8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): June 14, 2005

SLS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	333-43770	52-2258371
(State of incorporation)	(Commission File Number)	(IRS Employer ID No.)

1650 West Jackson Street, Ozark, Missouri 65721

(Address of principal executive offices) (Zip Code)

(417) 883-4549

Registrant’s telephone number, including area code:

Item 1.01.

Entry into a Material Definitive Agreement.

(a)

On June 14, 2005, SLS International, Inc. (“SLS”), JMBP, Inc. (“JMBP”) and Mark Burnett (“Burnett”) entered into a Promotion Agreement (the “Promotion Agreement”). The Promotion Agreement sets forth, among other terms, terms summarized as follows:

h

JMBP and Mr. Burnett will use their commercially reasonable good-faith efforts to identify opportunities for SLS products to be the subject of product placements in connection with television productions involving JMBP, Mr. Burnett and their affiliates.

h

JMBP and Mr. Burnett will use their commercially reasonable good-faith efforts to execute a product integration whereby an SLS product will be integrated as part of the central premise of an episode of a prime-time network television production in which JMBP or Mr. Burnett is involved.

h

Mr. Burnett will act as a consultant to SLS in connection with various promotional activities relating to SLS and its products.

h

JMBP and SLS will use their commercially reasonable good-faith efforts to enter into license agreements whereby JMBP would grant to SLS certain licenses to use various trademarks and phrases relating to JMBP productions associated with any product placements and product integrations generated under the Promotion Agreement. Any licenses would bear specified royalties based on certain sales of SLS products.

The Promotion Agreement includes a three-year term, except for certain matters that terminate earlier as set forth in the Promotion Agreement. Any product placements, product integrations and licenses will be subject to additional terms to be negotiated and set forth in subsequent related agreements.

The foregoing summary description of the Promotion Agreement is qualified in its entirety by reference to the terms of the Promotion Agreement, which is filed as Exhibit 10.1 hereto.

(b)

In connection with the Promotion Agreement, SLS entered into an Option Agreement, dated as of June 14, 2005, with Mr. Burnett. Under the Option Agreement, SLS granted to Mr. Burnett options to purchase 1,000,000 shares of SLS common stock at an exercise price of $2.05 per share, subject to certain adjustments specified in the Option Agreement. SLS issued the options as part of the consideration for the consulting and other services SLS is entitled to receive under the Promotion Agreement. Any proceeds received by SLS in connection with the exercise of the options are expected to be used for general corporate purposes.

Forty percent of the options vested as of June 14, 2005 and the remainder of the options vest, if at all, incrementally based on the achievement of specified milestones. SLS may redeem the options (or require the holder to exercise them) if certain conditions are met.

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The options, and the common stock for which the options are exercisable, have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption. The options were issued in reliance upon an exemption from registration under Section 4(2) of the Securities Act. SLS has agreed to register for resale the shares of common stock issuable upon exercise of the options.

The options are exercisable at any time, and from time to time, during the term beginning on June 14, 2005 and ending on June 14, 2010. Payment of the exercise price may be made in cash, by check or through a cashless exercise procedure specified in the Option Agreement.

The foregoing summary description of the Option Agreement is qualified in its entirety by reference to the terms of the Option Agreement, which is filed as Exhibit 10.2 hereto.

(c)

In connection with the Promotion Agreement, SLS issued a Warrant Certificate, dated as of June 14, 2005, to Mr. Burnett. Pursuant to the Warrant Certificate, SLS granted to Mr. Burnett warrants to purchase 1,000,000 shares of SLS common stock at an exercise price of $6.50 per share, subject to certain adjustments specified in the Warrant Certificate. SLS issued the warrants as part of the consideration for the consulting and other services SLS is entitled to receive pursuant to the Promotion Agreement. Any proceeds received by SLS in connection with the exercise of the warrants are expected to be used for general corporate purposes.

Forty percent of the warrants vested as of June 14, 2005 and the remainder of the warrants vest, if at all, incrementally based on the achievement of specified milestones. SLS may redeem the warrants (or require the holder to exercise them) if certain conditions are met.

The warrants are exercisable at any time, and from time to time, during the term beginning on June 14, 2005 and ending on June 14, 2010. Payment of the exercise price may be made in cash, by check or through a cashless exercise procedure specified in the Warrant Certificate.

The warrants, and the common stock for which the warrants are exercisable, have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption. The warrants were issued in reliance upon an exemption from registration under Section 4(2) of the Securities Act. SLS has agreed to register for resale the shares of common stock issuable upon exercise of the warrants.

