Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT, effective February 7,
2006, by and between SPORT-HALEY, INC., a Colorado corporation (the “Company”)
and Michael D. Doris (the “Employee”).

 

WHEREAS, the Company desires to employ the Employee
on a full-time basis, and the Employee desires to be so employed by the
Company, from and after the date of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the parties agree as follows:

 

ARTICLE I

EMPLOYMENT DUTIES AND BENEFITS

 

Section 1.1 
Employment.
The Company hereby employs the Employee in the position described on Schedule 1
hereto as an Employee of the Company. The Employee accepts such employment and
agrees to perform the duties and responsibilities assigned to him pursuant
to this Agreement.

 

Section 1.2 
Duties and Responsibilities. The Employee shall hold the position with the Company which is
specified on Schedule 1, which is attached hereto and incorporated herein
by reference. The Employee is employed pursuant to the terms of this Agreement
and agrees to devote full-time to the business of the Company. The Employee
shall perform the duties set forth on Schedule 1 while employed as an
Employee, and such further duties as may be determined and assigned to him
from time-to-time by the Chief Executive Officer and/or the Board of Directors
of the Company. The Employee shall at all times perform, faithfully,
industriously, and to the best of the Employee’s ability, experience, and
talent, all duties that may be required of the employee pursuant to the
express and implicit terms of this Agreement, to the reasonable satisfaction of
the Company. In spite of anything in this agreement to the contrary, it is
expressly understood and agreed that the Employee shall not have the authority
to enter into any contracts or commitments on behalf of the Company, except for
commitments to established sales customers in the ordinary course of business,
without the written consent of the Chief Executive Officer of the Company.

 

Section 1.3 
Working Facilities. The Employee shall be furnished with facilities and services suitable
to the position and adequate for the performance of the Employee’s duties under
this Agreement.

 

Section 1.4 
Vacations. The
Employee shall be entitled each year to a reasonable vacation of not less than
two weeks in accordance with the established practices of the Company now or
hereafter in effect for Employee personnel, during which time the Employee’s
compensation shall be paid in full.

 

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Section 1.5 
Expenses. The
Employee may incur reasonable expenses for promoting the domestic and
international business of the Company in all respects, including expenses for
entertainment, travel and similar items, provided that such expenses do not
exceed the budgets established by the Company for such items. The Company will
reimburse the Employee for all such expenses upon the presentation by the
Employee, from time-to-time, of an itemized account of such expenditures.

 

Section 1.6 Benefit Plans. From the effective date of this Agreement,
the Employee shall be entitled to participate in all existing benefit plans
provided to the Company’s employees at a similar level within the Company’s
hierarchy including, to the extent now or hereafter in effect, medical, health,
dental, vision, disability, life insurance, death benefit plans, and 401(k)
retirement plans, in accordance with the terms of such plans. Employee shall be
responsible for paying for such benefits for his spouse and/or other eligible
family members.

 

ARTICLE II

COMPENSATION

 

Section 2.1 
Base Salary.
The Company shall pay to the Employee a base salary of not less than the amount
specified on Schedule 1, subject to annual review and raises in such base
salary. The base salary may be raised by action of the Board of Directors,
and such raises shall thereafter be included in the Employee’s base salary as
defined for purposes of this Agreement and the Company’s bonus plan.

 

Section 2.2  Bonus and Bonus Plan Participation. The Employee shall be entitled to receive a
bonus at such time or times as may be determined by the Board of Directors
and Compensation Committee of the Company, in their sole discretion.

 

ARTICLE III

TERM OF EMPLOYMENT AND
TERMINATION

 

Section 3.1 
Term. This
Agreement shall be for a term which is specified on Schedule 1, commencing
on its effective date, subject, however, to termination during such period as
provided in this Article. Provided that the Employee is in compliance with all
of his obligations hereunder, at the expiration of the initial term, unless
either the Company or the Employee shall, at least 90 days prior to the
expiration of the initial term or of any renewal term, give written notice of
the intention not to renew this Agreement, this Agreement will be extended for
a renewed term of one year, on the same terms and conditions as contained in
this Agreement. If the Company gives such written notice of non-renewal, the
provisions of Section 3.3 shall apply; if the Employee gives such written
notice of non-renewal, the provisions of Section 3.5 shall apply. Renewed
terms shall be effective in subsequent years on the same day of the same month
as the original effective day and month of this Agreement.

