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<FILING-DATE>20110105
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<CONFORMED-NAME>PepperBall Technologies, Inc.
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<STATE-OF-INCORPORATION>CO
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT REPORT</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant to Section&#160;13 or 15(d)&#160;of the</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item 1.01&#160;&#160;&#160;&#160;Entry into a Material Definitive Agreement</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain of the Company's previously issued&#160;secured and unsecured 10%&#160;notes that had a scheduled maturity&#160;date of December 31, 2010, have been amended by mutual agreement with the holders to a revised maturity date of December 31, 2012.&#160; The notes were originally&#160;issued in 2009 to 2010 and included $1,530,000 in secured notes, subject to&#160;subordination agreements and $2,572,000 in unsecured notes.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>As consideration for the extension of the Notes, warrants to purchase shares of the Company&#8217;s Common Stock, or at the option of the Investor shall be convertible into the Company&#8217;s Preferred Stock, no par value per share, at $0.05 per share will be issued.&#160;&#160;The number of Warrants to purchase said Common Stock or Preferred Stock shall be equal to fifty percent of the amount of the Notes divided by $0.05.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As part of the note agreements and extension provisions for the investors who participated in the closing which was described in the Company's&#160;Form 8-K filed as of December 20, 2010, those investors, to the extent 1)&#160;that they where existing holders of the Company's 10% Notes and 2)&#160;they invested&#160;&#160;in the December 20, 2010 Closing, had the conversion price of the existing prior Notes reduced&#160;to $.05 per common share for a&#160;amount equal to the level of&#160;their investment in the&#160;new Notes.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The description of the transaction set forth above is qualified in its entirety by reference to the Secured Note Extension Agreement, Unsecured Note Extension Agreement, and Warrant, forms of which are filed with this current report as Exhibits 10.1, 10.2,&#160;&#160;and 10.3, respectively.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The information set forth above under <font style="DISPLAY: inline; FONT-STYLE: italic">Item 1.01, Entry into a Material Definitive Agreement</font>, is hereby incorporated by reference into this Item 2.03.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item 3.02&#160;&#160;&#160;&#160;Unregistered Sales of Equity Securities</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The information set forth above under <font style="DISPLAY: inline; FONT-STYLE: italic">Item 1.01, Entry into a Material Definitive Agreement</font>, is hereby incorporated by reference into this Item 3.02.</font></div>

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<font style="DISPLAY: inline; FONT-WEIGHT: bold">Item 5.02&#160;&#160; Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(b).&#160;&#160;&#160;&#160;&#160; Resignation of Officer.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective January 1, 2011 Jeffrey McGonegal resigned as Chief Financial Officer (principal financial officer) of PepperBall Technologies, Inc.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">(c).&#160;&#160;&#160;&#160;&#160;&#160;Appointment of Officer.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective January 1, 2011, Christin Lewis, age 46, was appointed to the position of Chief Financial Officer (principal financial officer) of PepperBall Technologies, Inc.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms. Lewis has more than 20 years of experience in financial reporting and accounting matters. Most recently she has served as Vice President of Finance for PepperBall Technologies, Inc. and over the past 10 years has been employed by PepperBall Technologies, Inc., serving in accounting and financial reporting roles for the Company and its predecessors.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms. Lewis graduated from San Diego State University with a Bachelor of Science in Business Administration with an Accounting emphasis.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a result of this appointment there was no change in the compensation arrangements with Ms. Lewis.&#160;&#160;There are no family relationships between Ms. Lewis and any director or other executive officer of the Company.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d) <font style="DISPLAY: inline; FONT-STYLE: italic">Exhibits</font>.</font></div>

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<div style="TEXT-ALIGN: right">Exhibit 10.1</div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PepperBall Technologies, Inc.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Extension Agreement</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: bold"><font style="FONT-WEIGHT: normal"><font style="DISPLAY: inline; FONT-WEIGHT: normal">This Secured Convertible Promissory Note Extension Agreement (&#8220;Note Extension Agreement&#8221;)</font> is entered into by and between PepperBall Technologies, Inc. a Colorado corporation (the Company), and ______________________(Investor).</font></font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The attached <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note</font> dated as of _________________ currently held by Investor is due December 31, 201_.&#160;&#160;In consideration for the extension of the maturity date of attached <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note</font> until December 31, 2012, the Company hereby issues to Investor a <font style="DISPLAY: inline; FONT-WEIGHT: normal">Warrant</font> to purchase common stock of the Company in the amount of up to $________ at the exercise price of $0.05 per share.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A copy of this <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note Extension Agreement </font>will be attached to and modify the <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note</font> issued to Investor and attached hereto.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The effective date of this <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note Extension Agreement </font>and the<font style="DISPLAY: inline; FONT-WEIGHT: normal"> Warrant </font>is December 30, 2010.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div>&#160;</div>

