March 31, 2003
Xxxxx Xxxxxx,
Chief Executive Officer
NEBO Products, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxx 00000
Re: Settlement of Account Receivable
Dear Xxxxx:
As you know, at February 28, 2003, the Company owed this firm $70,680.33. We
have agreed to a payment and settlement of this amount as outlined in this
letter. Please sign the enclosed copy of this letter and the enclosed pledge
agreement and promissory note and return them to me together with the two stock
certificates mentioned below.
We have agreed as follows:
1) The Company will immediately issue Durham Xxxxx & Xxxxxxx 1,500,000
free-trading shares registered or to be registered on a Form S-8 valued
at $0.02 per share ($30,000). The receipt of these shares will be
treated by the firm as a cash payment and the receivable would be
reduced accordingly. The Company will pay the cost of registration of
the shares.
2) The Company will sign and deliver to the firm a promissory note for
$25,000 at 18% per annum interest, due in full on April 1, 2004;
subject, however, to the acceleration (immediate payment) of the note,
plus accrued interest, in the event of (a) equity or debt financing
with proceeds to the company of $250,000 or more; or (b) the sale of
the sporting goods division or similar sale of assets regardless of the
purchase price. We have agreed that if you receive equity funding or
the purchase price in such a sale in installments, that you may make
the repayment of the note in installments as those other installments
are received in an amount that is not less than 15% of the
Xxxxx Xxxxxx
March 31, 2003
Page 2
installment received by the Company; provided, however, that the note
must be paid in full on or before April 1, 2004. For example, if you
receive funding in $100,000 increments, you would pay a minimum of
$15,000 towards the note; payments applied first to accrued interest
and then to principal.
3) The note will be secured by 2,000,000 restricted shares of common stock
issued by the Company (which could be registered at a subsequent date
pursuant to registration rights). The terms of such a pledge will be
those contained in a Pledge and Security Agreement. Those shares would
be returned when the note is paid in full.
4) The balance of the receivable ($15,680.33) would be paid (with interest
at 18% per annum, i.e., 1.5% per month) in three payments, 1/3 by April
15, 2003, 1/3 by May 15, 2003 and 1/3 by June 15, 2003.
5) Fees and expenses billed for billing cycles commencing March 1, 2003,
will be paid upon receipt of invoice, generally by the 15th of the
following month. For example, the bill for March 2003 time will be
mailed by the firm on or about April 10. Payment is to be received by
the firm by April 15th.
6) Any default under the promissory note, or the payments agreed upon
under items 4 and 5 above will constitute a default under all of the
obligations and therefore the entire unpaid amounts owed to the firm
(including amounts remaining under items 2, 4 and 5 above) would be
deemed in default and payable immediately.
Thank you.
Very truly yours,
DURHAM XXXXX & XXXXXXX
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Accepted and Agreed:
NEBO PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------------------------
Xxxxx Xxxxxx, President
KRP/lh
Enclosures