 

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Section 3.2 
Termination by the Company With Cause. The Company may terminate the Employee,
at any time, upon ten days’ written notice and opportunity for Employee to
remedy any non-compliance with the terms of this Agreement (if such non-compliance
is capable of being remedied; if not, the Company’s notice of termination shall
be effective immediately), for Cause. In such event, the Board of Directors
shall provide in writing to the Employee an opinion of the Board of Directors,
signed by each member voting in favor of termination of the Employee, which
shall specify with particularity the basis for such termination. Upon the date
of such termination, the Company’s obligation to pay compensation and benefits
shall terminate, at which time the Company shall be responsible for
compensating the Employee for any vacation time not taken. Subject to this
exception and the obligation of the Company to compensate the Employee through
the notice period, no other compensation shall be payable to the Employee
should this Agreement be terminated pursuant to this Section 3.2.

 

As used herein, the term “Cause” shall be limited to
any of the following from and after the date hereof: (i) any willful
breach of any material written policy of the Company that results in material
and demonstrable liability or loss to the Company; (ii) the engaging by
Employee in conduct involving moral turpitude that causes material and
demonstrable injury, monetarily or otherwise, to the Company, including, but
not limited to, misappropriation or conversion of assets of the Company (other
than immaterial assets); (iii) conviction of or entry of a plea of nolo
contendere to a felony; or (iv) a material breach of this Agreement by
engaging in action in violation of the restrictive covenants in this Agreement.
No act or failure to act by the Employee shall be deemed “willful” if done, or
omitted to be done, by him in good faith and with the reasonable belief that
his action or omission was in the best interests of the Company.

 

Section 3.3 
Termination by the Company Without Cause. The Company may terminate the Employee’s
services without cause at any time upon 90 days’ written notice. In such event,
in addition to compensating the Employee during such 90-day notice period, the
Company shall be obligated to compensate the Employee with severance pay equal
to three additional months’ compensation as of the date of such termination.
Accordingly, in the event the Company terminates this Agreement without cause
or chooses not to renew this Agreement upon its expiration, the Employee shall
receive an aggregate of six months’ salary from and after the date of the
Employee’s receipt of a notice of termination through and including the date of
termination.

 

Section 3.4 
Termination by the Employee With Cause. The Employee may terminate his
employment with the Company at any time, upon ten days’ written notice and
opportunity for the Company to remedy any non-compliance, by reason of (i) the
Company’s material failure to perform its

 

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duties
pursuant to this Agreement, or (ii) any material diminishment in the
duties and responsibilities, working facilities, or benefits as described in Article I
of this Agreement. The Employee shall not be entitled to the severance
compensation and other benefits described in Section 3.7 below in the
event of termination of this Agreement pursuant to this Section 3.4,
except as otherwise provided in Section 3.7(a), but shall be entitled to
the compensation provided in Section 3.3 upon a determination that the
Company has failed to perform its duties pursuant to this Agreement and
that such failure is material or a determination that the duties and
responsibilities, working facilities, or benefits as described herein have been
materially diminished. Such determination shall be made by the Board of
Directors in their best good faith.

 

Section 3.5 
Termination by the Employee Without Cause. The Employee, without cause, may terminate
this Agreement upon 90 days’ written notice to the Company. In such event, the
Employee shall not be required to render the services required under this
Agreement following such 90-day period. Compensation for vacation time not
taken by the Employee shall be paid to the Employee at the date of termination.
The Employee shall not be entitled to the severance compensation and other
benefits described in Section 3.7 below in the event of termination of
this Agreement pursuant to this Section 3.5, except as described in Section 3.7(a),
and shall not be entitled to the compensation provided in Section 3.3.

 

Section 3.6 
Termination upon Death of the Employee. In addition to any other provision relating
to termination, this Agreement shall terminate upon the Employee’s death. In
such event, all unpaid compensation and bonuses, compensation for vacation time
not taken by the Employee and all expense reimbursements due to the Employee
shall be paid to the Employee’s estate.

 

Section 3.7 
Severance Compensation and Continuation of Benefits.

