EXHIBIT 10.4
SLS INTERNATIONAL, INC.
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
July 10, 2003
Xxxxxx X. Xxxxx PLLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Re: Xxxxxx X. Xxxxx v. SLS International, Inc. (the "Litigation")
Gentlemen,
Xxxxxx X. Xxxxx PLLC ("Xxxxx") and SLS International, Inc. (the "Company")
entered into two letter agreements dated July 17, 2002 (the "Prior Agreements")
related to the settlement of the Litigation and the provision of services to the
Company by Xxxxx. This letter agreement amends and restates the Prior Agreements
in their entirety.
1. The Company acknowledges and agrees that Xxxxx performed and
completed the legal services described in the Prior Agreements.
2. The Company and Xxxxx agree to settle the captioned action and
pay for the services described in paragraph 1 by payment of
$50,000, payable as follows:
(a) The Company shall pay $20,000 in cash by wire transfer of
immediately available funds to an account designated by Xxxxx by
no later than Thursday, July 10, 2003.
(b) By no later than August 11, 2003, the Company in its sole
discretion shall either (i) pay $30,000 in cash by delivery of a
Company check payable to Xxxxx or wire transfer of immediately
available funds to an account designated by Xxxxx; or (ii)
deliver options to AVG to purchase shares of the Company's common
stock with an aggregate exercise price of $30,000, together with
the credit account described in paragraph 2(c)(iii) below; or
(iii) a combination of cash and options, as described in (i) and
(ii), equal to a sum of $30,000. Any options delivered hereunder
shall have an exercise price per share equal to (x) for the first
$10,000 of aggregate exercise price of options delivered
hereunder, $0.44 per share; and (y) for all other options, the
average closing bid price for the shares, published on the NASD
Bulletin Board for the five trading days preceding the issuance
date of such options. Any such options shall have a term of four
months following such issuance date.
(c) To the extent the Company elects to deliver options pursuant
to paragraph 2(b) above, the Company shall also, by no later than
August 15, 2003:
(i) Deliver to Xxxxx shares of its common stock in an
amount equal to 2,000 shares for each $10,000 of
aggregate exercise price of options delivered to
Xxxxx, or a pro rata portion thereof for amounts less
than $10,000. Such shares shall be "restricted
securities" under Rule 144 adopted by the U.S.
Securities and Exchange Commission.
(ii) File a Registration Statement on Form S-8
covering the shares issuable upon exercise of the
options issued pursuant to paragraph 2(b) above.
(iii) Permit AVG to exercise the options by offset
against a credit account established by the Company
for AVG's account in an amount equal to $50,000 minus
the amount of cash paid to Xxxxx pursuant to this
paragraph 2.
3. In consideration for the Company's agreement to settle the claim
for $50,000 as set forth herein, and as a condition to the
Company's agreements contained herein, on the date hereof (a)
Xxxxx and Xxxxxx X. Xxxxx ("AVG") shall sign and deliver to
Xxxxxxx the General Release in the form attached hereto as
Exhibit A; and (b) Xxxxx and AVG shall sign the Stipulation in
the form attached hereto as Exhibit B, to be held in escrow by
Xxxxx'x and AVG's attorney, Xxxxxx Xxxxxxx ("Xxxxxxx"). Xxxxxxx
shall deliver the General Release to the Company, and Xxxxxxx
shall file the Stipulation with the Supreme Court of the State of
New York, County of New York, promptly following (but no later
than five business days following) the Company's payment of the
amounts set forth in paragraphs 3(a) and (b) above.
4. Escrow. To ensure the Company's performance of its obligations
under paragraph 2 above, the Company previously delivered options
to Xxxxxxx with the dates, exercise price and number of shares
blank, as well as one option with only the date blank. The
options shall be held in escrow by Xxxxxxx until August 12, 2003,
at which time Xxxxxxx shall either (a) if the Company has
delivered $30,000 to Xxxxx pursuant to paragraph 2(b) above,
return such options to the Company; or (b) to the extent the
Company has delivered less than such $30,000 amount, on one (or
if the aggregate exercise price of the options is greater than
$10,000, then on two) of the blank options, fill in the issuance
date of the option as of August 11, 2003, fill in the exercise
price and number of shares subject thereto in accordance with
paragraph 2(b), and deliver the option to AVG. At least four
hours prior to delivery of such option to AVG, Xxxxxxx shall fax
to the Company at (000) 000-0000 notice of the date, exercise
price and number of shares that he will fill in such option, with
a copy to the Company's attorney, Xxxx Xxxxxxx, at (312)
360-6597. Unless the Company or its attorney indicates
disagreement with the issuance date, exercise price or number of
shares within four hours by return
fax to Xxxxxxx at (000) 000-0000, the amounts specified by
Xxxxxxx shall be deemed final, absent intentional error or fraud.
If there is a dispute over the calculation of exercise price or
the number of shares, the parties agree to submit and be bound by
the calculation thereof by the Company's auditors.
Notwithstanding anything to the contrary contained herein, the
Company shall not alter the delivery instructions concerning the
options as specified herein, except in the event of a
disagreement with the calculations of exercise price, number of
shares and issuance date. Upon delivery of one option (or two
options) to AVG by Xxxxxxx and the Company's agreement with the
calculations of the exercise price, number of shares and issuance
date thereof, Xxxxxxx shall return the other options in its
possession to the Company or to Xxxx Xxxxxxx.
5. Company Covenant. The Company covenants that it will timely file
its periodic reports with the SEC as required by the Securities
Exchange Act of 1934, as amended, for any period during which any
of the options described above are outstanding.
6. Escrow Agent. The parties agree to indemnify Xxxxxxx and hold him
free and harmless from any and all claims, lawsuits, actions or
proceedings in connection with the transactions contemplated
herein, except for acts of gross negligence or malfeasance.
7. Limitation on Resales. It is understood that AVG intends not to
disrupt the market for the Company's shares by selling large
blocks of stock delivered from exercise of the options all at
once. In this connection, AVG agrees to sell no more than the
number of shares received in return for the delivery of an
aggregate exercise price of $2,500 in any single week.
[Signatures on following page.]
Very truly yours,
SLS International,
Inc.:
By_______________________
Xxxx Xxxx, President
Accepted and Agreed:
Xxxxxx X. Xxxxx PLLC
By___________________
Xxxxxx X. Xxxxx, Principal
_______________________ _______________________
Xxxxxx X. Xxxxx Xxxxxx Xxxxxxx