The foregoing summary description of the Warrant Certificate is qualified in its entirety by reference to the terms of the Warrant Certificate, which is filed as Exhibit 10.3 hereto.

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Item 3.02

Unregistered Sales of Equity Securities.

See disclosure under Items 1.01(b) and 1.01(c) of this report, which items are incorporated by reference in this Item 3.02.

Item 8.01

Other Events.

On June 20, 2005, SLS issued a press release announcing that it had entered into the Promotion Agreement. A copy of such press release is furnished herewith as Exhibit 99.1.

Item 9.01.

Financial Statements and Exhibits.

(c)

Exhibits

Exhibit No.	Description
10.1	Promotion Agreement, dated as of June 14, 2005, by and among SLS International, Inc., JMBP, Inc. and Mark Burnett
10.2	Option Agreement, dated as of June 14, 2005, by and between SLS International, Inc. and Mark Burnett
10.3	Warrant Certificate, dated as of June 14, 2005
99.1	Press Release

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.

SLS INTERNATIONAL, INC.
	(Registrant)
By	/s/ JOHN M. GOTT
	John M. Gott President and Chief Executive Officer

Dated: June 20, 2005

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SLS INTERNATIONAL, INC.

Current Report on Form 8-K

EXHIBIT INDEX

Exhibit No.	Description
10.1	Promotion Agreement, dated as of June 14, 2005, by and among SLS International, Inc., JMBP, Inc. and Mark Burnett
10.2	Option Agreement, dated as of June 14, 2005, by and between SLS International, Inc. and Mark Burnett
10.3	Warrant Certificate, dated as of June 14, 2005
99.1	Press Release

EX-10.1

EXHIBIT 10.1

PROMOTION AGREEMENT

This Promotion Agreement (this “Agreement”) is entered into and made effective as of June 14, 2005, by and among SLS International, Inc., a Delaware corporation (“SLS”), JMBP, Inc. (“JMBP”), a California corporation, and Mark Burnett (“Burnett” and, together with SLS and JMBP, the “Parties”). In consideration of the mutual agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

1.	Term of Agreement:	Unless otherwise specifically stated with respect to any covenant or agreement set forth herein, this Agreement, and the covenants and obligations set forth herein, shall be for a three (3) year term beginning on the date hereof (the "Term").
2.	Product Placements:	(a) JMBP and Burnett will use their respective commercially reasonable good-faith efforts, on an ongoing basis and from time to time during the Term, to identify opportunities to cause loudspeakers, headphones, amplifiers, home-theater-in-a-box systems and tabletop home entertainment systems (collectively, the “A/V Products”) under SLS’ brand (as so branded, the “SLS Products”)to be placed and/or otherwise used on the set or other shooting location in connection with television productions involving JMBP, Burnett or any of their respective affiliates (each, a "Product Placement"), including, without limitation, by using their respective commercially reasonable good-faith efforts to effect a Product Placement on the television production “Rock Star” that is expected to air in the fall of 2005.
		(b) SLS will reasonably cooperate with JMBP's and Burnett's efforts to identify and execute Product Placement opportunities under this Section 2. No Product Placement shall occur unless a separate Product Placement agreement is entered into by the Parties. The Parties shall use commercially reasonable good-faith efforts to reach agreement with respect to each Product Placement provided that the related Product Placement agreement shall be on terms in accordance Sections 7 and 13.

3.	Product Integrations:	(a) JMBP and Burnett will use their respective commercially reasonable good-faith efforts to discover, create and execute a product integration whereby an SLS Product or SLS Products will be integrated as a part of the central premise of an episode of a Prime-Time Network Show (as defined below) in which JMBP or Burnett is involved (a "Product Integration"). In addition, JMBP and Burnett will consider in good faith such other Product Integration ideas as SLS may propose from time to time during the Term. “Prime-Time Network Show” shall mean a primetime television production on any of the ABC, NBC, CBS and FOX television networks.
		(b) The Product Integration that JMBP and Burnett shall make commercially reasonable good-faith efforts to create and execute shall involve the SLS “Q-Line Qube System” (or such other SLS Product as may be mutually agreed by the Parties). In the case of a Product Integration involving the Q-Line Qube System, JMBP and Burnett will use their commercially reasonable good-faith efforts to schedule such Product Integration to be initially aired to coincide with SLS’ launch of the “Q-Line Qube System” product, which is currently expected to be launched in the first quarter of 2006.
		(c) In connection with each Product Integration:
		• the specific SLS Products to be used in connection therewith shall be determined mutually by the Parties;
		• the Parties shall mutually select the Prime-Time Network Show in connection therewith; and
		• SLS will make Quincy Jones (or another SLS spokesperson or representative subject to approval by JMBP or Burnett, such approval not to be unreasonably withheld) available to appear (at no additional cost to JMBP or Burnett except as contemplated by Section 3(e)) in connection therewith.
		(d) SLS will reasonably cooperate with JMBP's and Burnett's efforts to identify and execute Product Integration opportunities under this Section 3. No Product Integration shall occur unless a separate Product Integration agreement is entered into by the Parties. The Parties shall use commercially reasonable good-faith efforts to reach agreement with respect to each such Product Integration provided that the related Product Integration agreement shall be on terms in accordance Sections 7 and 13.