 

(a) Notwithstanding any other provisions
hereof, in the event of a non-negotiated change in control of the Company and
either the Employee or the Company terminate this Agreement within 60 days of
such non-negotiated change in control, the Employee shall receive severance
compensation, payable in a lump sum within 30 days of such non-negotiated
change in control, equal to three times his annual salary and incentive or
bonus payments, if any, as shall have been paid to the Employee during the most
recent 12-month period concluded prior to the date of his termination or
resignation. If the total amount of the non-negotiated change of control
compensation were to exceed three times the Employee’s base compensation (the
average annual taxable compensation of the Employee for the five years
preceding the year in which the change of control occurs), the Company and the
Employee will reduce the lump sum compensation to be received by the Employee
in order to avoid the imposition of the golden

 

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parachute
tax as provided in the Tax Reform Act of 1984, as amended by the Tax Reform Act
of 1986. The foregoing provisions shall not apply in the event of a negotiated
change in control of the Company.

 

(b) In the event the Employee is required to
hire counsel to negotiate on his behalf in connection with his termination or a
change in control of the Company, or in order to enforce the rights and
obligations as provided herein, the Company shall reimburse to the Employee all
reasonable attorney’s fees which may be expended by the Employee in
seeking to enforce the terms hereof. Such reimbursement shall be paid by the
Company every 30 days after the Employee provides to the Company copies of
invoices from the Employee’s counsel. Such invoices may be redacted to
preserve the attorney-client privilege or attorney-client confidentiality.

 

(c) So long as the Employee is receiving
severance compensation pursuant to this Section 3.7, the Employee shall be
entitled to continue to participate, at the Company’s cost, in all existing
benefit plans provided to the Company’s Employee employees at the time of the
Employee’s termination or resignation. Such plans shall include, but are not
limited to, then-existing medical, health, dental, vision, disability, life
insurance and death benefit plans. If the terms of such plans expressly
prohibit the Employee from continuing as a participant in such plans following
the date of resignation or termination, the Company will provide the Employee
with benefits equivalent to, or exceeding, those offered by the then-existing
benefit plans offered to the Company’s Employee employees, all at the Company’s
cost, for the duration of the Employee’s right to severance compensation
hereunder.

 

Any compensation to be paid to the Employee under
the foregoing provisions of this Section 3.7 shall be subject to the
Employee complying with the non-compete provisions of Section 4.1(c) below.
In the event the Employee does not so comply, the Company, without waiving any
rights or remedies, shall be released from any obligations to the Employee
under this Section 3.7.

 

Section 3.8  Options. In the event of a non-negotiated change in
control of the Company and either the Employee or the Company terminate this
Agreement within 60 days of such non-negotiated change in control as provided
in Section 3.7(a) of this Agreement, any and all options granted to
the Employee to purchase Common Stock of the Company shall become fully vested
and exercisable on the date of termination of this Agreement. In the event of
termination or non-renewal by either party without cause in accordance with
Sections 3.3 or 3.5 of this Agreement, any and all options granted to the
Employee to purchase Common Stock of the Company will vest and become
exercisable on a pro-rated basis from the date of grant to the date of
termination of this Agreement based on the number of months during which this
Agreement has been in effect from the date of grant and the Company’s
established thirty six month vesting period. For example, options granted to
purchase 20,000 shares on the effective date of this

 

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Agreement
would become vested and exercisable at a rate of 555.55 shares per month for
each month during which this Agreement is in effect. In the event this
Agreement is terminated by the Company for cause, options will vest and be
exercisable pursuant to the terms of the applicable Stock Option Plan or any
successor plan under which such options are granted (the “Plan”) regarding
termination of employment for cause. This provision shall serve as a
contractual modification of any option grants or agreements between the
Employee and the Company and is hereby incorporated by reference into each such
option grant or agreement.

 

ARTICLE IV

CONFIDENTIALITY AND COMPETITION

 

Section 4.1 
Further Obligations of the Employee During and After Employment.

 

(a) The Employee agrees that during the term of
his employment under this Agreement, he will engage in no other business
activities which are or may be competitive with, or which might place him
in a competing position to that of, the Company or any subsidiary of the
Company.

