company before transferring this Warrant or transferring any Warrant Shares of
such Holder’s intention to do so, describing briefly the manner of any proposed
transfer. Promptly upon receiving such written notice, the Company shall
present copies thereof to the Company’s counsel and to counsel to the original
purchaser of this Warrant. If in the opinion of each such counsel the proposed
transfer may be effected without registra­tion or qualification (under any
federal or state securities laws), the Company, as promptly as practicable,
shall notify the Holder of such opinion, whereupon the Holder shall be entitled
to transfer this Warrant or to dispose of Warrant Shares received upon the
previous exercise of this Warrant, all in accordance with the terms of the
notice delivered by the Holder to the Company; provided that an appropriate
legend may be endorsed on this Warrant or the certificates for such Warrant
Shares respecting restrictions upon transfer thereof necessary or advisable in
the opinion of counsel and satisfactory to the Company to prevent further transfers
which would be in violation of Section 5 of the Securities Act of 1933, as
amended (the “1933 Act”) and applicable state securities laws; and provided
further that the prospective transferee or purchaser shall execute such
documents and make such representations, warranties, and agree­ments as may be
required solely to comply with the exemptions relied upon by the Company for
the transfer or disposition of the Warrant or Warrant Shares.

(b)           If in the opinion of either of the
counsel referred to in this Section 7, the proposed transfer or
disposition of this Warrant or such Warrant Shares described in the written
notice given pursuant to this Section 7 may not be effected without
registration or qualification of this Warrant or such Warrant Shares the
Company shall promptly give written notice thereof to the Holder, and the

 4
 

Holder
will limit its activities in respect to such transfer or disposition as, in the
opinion of both such counsel, are permitted by law.

8.             Fractional
Shares.

(a)           Fractional shares shall not be issued
upon the exercise of this Warrant, but in any case where the holder would,
except for the provisions of this Section, be entitled under the terms hereof
to receive a fractional share, the Company shall, upon the exercise of this Warrant
for the largest number of whole shares then called for, pay a sum in cash equal
to the sum of (a) the excess, if any, of the Fair Market Value of such
fractional share over the proportional part of the Warrant Exercise Price
represented by such fractional share, plus (b) the proportional part of
the Warrant Exercise Price represented by such fractional share.

(b)           For purposes of this Section, the
term “Fair Market Value” with respect to shares of Common Stock as of a
particular date (the “Determination Date”) shall mean:

(i)            If the Company’s Common Stock is
traded on an exchange or is quoted on The Nasdaq National Market, then the
average closing or last sale prices, respectively, reported for the ten (10)
business days immediately preceding the Determination Date;

(ii)           If the Company’s Common Stock is not
traded on an exchange or on The Nasdaq National Market but is traded on The
Nasdaq Small-Cap Market or the local over-the-counter market, then the average
closing bid and asked prices reported for the ten (10) business days
immediately preceding the Determination Date; and

(iii)          If the Company’s Common Stock is not
traded on an exchange, on The Nasdaq National Market, The Nasdaq Small-Cap
Market or on the local over-the-counter market, then the fair market value of
Common Stock as determined in good faith by the Board of Directors of the
Company.

9.             Registration
Rights.

                (a)           Required Registration.  The Company shall include the Warrant Shares
in the Registration Statement that the Company is required to file within forty-five
(45) days of the final closing of the private offering, in connection with
which this Warrant was issued, and shall keep such Registration Statement
effective until the Warrant Shares have been sold

                (b)           Piggyback Registration. If the Company at any time
within two (2) years after complete exercise of this Warrant, but no more than
seven (7) years from the date of this Warrant, proposes to register under the
1933 Act (except by a Form S-4 or Form S-8 Registration Statement or
any successor forms thereto) or qualify for a public distribution under
Section 3(b) of the 1933 Act, any of its securities, it will give written
notice to all Holders of this Warrant, any Warrants issued pursuant to
Section 2 and/or Section 3(a) hereof, and any Warrant Shares of its
intention to do so and, on the written request of any such Holder given within
twenty (20) days after receipt of any such notice (which request shall specify
the Warrant Shares intended to be sold or disposed of by such Holder and describe
the nature of any proposed sale or other disposition thereof), the Company will
use its best efforts to cause all such Warrant Shares, the Holders of which
shall have requested the registration or qualification thereof, to be included
in such registration statement proposed to be filed by the Company; provided,
however, that if a greater number of Warrant Shares is offered for
participation in the proposed offering than in the reasonable opinion of the
managing underwriter of the proposed offering (which opinion shall be in
writing and delivered to the Holders) can be accommodated without adversely
affecting the proposed

