Ballistic Recovery Systems, Incorporated
300 Airport Road
South St. Paul, MN 55075
USA
Tel: 651-457-7491
Fax: 651/457-8651
E-Mail: BRSchute@aol.com
Web: www.AirplaneParachutes.com
DATE: September 17, 1999
FOR IMMEDIATE RELEASE
CIRRUS DESIGN, BUILDER OF THE SR20 AIRCRAFT,
OPTS FOR STAKE IN PARACHUTE MAKER, BRS
SOUTH ST. PAUL, MINN. - BRS announced today that it entered into a Purchase
and Supply Agreement with Cirrus Design Corporation. Under the Agreement,
Cirrus would receive warrants to acquire up to 19.3% of BRS stock based on
today's outstanding shares. In order to be able to execute the warrants,
Cirrus must meet certain purchase levels of BRS emergency parachute systems
for their aircraft.
"Cirrus and BRS have been in discussion on this deal since August of
1998," reported BRS president & CEO, Mark Thomas. As part of an accord
spanning five years, Cirrus may eventually have the right to buy up to
1.4 million shares of BRS stock.
"The document represents a five-year manufacturing contract and provides
several benefits to both the BRS and Cirrus companies," explained Thomas.
"Since Cirrus is required to purchase a growing number of parachute units
each year in order to maximize the number of warrants available, BRS
anticipates that sales will accelerate every year," reported Thomas. He
added, "If Cirrus takes delivery on 1,150 parachute system over the next five
year, their purchases represent in excess of $12 million in sales volume over
the life of the contract."
Of course, it is possible that Cirrus will not reach the level of
purchases necessary to receive all of the warrants, and if so, the number of
shares which can be acquired by Cirrus and the dollar value of those stock
purchases will be less. Cirrus is required to purchase 250 parachute systems
in year number three of the agreement, 400 in year number four, and 500 units
in year number five in order to qualify to receive all of the warrants. BRS
anticipates offering systems to Cirrus for use on aircraft beyond the
SR20 model as they expand their product line. Please see the attached schedule
for further details.
According to terms of the Agreement, Cirrus could pay BRS in excess of
$1.6 million to exercise its warrants, the exercise of which is contingent
upon achieving certain purchase levels under the Agreement.
The Agreement provides that Cirrus will cancel $604,000 of purchase
discounts due from BRS. Cirrus was entitled to the purchase discounts in
exchange for its original contribution to BRS during the development stage of
the product. The cancellation of the purchase discounts does not call for any
technology transfers between the companies.
Assuming Cirrus Design meets all of the purchase levels of the
agreement, the shares of BRS acquired by Cirrus will average $1.59 per share.
In recent weeks the shares of BRS have been trading in the $2.00-3.00 range,
although the rolling average share price over the last year is $1.84 per
share. Please see the attached schedule for further details.
The Private Securities Litigation Reform Act of 1995 provides "safe
harbor" for forward-looking statements. Certain information included in this
press release (as well as information included in oral statements or other
written statements made or to be made by the Company) contain statements that
are forward-looking, such as statements relating to plans of the Company,
anticipated BRS and Cirrus sales, and the exercise of warrants. Such
forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks
and uncertainties include, but are not limited to, the decline in registered
and unregistered aircraft sales, the market acceptance of Cirrus products,
the exercise of warrants by Cirrus, potential product liability claims,
dependence on discretionary consumer spending, dependence on existing
management, general economic conditions, changes in federal or state laws or
regulations.
Cirrus Design received certification for its modern SR20 aircraft in
October 1998 after successfully concluding all FAA requirements including
eight in-air deployments of the parachute system. The Duluth, Minnesota
company delivered its first two aircraft in July of 1999 and currently has a
firm order backlog of 356 aircraft.
Since the early 1980s BRS has delivered nearly 15,000 parachute systems
to owners of ultralight, microlight, kit-built, and general aviation
aircraft. Actual uses of the system are credited with saving the lives of 129
persons through the end of June, 1999. BRS is a publicly-traded company based
in South St. Paul, Minnesota. (Computer searches: use the stock symbol
"BRSI.") Further information is available on the company's web site.
Contact: DAN JOHNSON, Vice President of BRS
Summary of Transaction
Under terms of the agreement, Cirrus has been issued four (4) warrants to
purchase shares of BRS stock as set forth in the table below. In order to
exercise the warrant, Cirrus must meet the minimum purchase levels as set forth.
If the minimum purchase levels are met, then Cirrus has the right to exercise
the warrant during the exercise period for the state exercise price. In the
event that Cirrus does not meet the minimum purchase levels, Cirrus will forfeit
the right to exercise that particular warrant.
The Warrant terms are as follows:
Exercise Price per
Warrant # Exercise Period Warrant Shares Warrant Share Purchase Commitment
- --------- --------------- -------------- ------------- -------------------
1 January 1, 2002- 250,000 $1.00 250 Recovery Units
February 28, 2003 in year 2002
2 January 1, 2003- 250,000 $1.00 \
February 28, 2004 400 Recovery Units
in year 2003
3 January 1, 2003- 250,000 $1.25 /
February 28, 2004
4 January 1, 2004- 650,000 $1.25 500 Recovery Units
February 28, 2005 in year 2004
If Cirrus fulfills their purchase commitments and exercises their warrants,
the impact on equity may be as follows: (Assumes equity contributions based
on exercise of all warrants)
Calendar Equity
Year Contribution
---- ------------
2002 $250,000
2003 $562,500
2004 $812,500
Total $1,625,000