 

(b) The Employee realizes that during the
course of his employment, the Employee will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, formula, specifications, trade secrets, customer lists,
account lists and inventions of the Company and its affiliates. Therefore,
during or subsequent to his employment by the Company, or by an affiliate, the
Employee agrees to hold in confidence and not to directly or indirectly
disclose or use or copy or make lists of any such information, except to the
extent authorized by the Company in writing. All records, files, business
plans, documents, equipment and the like, or copies thereof, relating to
Company’s business, or the business of an affiliated company, which the
Employee shall prepare, or use, or come into contact with, shall remain the
sole property of the Company, or of an affiliated company, and shall not be
removed from the Company’s or the affiliated company’s premises without its
written consent, and shall be promptly returned to the Company upon termination
or resignation of employment with the Company or its affiliated companies.

 

(c) Because of his employment by the Company,
the Employee will have access to trade secrets and confidential information
about the Company, its business plans, its business accounts, its business
opportunities, its expansion plans into other geographic areas and its methods
of doing business. The Employee agrees that for a period of nine months after
termination or resignation of his employment (except if the Employee terminates
this Agreement for cause under Section 3.4 hereof or without cause under Section 3.5
hereof), he will not, directly or indirectly, compete with the Company or its
affiliates in the business of designing, merchandising, marketing or
contracting for the manufacture of men’s and

 

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women’s
golf apparel and golf outerwear within the United States. This non-compete
agreement shall be void and of no further force or effect in the event
termination occurs under Section 3.3 or Section 3.7 hereof and the
Company fails to pay the Employee amounts required under Section 3.3 or Section 3.7
hereof.

 

(d) In the event a court of competent
jurisdiction finds any provision of this Section 4.1 to be so overly broad
as to be unenforceable, then such provision shall be reduced in scope by the
court, but only to the extent deemed necessary by the court to render the
provision reasonable and enforceable, it being the Employee’s intention to
provide the Company with the broadest protection possible against harmful
competition.

 

ARTICLE V

DISABILITY AND ILLNESS

 

Section 5.1 
Disability and Salary Continuation.

 

(a) Definition of Total Disability. For
purposes of this Agreement, the terms “totally disabled” and “total disability”
shall mean disability as defined in any total disability insurance policy or
policies, if any, in effect with respect to the Employee. If no insurance
policy is in effect, “total disability” shall mean a medically determinable
physical or mental condition which in the opinion of two independent physicians
renders the Employee unable to perform substantially all of the duties
required pursuant to this Agreement. Total disability shall be deemed to have
occurred on the date of the disabling injury or onset of the disabling illness,
as determined by the two independent physicians.

 

(b) Salary Continuation. If the Employee
becomes totally disabled during the term of this Agreement, his full salary
shall be continued for 360 days from the date of the disabling injury or onset
of the disability illness.

 

Section 5.2 
Illness. If
the Employee is unable to perform the services required under this
Agreement by reason of illness or physical injury not amounting to total
disability, as defined in this Article, the compensation otherwise payable to
the Employee under this Agreement shall be continued in full for the remaining
term or renewed term of this Agreement, but in no event for a period exceeding
one year.

 

ARTICLE VI

GENERAL MATTERS

 

Section 6.1 
Governing Law.
This Agreement shall be governed by the laws of the State of Colorado and shall
be construed in accordance therewith.

 

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Section 6.2 
No Waiver. No
provision of this Agreement may be waived except by an agreement in
writing signed by the waiving party. A waiver of any term or provision shall
not be construed as a waiver of any other term or provision.

 

Section 6.3 
Amendment. This
Agreement may be amended, altered or revoked at any time, in whole or in
part, by filing with this Agreement a written instrument setting forth such
changes, signed by each of the parties.

 

Section 6.4 
Benefit. This
Agreement shall be binding upon the Employee and the Company, and shall not be
assignable by the Company without the Employee’s written consent.

 

Section 6.5 
Construction.
Throughout this Agreement the singular shall include the plural, and the plural
shall includes the singular, and the masculine and neuter shall include the
feminine, wherever the context so requires.

 

Section 6.6 
Text to Control.
The headings of articles and sections are included solely for convenience of
reference. If any conflict between any heading and the text of this Agreement
exists, the text shall control.

