September 18, 0000
Xx. Xxxx Xxxxxxxxxx
Xxxxxxx Inflatables, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Dear Xx. Xxxxxxxxxx:
This letter is written on behalf of National Paintball Supply Co., Inc.
("Paintball") and details the agreement between Paintball and you with respect
to the currently outstanding "investor notes" issued by American Inflatables,
Inc. ("Inflatables").
Background
You and we acknowledge the following:
1. Inflatables has issued $330,000 principal amount of notes to Universal
Consultants, Inc. (the "Holders") pursuant to promissory notes dated
_____________________ (the "Notes").
2. You personally guaranteed repayment of the Notes.
3. In connection with the issuance of the Notes, warrants to purchase
1,320,000 shares of Inflatables common stock were issued (the "Warrants"). The
Warrants have an exercise price of $0.25 per share.
4. Assuming consummation of the pending acquisition of Inflatables by
Paintball (the "Merger"), the Warrants would be exercisable for 220,000 shares
of Paintball common stock and have an aggregate exercise price of $1.50.
Agreement
We have agreed (and by this letter do hereby agree) as follows:
1. Any exercise price paid in the cash for the Warrants received by
Paintball will be applied to amounts owed under the Notes.
2. You will indemnify Inflatables post-Merger from all amounts owed under
the Notes and not paid as a result of the receipt of exercise price proceeds
from exercise of the Warrants.
We acknowledge that Paintball has no current or future obligation with
respect to the Notes (other than the obligation to apply exercise price proceeds
as contemplated herein).
Please evidence your consent to this letter agreement by signing in the
place indicated below.
Yours truly,
National Paintball Supply Co., Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxxx
Xxxx Xxxxxxxxxx
/s/ Xxxx Xxxxxxxxxx
----------------------------
An individual