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		(e) In exchange for each Product Integration, SLS will pay JMBP four percent (4%) of the total Net Sales of the SLS Products included in the Product Integration and any other SLS Products appearing or depicted in the program featuring the Product Integration during the one (1) year period beginning on the initial airing date of the related episode (each, a “PI Royalty”). "Net Sales" shall mean the aggregate revenues realized by SLS as a result of the sales in question, less deductions for (i) trade discounts, shipping charges, returns and allowances actually granted and (ii) any and all royalties and other fees, expenses and costs payable to Quincy Jones and/or, as applicable, any other talent participating in a Product Integration; provided, however, that the foregoing deductions shall not collectively exceed ten percent (10%) of such aggregate revenues. Net Sales shall be determined without deducting income taxes, franchise taxes, uncollectible accounts or financial discounts. Except as specifically referenced above, no costs incurred in the manufacture, sale, distribution, advertising or exploitation of such products shall be deducted in the computation of Net Sales.
4.	Licenses In Connection with Promotional Activities:	(a) In connection with each Product Placement and Product Integration, JMBP and SLS shall use their respective commercially reasonable good-faith efforts to enter into a license agreement whereby JMBP will grant SLS worldwide, non-exclusive, non-transferable licenses (each, a “License”) to use various trademarks and phrases relating to JMBP productions associated with any Product Placement or Product Integration, each such license to permit uses in connection with the sale, marketing and promotion of certain SLS Products to be mutually agreed upon by JMBP and SLS, as follows: (i) on packaging (whether on the box or on materials provided therein) of SLS Products; and (ii) in advertising (whether print, billboard, radio, television, theatrical, website-based or otherwise) relating to SLS Products. Any such license(s) will be for a term of one (1) year or less beginning on the date on which the episode associated with the related Product Integration or Product Placement is initially aired. Any advertising on television or radio shall be subject to the prior approval of JMBP's distributors and the networks exhibiting the productions related to the applicable licensed phrases or trademarks, which approval JMBP will request in good faith. The licenses will bear no royalties for uses in advertising which displays or depicts the SLS brand or any related brand but does not display, depict or advertise a particular SLS Product, but will bear a royalty of two percent (2%) of the Net Sales of each unit of SLS Product sold with packaging containing such licensed phrases (the “License Royalty”); provided, however, that no License Royalty will be paid with respect to any unit for which a PI Royalty has been or is to be paid. With respect to any license for use in advertisements displaying, depicting or advertising particular SLS Products, the Parties will use their respective commercially reasonable good-faith efforts to negotiate license arrangements that provide benefits commensurate with the two percent (2% ) royalty arrangement described above, provided, however, that in no event shall additional royalties be payable with respect to any unit of SLS Product for which either a PI Royalty or a License Royalty has been or is to be paid.