 

Section 6.7 
Severability.
If any provision of this Agreement is declared by any court of competent
jurisdiction to be invalid for any reason, such invalidity shall not affect the
remaining provisions. On the contrary, such remaining provisions shall be fully
severable, and this Agreement shall be construed and enforced as if such
invalid provisions had not been included in the Agreement.

 

Section 6.8 
Authority. The
officer executing this Agreement on behalf of the Company has been empowered
and directed to do so by the Board of Directors and Compensation Committee of
the Company.

 

Section 6.9 
Effective Date.
The effective date of this Agreement shall be February 7, 2006.

 

 

 

	
  SPORT-HALEY, INC.

  	
  Employee:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Donald W. Jewell

  	
   

  	
  /s/ Michael D. Doris

  	
   

  
	
   

  	
  Donald W. Jewell,

  	
  Michael D. Doris

  
	
   

  	
  Interim Chief Executive Officer

  	
   

  
					

 

8

 

SPORT-HALEY, INC.

 

EMPLOYMENT AGREEMENT

 

Schedule 1

 

Duties and Compensation

 

	
  Employee:

  	
   

  	
  Michael D. Doris

  
	
   

  	
   

  	
   

  
	
  Position:

  	
   

  	
  Regional Sales Manager

  
	
   

  	
   

  	
   

  
	
  Base Salary:

  	
   

  	
  $ 110,000 per year, payable bi-weekly, plus an override of
  0.2% on the Company’s gross annualized sales, less discounted sales of more
  than 50% from original suggested wholesale sales price, returns and credits

  
	
   

  	
   

  	
   

  
	
  Bonus:

  	
   

  	
  At the sole discretion of the Compensation Committee

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  February 7, 2006, through February 6, 2007, subject to
  renewal terms of one (1) year as described in Section 3.1 of the
  Employment Agreement

  
	
   

  	
   

  	
   

  
	
  Stock Options:

  	
   

  	
  The Company’s Stock Option Plan has expired. When and if the Company
  creates a new stock option plan, the Employee may be allowed to
  participate in such plan and receive grants of options in amounts at the
  discretion and subject to approval of the Compensation Committee. Such
  options to purchase shares typically vest in increments of one-third per year
  and are issued with an exercise price of not less than 85% of the fair market
  value of the Company’s Common Stock on date of grant, such date to be
  determined by the Compensation Committee.

  
	
   

  	
   

  	
   

  
	
  Duties and

  Responsibilities:

  	
   

  	
  The employee will use his best efforts and entire time during usual
  business hours to promote and solicit the sale of the company’s products
  actively and diligently throughout the United States and will manage and
  oversee the Company’s independent sales representatives in the Western United
  States.

  

 

 

	
  APPROVED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE COMPANY:

  	
  Employee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Donald W. Jewell

  	
   

  	
  By:

  	
  /s/ Michael D. Doris

  	
   

  
	
   

  	
  Donald W. Jewell

  	
  Michael D. Doris

  
	
   

  	
  Interim Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  
	
  Date: February 7, 2006

  	
  Date: February 7, 2006

  
								

 

9EXHIBIT 10.1

 

[Portions herein identified by [***] have been omitted
pursuant to a request

for confidential treatment and have been filed separately with the

Commission pursuant to Rule 24b-2 of the Securities Act of 1934.]

 

AMENDMENT TO PURCHASE AND SUPPLY AGREEMENT

 

This AMENDMENT TO
PURCHASE AND SUPPLY AGREEMENT (this “Amendment”)
is made effective as of the 6th day of February, 2006, by and among
Cirrus Design Corporation (“Cirrus”)
and Ballistic Recovery Systems, Inc. (“BRS”).
Capitalized terms used herein but not defined herein shall have the meanings
set forth in the Purchase and Supply Agreement (as defined below).

 

BACKGROUND

 

A.            Cirrus
and BRS are parties to that certain Purchase and Supply Agreement dated as of September 17,
1999 (the “Purchase and Supply Agreement”).

 

B.            The
parties desire to amend certain sections of the Purchase and Supply Agreement
as set forth below to change the terms regarding product liability
indemnification and certain supply and pricing terms.