 5
 

offering, then the amount
of Warrant Shares proposed to be offered by such Holders for registration, as
well as the number of securities of any other selling shareholders
participating in the registration, shall not be included or shall be
proportionately reduced to a number deemed satisfactory by the managing
underwriter. With respect to each inclusion of securities in a registration statement
pursuant to this Section 9(a), the selling Holders shall pay the fees and
disbursements of special counsel and accountants for the selling Holders, and
underwriting discounts or commissions and transfer taxes applicable to the
selling Holders’ shares, and the Company shall pay all other costs and expenses
of the registration, including but not limited to all registration, filing and
NASD fees, printing expenses, fees and disbursements of counsel and accountants
for the Company, all internal expenses, and legal fees and disbursements and
other expenses of complying with state securities laws of any jurisdictions in
which the securities to be offered are to be registered or qualified. The
Company need not maintain the effectiveness of any such registration,
qualification, notification or approval, whether or not at the request of the
Holders, more than six (6) months following the effective date thereof.

(c)           Indemnification. The Company
hereby indemnifies each of the Holders of this Warrant and of any Warrant
Shares, and the officers and directors, if any, who control such Holders,
within the meaning of Section 15 of the 1933 Act, against all losses,
claims, damages, and liabilities caused by (1) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (and as amended or supplemented if the Company shall
have furnished any amendments thereof or supplements thereto), any Preliminary
Prospectus (not corrected in the final, amended or supplemented prospectus
furnished to such Holders for distribution) or any state securities law
filings; (2) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading except insofar as such losses, claims, damages, or liabilities
are caused by any untrue statement or omission contained in information
furnished in writing to the Company by such Holder expressly for use therein;
and each such Holder by its acceptance hereof severally agrees that it will
indemnify and hold harmless the Company, each of its officers who signs such
Registration Statement, and each person, if any, who controls the Company,
within the meaning of Section 15 of the 1933 Act, with respect to losses,
claims, damages, or liabilities which are caused by any untrue statement or
omission contained in information furnished in writing to the Company by such
Holder expressly for use therein.

(d)           Cooperation. Upon the exercise
of registration rights pursuant hereto, each holder agrees to supply the
Company with such information as may be required by the Company to register or
qualify the shares to be registered.

IN WITNESS WHEREOF, Ballistic Recovery Systems, Inc. has
caused this Warrant to be signed by its duly authorized officer and this
Warrant to be dated January 10, 2007.

	
  

  	
  BALLISTIC RECOVERY SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Don Hedquist

  
	
   

  	
   

  	
  Its Chief
  Financial Officer

  

Signature Page

Ballistic Recovery Systems, Inc.

Warrant No.            

 6
 

Warrant
No.                  

 

SUBSCRIPTION FORM

(To be
signed upon exercise of Warrant)

The
undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase thereunder,
                 
                        
of the shares of Common Stock of BALLISTIC RECOVERY SYSTEMS, INC. to which such
Warrant relates and herewith makes payment of $                           
therefor in cash or by certified check and requests that the certificate for
such shares be issued in the name of, and be delivered to,                            ,
the address for which is set forth below the signature of the undersigned.

Dated:                                 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security or Tax Ident. No.

  

 

 7
 

Warrant
No.                  

 

ASSIGNMENT FORM

(To be
signed upon authorized transfer of Warrant)

FOR
VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto                                                     
the right 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                       
with full power of substitution in the premises.

Dated:                              

	
  

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security or Tax Ident. No.

  

 

 8

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