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		(b) The specific phrases to be included in each license shall be mutually agreed upon by JMBP and SLS as set forth in the applicable License agreement. JMBP shall have approval rights over any proposed use by SLS of any trademarks and phrases and the right to control any such use. Any such License agreement shall be on terms in accordance with Sections 7 and 13.
5.	Consulting Services.	(a) Burnett will act as an advisor and consultant to SLS whereby Burnett will, on an ongoing basis from time to time throughout the Term, use his commercially reasonable good-faith efforts to promote SLS and the SLS Products in connection with television and related opportunities. Such services include (i) advising SLS with respect to Product Placement and Product Integration matters, (ii) making introductions on behalf of SLS to celebrities, captains of industry, business partners of JMBP and Burnett, certain media entities, television networks and producers, retailers and related entities and (iii) personally recommending SLS Products as reasonable opportunities to do so may arise from time to time. Burnett shall use his reasonable discretion in determining the prospects and strategies in promoting SLS and the SLS Products as contemplated by this Section 5.
		(b) In connection with Burnett’s obligations under Section 5(a), Burnett shall make himself reasonably available for face-to-face meetings with a representative of SLS (which representative shall be reasonably selected by SLS) at least once per fiscal quarter during the Term for purposes of collaborating as to prospects for promoting SLS and SLS Products as contemplated by this Section 5, provided, however, that the dates, times and locations of such meetings shall be consistent with Burnett’s schedule and availability (but otherwise subject to reasonable advance notice and availability of SLS and its appointed representatives) and SLS shall, if reasonably required by Burnett’s schedule, travel to Burnett’s location for such meetings.
		(c) Burnett shall not, and is not authorized to, negotiate the terms and conditions of any agreements with any third parties on SLS’ behalf, including, without limitation, with respect to the license of any intellectual property or the payment for materials, products or services.
6.	Exclusivity.	(a) During the Term, Burnett shall not act as a paid personal spokesman with respect to any A/V Products offered by any Competitor or CE Manufacturer (each as defined below).

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		(b) During the Term, neither JMBP nor Burnett shall feature or display any A/V Product offered by any Competitor or CE Manufacturer in an unpaid Product Placement in a program for which JMBP (or another production entity controlled by Burnett) is the producer of, or controls, the production of such program, unless SLS is first offered, by notice in accordance with Section 18, the exclusive right to provide such A/V Product for such Product Placement. If SLS declines to provide the requested A/V product for any such Product Placement (or fails to accept the offer within two (2) days after receipt of such notice), then JMBP and Burnett may instead feature or display the applicable A/V Product offered by any Competitor or CE Manufacturer. For purposes of this Section 6(b) only, JMBP may give notice to SLS via e-mail to an e-mail address or addresses supplied by SLS for purposes of such notice. “Competitor” means any individual or entity primarily engaged in the business of manufacturing or distributing loudspeakers (including, without limitation, Bose, JBL, M&K, Infinity, Paradigm and B&W). “CE Manufacturer” means any manufacturer of consumer electronics products, including, without limitation, audio/video products. Notwithstanding anything to the contrary herein, the exclusivity provisions contained in this Section 6(b) shall not apply to any series which is in pre-production as of the date hereof (including "Rock Star" and "Apprentice IV").
		(c) As to each Product Integration pursuant to Section 3, JMBP shall not produce for airing, during the season of such Prime-Time Network Show in which the SLS Product has been or is to be integrated, any episode of the associated Prime-Time Network Show which includes a product integration of a third-party’s A/V Product which directly competes with such SLS Product. For the sake of clarity, (i) any loudspeaker shall be deemed a product which directly competes with any SLS-branded loudspeaker, and (ii) this Section 6(c) shall not apply to any program where JMBP (or another production entity controlled by Burnett) does not produce or control the production thereof.
7.	Creative Control; Access Rights.	Except as provided otherwise in Sections 2 and 3, JMBP and Burnett will retain full creative control over all productions involving each Product Placement and Product Integration, including control over all aspects of the Product Placement and Product Integration, provided, however, that SLS will have the right to have a designee reasonably acceptable to JMBP or Burnett at or around the shooting location of each production relating to any Product Placement or Product Integration. To the extent practicable, JMBP will provide reasonable advance notice to SLS of the dates, times and locations of all such productions.

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8.	Indemnification; Remedies.	JMBP shall indemnify and hold harmless, and shall defend and protect, SLS and its stockholders, officers, directors, employees, agents and representatives (collectively, the “SLS Indemnified Parties”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages and expenses (regardless of whether such indemnified party is a party to the action for which the indemnification hereunder applies), including reasonable attorneys’ fees and disbursements (the “Indemnified Losses”) incurred by any SLS Indemnified Party as a result of, or arising out of, or relating to any action, claim, cause of action or suit by any third party alleging that such third party is entitled to (a) any of the consideration provided or to be provided to JMBP or Burnett hereunder or (b) any other payment or benefit in connection with this Agreement or any of the transactions contemplated hereby based on any commitment or obligation by JMBP or Burnett to such third-party.
		SLS shall indemnify and hold harmless, and shall defend and protect, JMBP and Burnett and, as applicable, their stockholders, officers, directors, employees, agents and representatives (collectively, the “JMBP/Burnett Indemnified Parties”) from and against any and all Indemnified Losses incurred by any JMBP/Burnett Indemnified Party as a result of, or arising out of, or relating to any action, claim, cause of action or suit by any third party alleging that such third party is entitled to (a) any of the consideration provided or to be provided to SLS hereunder or (b) any other payment or benefit in connection with this Agreement or any of the transactions contemplated hereby based on any commitment or obligation by SLS to such third-party.
		To the extent that the foregoing undertakings by any indemnifying party may be unenforceable for any reason, the indemnifying party shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Losses which is permissible under applicable law.
		SLS waives any right to injunctive relief as a remedy for any breach of this Agreement.
9.	Audit Rights	(a) All payments in connection with any amounts owing hereunder will be made within thirty (30) days after the end of each calendar quarter during which such payment obligations are accrued.