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<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">PepperBall Technologies, Inc.</font></font></td>
<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">___________________________</font></td>
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<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Investor Name</font></font></td>
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<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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<td width="40%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline">/s/ Christin Lewis</font></font></font></div>
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<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;___________________________</font></td>
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<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Asst Secretary</font></font></td>
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<DOCUMENT>
<TYPE>EX-10.2
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<FILENAME>ex10x2.htm
<DESCRIPTION>EXHIBIT 10.2
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<head>
    <title>ex10x2.htm</title>
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<div style="TEXT-ALIGN: right">Exhibit 10.2</div>

<div>&#160;</div>

<div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PepperBall Technologies, Inc.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Extension Agreement</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unsecured Convertible Promissory Note</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrant Attached</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: bold"><font style="FONT-WEIGHT: normal"><font style="DISPLAY: inline; FONT-WEIGHT: normal">This Unsecured Convertible Promissory Note Extension Agreement (&#8220;Note Extension Agreement&#8221;)</font> is entered into by and between PepperBall Technologies, Inc. a Colorado corporation (the Company), and ______________________(Investor).</font></font></font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The attached <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note</font> dated as of April 22, 2009 currently held by Investor is due December 31, 2010.&#160;&#160;In consideration for the extension of the maturity date of attached <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note</font> until December 31, 2012, the Company hereby issues to Investor a <font style="DISPLAY: inline; FONT-WEIGHT: normal">Warrant</font> to purchase common stock of the Company in the amount of up to $________ at the exercise price of $0.05 per share.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The <font style="DISPLAY: inline; FONT-WEIGHT: normal">Warrant</font> expires on January 15, 2014.&#160;&#160;A copy of the <font style="DISPLAY: inline; FONT-WEIGHT: normal">Warrant</font> is attached.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Investor has also entered into an additional promissory note dated December 2010 (&#8220;new note&#8221;). As additional consideration for the new note, the Company will decrease $______________ of the extended note&#160;conversion price to $.05 per share.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A copy of this <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note Extension Agreement </font>will be attached to and modify the <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note</font> issued to Investor and attached hereto.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The effective date of this <font style="DISPLAY: inline; FONT-WEIGHT: normal">Note Extension Agreement </font>and the<font style="DISPLAY: inline; FONT-WEIGHT: normal"> Warrant </font>is December 30, 2010.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">
<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div>&#160;</div>

<div align="center">
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<tr>
<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">PepperBall Technologies, Inc.</font></font></td>
<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">___________________________</font></td>
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<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Investor Name</font></font></td>
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<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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<td width="40%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline">/s/ Christin Lewis</font></font></font></div>
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<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;___________________________</font></td>
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<td width="40%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Asst Secretary</font></font></td>
<td width="60%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Signature)</font></td>
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<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>ex10x3.htm
<DESCRIPTION>EXHIBIT 10.3
<TEXT>
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<head>
    <title>ex10x3.htm</title>
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<div style="TEXT-ALIGN: right">Exhibit 10.3</div>

<div>&#160;</div>

<div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF OR IN ACCORDANCE WITH APPLICABLE LAW.</font></div>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WARRANT TO PURCHASE STOCK</font></div>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>

<div align="center">
<table bgcolor="white" cellpadding="0" cellspacing="0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
<td width="24%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Corporation:&#160;&#160;&#160;&#160;</font></td>
<td width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;PEPPERBALL TECHNOLOGIES, INC.</font></td>
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<td width="24%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number of Shares:&#160;</font></td>
<td width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$________________/Exercise&#160;Price</font></td>
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<td width="24%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Class of Stock:&#160;&#160;&#160;</font></td>
<td width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Common or Series C Preferred Stock</font></td>
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<td width="24%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Initial Exercise Price:&#160;</font></td>
<td width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.05 per share</font></td>
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<td width="24%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Issue Date:&#160;</font></td>
<td width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;December 30, 2010</font></td>
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<td width="24%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Expiration Date:&#160;&#160;</font></td>
<td width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;January 15, 2014</font></td>
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</div>