 

NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged by the parties hereto,
the parties agree as follows:

 

1.             Appendix
A to the Purchase and Supply Agreement is deleted in its entirety and restated
in its entirety as indicated on EXHIBIT 1 hereto. To the extent there is a
conflict between the terms and conditions of the restated Appendix A attached
hereto as EXHIBIT 1 and the Purchase and Supply Agreement, the restated
Appendix A shall prevail.

 

2.             Section 22
(INSURANCE AND INDEMNIFICATION OF BRS) is hereby added to the Purchase and
Supply Agreement as follows:

 

22.           INSURANCE AND INDEMNIFICATION OF BRS

 

22.1         Insurance
- Cirrus shall maintain at all times during the term of this Agreement a
products liability insurance policy in an amount of not less than $10 million. At
BRS’s request, Cirrus shall furnish BRS a certificate of insurance indicating
that such insurance policy is in full force and effect. Cirrus shall supply BRS
with 90 days’ notice of any change or cancellation of such policy.

 

22.2         Indemnification
of BRS - Cirrus and BRS acknowledge that Cirrus is the owner and type
certificate holder for the Cirrus Airframe Parachute System (“CAPS”) and that
Cirrus is wholly responsible for the design, sale, installation, warnings,
training, and instructions for operation of CAPS. Accordingly, Cirrus agrees to
indemnify, defend and hold BRS harmless from any and all actions, causes of
action, claims, demands, costs, losses, liabilities, expenses

 

[***]

 

 

and damages
(excepting attorneys fees incurred by BRS without the express written approval
of Cirrus) arising out of or in connection with any claim for personal injury
or property damage alleged to have been caused by any defect in any CAPS
component (including, but not limited to, design, manufacture, training, and
installation), supplied by BRS during the term of this Supply Agreement, and
installed on a Cirrus aircraft, regardless of whether such claim is couched as
a breach of warranty, negligence, or strict liability claim and regardless of
whether the claim has been filed or served.

 

Notwithstanding anything
contained in Paragraph 22.2, Cirrus’ obligation to defend and indemnify BRS
pursuant to Paragraph 22.2 shall be subject to the following conditions:

 

a.             BRS
provides Cirrus with prompt written notice of any claim;

 

b.             Cirrus
shall have sole authority to select counsel and control BRS’s defense.

 

22.3         BRS
understands that Cirrus and BRS will be defended by common counsel and BRS waives
any claim of conflict of interest that may arise out of the defense of BRS
and Cirrus by such common counsel. Such waiver shall apply to claims to which
Paragraph 22.2 applies as well as to other, future litigation to which BRS and
Cirrus are parties but to which the indemnification contained in Paragraph 22.2
is inapplicable. Accordingly, this subparagraph 22.3 shall survive any
termination or expiration of this Agreement.

 

22.4         Cirrus
shall have sole authority to control the defense of all claims and any related
settlement negotiations. Cirrus shall not be responsible for any settlement
made without its written consent.

 

22.5         Cirrus’
obligation to indemnify shall cease immediately upon BRS’ failure to make
material shipments of goods to Cirrus, material breach of the underlying Supply
Agreement or, with respect to BRS, any of the following events:

 

a.             Merger;

b.             Sale
of all or substantially all assets associated with the production of CAPS
components;

c.             Bankruptcy;

d.             Insolvency.

 

Notwithstanding anything
contained in Paragraph 22.2, Cirrus’ obligation to indemnify shall not extend
to claims for punitive or exemplary damages or damages for willful, grossly
negligent, or wanton conduct. To the extent that punitive or exemplary or
willful, grossly negligent, or wanton conduct damages claims have been
asserted, counsel selected to defend Cirrus will defend such claims unless BRS,
at its sole expense, elects to retain separate counsel to defend BRS solely
with respect to punitive damages claims.

 

Notwithstanding anything
contained in Paragraph 22.2, Cirrus’ obligation to indemnify and defend BRS
shall not extend to claims for economic losses. Economic losses are

 

[***]

 

2

 

losses for damage
or injury solely to the aircraft or any component thereof, as well as
consequential damages arising from such economic loss.

 

3.             Section 23
(EXCLUSIVITY FOR 3,600 POUND SYSTEM) is hereby added to the Purchase and Supply
Agreement as follows:

 

23.           EXCLUSIVITY FOR 3,600 POUND SYSTEM

 

BRS shall provide Cirrus
limited exclusivity for a 3,600-pound CAPS system for a 12-month period
beginning the date Cirrus introduces to the market or otherwise offers for
sale, a Cirrus airplane that contains the 3,600-pound CAPS system. This one-year
exclusivity is limited as follows:

 

a.             Cirrus
must consent and approve during such 12-month period of any sale of a
3,600-pound aircraft recovery system to a general aviation aircraft
manufacturer other than Cirrus.

 

b.             In
addition to any credits indicated under Appendix A hereof, to the extent BRS
sells any 3,600-pound aircraft recovery system to a general aviation
manufacturer other than Cirrus during such 12-month period, BRS must pay Cirrus
a mutually agreed upon royalty of $[***]
for each 3,600-pound aircraft recovery system sold.

 

4.             Except
as expressly provided herein, nothing in this Amendment shall be deemed to
waive or modify any of the provisions of the Purchase and Supply Agreement, or
any amendment or addendum thereto, and the Purchase and Supply Agreement will
remain unchanged and in full force and effect. In the event of any conflict
between the Purchase and Supply Agreement and this Amendment, this Amendment
shall prevail.

 

5.             This
Amendment shall be binding upon any assignee, transferee, successor or assign
of any parties to the Purchase and Supply Agreement.

 

6.             BRS
shall not disclose the existence, terms or conditions of this Amendment to
Purchase Supply Agreement or the original Purchase and Supply Agreement without
the prior written consent of Cirrus.

 

7.             This
Amendment may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
executing party with the same force and effect as if such facsimile signature page were
an original thereof.

 

[Remainder of page intentionally
left blank.]

 

[***]

 

3

 

IN WITNESS WHEREOF, the
undersigned have executed this Amendment to the Purchase and Supply Agreement
as of the date first written above.

 

	
   

  	
  CIRRUS DESIGN CORPORATION:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brent Wouters

  	
  2/6/06

  	
   

  
	
   

  	
  Name:

  	
  Brent Wouters

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BALLISTIC RECOVERY SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry Williams

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Larry Williams

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
						

 

[***]

 

 

EXHIBIT 1

 

APPENDIX A

CERTAIN PURCHASE/PRICING TERMS

 

TO THE
EXTENT THERE IS A CONFLICT BETWEEN THE TERMS AND CONDITIONS OF THIS APPENDIX A
AND THE PURCHASE AND SUPPLY AGREEMENT (WITH EXHIBITS), THIS APPENDIX A SHALL
PREVAIL.

 

1.             Cirrus agrees that
all purchase orders for CAPS must be delivered to BRS at least 12 months in
advance of the scheduled delivery date.

 

2.             Cirrus agrees that
NBRS shall bepaid net 15 days of delivery of CAPS to Cirrus.

 

3.             The fully delivered
fixed contract price of CAPS (“Fixed Contract Price”) shall be as follows:

 

	
  CAPS – SR20

  	
   

  	
  $[***]

  
	
   

  	
   

  	
   

  
	
  CAPS – SR22

  	
   

  	
  $[***]

  
	
   

  	
   

  	
   

  
	
  CAPS – SR20 Fleet

  	
   

  	
  $[***] (NOTE: Volume not to exceed 10% of total orders
  in any one given month unless mutually agreed to by Cirrus and BRS.)

  

 

4.             The parties agree
that the Fixed Contract Price shall be adjusted as follows:

 

a.             A credit of $[***]
will be applied by BRS for each CAPS unit provided that the indemnification is
provided as indicated in Section 22 (INSURANCE AND INDEMNIFICATION OF BRS)
of the Purchase and Supply Agreement, as amended. This credit shall be
independent of any credit indicated in 4(b) of Appendix A hereof.

 

b.             Provided Cirrus
orders an average of 13 CAPS per week (based upon the average over a rolling
90-day period), a credit of $[***] will be applied by BRS to each CAPS unit
provided.

 

5.             BRS shall credit
Cirrus $[***]
for each 3,600-pound aircraft recovery system that BRS sells to a manufacturer
of general aviation aircraft, other than Cirrus, over a 12-month period
beginning from the date Cirrus first offers for sale a Cirrus product which
utilizes such 3,600 pound aircraft recovery system.

 

[***]

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