<div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THIS WARRANT CERTIFIES THAT, in consideration of the payment of $1.00 and for other good and valuable consideration, ________________________________________ or registered assignee (&#8220;Holder&#8221;) is entitled to purchase the number of fully paid and nonassessable shares (the &#8220;Shares&#8221;) of Common Stock of PEPPERBALL TECHNOLOGIES, INC. (the &#8220;Company&#8221;), in the number, at the price, and for the term specified above.&#160;&#160;This Warrant and the Warrant Shares shall not be subject to any agreements entered into between the Company and any person or entity that has the effect of reducing the number of Shares that Holder may acquire hereunder.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">&#160;</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE 1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">EXERCISE</font></font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">&#160;</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Method of Exercise</font>.&#160;&#160;Holder may exercise this Warrant by delivering this Warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix&#160;1 to the principal office of the Company.&#160;&#160;&#160;&#160;Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">&#160;</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.2</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Delivery of Certificate and New Warrant</font>.&#160;&#160;Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">&#160;</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.3</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Replacement of Warrants</font>.&#160;&#160;On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">&#160;</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE 2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">ADJUSTMENTS TO THE SHARES</font>.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">&#160;</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Stock Dividends, Splits, Etc</font>.&#160;&#160;If the Company declares or pays a dividend on its common stock payable in common stock, or other securities, subdivides the outstanding common stock into a greater amount of common stock, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">&#160;</div>

<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.2</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Reclassification, Exchange or Substitution</font>.&#160;&#160;Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event.&#160;&#160;Such an event shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock pursuant to the terms of the Company&#8217;s Certificate of Incorporation upon the closing of a registered public offering of the Company&#8217;s common stock.&#160;&#160;Upon the closing of any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company&#8217;s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction, the successor entity shall assume the obligations of this Warrant, and this Warrant thereafter shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing.&#160;&#160;The Warrant Price shall be adjusted accordingly.&#160;&#160;The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property.&#160;&#160;The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article&#160;2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant.&#160;&#160;The provisions of this Section&#160;2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center">1</div>

<div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160; </font></div>
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<div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160; </font></div>

<div style="WIDTH: 100%; TEXT-ALIGN: center">
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<div id="HDR">
<div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160; </font></div>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.4</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Impairment</font>.&#160;&#160;The Company shall not, by amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out all the provisions of this Article&#160;2 and in taking all such action as may be necessary or appropriate to protect Holder&#8217;s rights under this Article against impairment.&#160;&#160;If the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder&#8217;s rights under this Warrant, the Warrant Price shall be adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Warrant Price of this Warrant is unchanged.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.5</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Certificate as to Adjustments</font>.&#160;&#160;Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based.&#160;&#160;The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE 3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">REPRESENTATIONS AND COVENANTS OF THE COMPANY</font>.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Representations and Warranties</font>.&#160;&#160;The Company hereby represents and warrants to the Holder as follows:</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The initial Warrant Price referenced on the first page of this Warrant is not greater than the fair market value of the Shares as of the date of this Warrant.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All Shares that may be issued upon the exercise of the purchase right represented by this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The capitalization table attached hereto correctly sets forth the authorized, issued and outstanding shares of capital stock of the Company and all options to acquire any such shares.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notice of Certain Events</font>.&#160;&#160;If the Company proposes at any time (a)&#160;to declare any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b)&#160;to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c)&#160;to effect any reclassification or recapitalization of common stock; (d)&#160;to merge or consolidate with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets, or to liquidate, dissolve or wind up; or (e)&#160;offer holders of registration rights the opportunity to participate in an underwritten public offering of the company&#8217;s securities for cash, then, in connection with each such event, the Company shall give Holder (1)&#160;at least 20&#160;days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; (2)&#160;in the case of the matters referred to in (c) and (d) above at least 20&#160;days prior written notice of the date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such event); and (3)&#160;in the case of the matter referred to in (e) above, the same notice as is given to the holders of such registration rights.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE 4.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">MISCELLANEOUS</font>.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Term</font>.&#160;&#160;This Warrant is exercisable, in whole or in part, at any time and from time to time on or before the Expiration Date set forth above.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Legends</font>.&#160;&#160;This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR IN ACCORDANCE WITH APPLICABLE LAW.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.3</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Compliance with Securities Laws on Transfer</font>.&#160;&#160;This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.4</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Transfer Procedure</font>.&#160;&#160;Subject to the provisions of Section&#160;4.3, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable), provided that no such notice shall be required for a transfer to an affiliate of Holder.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.5</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices</font>.&#160;&#160;All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.6</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Waiver</font>.&#160;&#160;This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.7</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Attorneys&#8217; Fees</font>.&#160;&#160;In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys&#8217; fees.</font></div>

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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.8</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing Law</font>.&#160;&#160;This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.</font></div>

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<td colspan="2" valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;PEPPERBALL TECHNOLOGIES, INC.</font></td>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;/s/ Christin Lewis&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;Christin Lewis</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;Assistant Secretary&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">NOTICE OF EXERCISE</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The undersigned hereby elects to purchase ______________ shares of the Common Stock of PEPPERBALL TECHNOLOGIES, INC.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.</font></div>

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