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		(b) SLS will maintain accurate and complete books and records in accordance with generally accepted accounting principles as necessary to determine the amounts payable from time to time. For purposes of verifying the amounts owed to JMBP or Burnett hereunder, JMBP or its designee will have the right to examine and audit SLS’ books and records, at JMBP’s expense, upon reasonable advance written notice to SLS; provided, however, that SLS shall be required to pay for the reasonable out-of-pocket costs of the audit if it is agreed by JMBP and SLS (or finally determined by an arbitrator or court of competent jurisdiction) that the amounts owing for any period are ten percent (10%) or more lower than they should have been.
10.	SLS Stock Options and Warrant:	On the date hereof, SLS shall issue to Burnett (i) options to purchase one million (1,000,000) shares of SLS common stock with an exercise price of Two Dollars and Five Cents ($2.05) per share (the “Options”) and (ii) warrants to purchase one million (1,000,000) shares of SLS common stock with an exercise price of Six Dollars and Fifty Cents ($6.50) per share (the “Warrants” and, together with the Options, the “Securities”). The Options will be issued pursuant to an Option Agreement in the form of Exhibit A hereto (the “Option Agreement”). The Warrants will be issued pursuant to a Warrant Certificate in the form of Exhibit B hereto (the “Warrant Certificate”).
11.	Representations and Warranties by SLS:	SLS represents and warrants to each of JMBP and Burnett that:
		(a)	It is duly organized and is validly existing in good standing under the laws of the jurisdiction in which it was organized.
		(b)	It has the power authority to enter into and perform its obligations under this Agreement, the Option Agreement and the Warrant Certificate (collectively, the “Transaction Agreements”) and perform the transactions contemplated thereby;
		(c)	It has taken all necessary action to authorize the execution, delivery and performance of the Transaction Agreements and the transactions contemplated thereby; and

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		(d)	The execution, delivery and performance of its obligations under the Transaction Agreements and the transactions contemplated thereby will not violate or conflict with or result in any breach of or default under any material contract, agreement, lease, license, indenture, trust or other instrument which is either binding upon or enforceable against it, nor will such execution, delivery and performance conflict with any decree, writ, injunction, judgment or order of any court or administrative or other governmental body or of any arbitration award which is either applicable to, binding upon or enforceable against it.
12.	Representations and Warranties by JMBP and Burnett:	(a) Each of JMBP and Burnett represents and warrants to SLS that:
			(i)	Such Party has the power authority to enter into and perform such Party’s obligations under the Transaction Agreements and perform the transactions contemplated thereby;
			(ii)	Such Party has taken all necessary action to authorize the execution, delivery and performance of the Transaction Agreements and the transactions contemplated thereby; and
			(iii)	The execution, delivery and performance of such Party’s obligations under the Transaction Agreements and the transactions contemplated thereby will not violate or conflict with or result in any breach of or default under any material contract, agreement, lease, license, indenture, trust or other instrument which is either binding upon or enforceable against such Party, nor will such execution, delivery and performance conflict with any decree, writ, injunction, judgment or order of any court or administrative or other governmental body or of any arbitration award which is either applicable to, binding upon or enforceable against such Party.
		(b) JMBP represents and warrants to SLS that JMBP is duly organized and is validly existing in good standing under the laws of the jurisdiction in which it was organized.

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13.	Additional Agreements:	(a) This Agreement shall remain a binding legal agreement between the Parties except to the extent set forth in any additional definitive agreements entered into by the Parties in connection with Product Placements, Product Integrations and/or License Agreements, it being understood that such other definitive agreements, upon execution thereof, will supersede the terms of this Agreement to the extent of a clear inconsistency between the terms hereof and the terms of such additional definitive agreement.
		(b) With respect to any terms not set forth in this Agreement, the Product Placement agreements, Product Integration agreements and License agreements will contain terms and conditions consistent with product placements, product integrations and licenses conducted by JMBP and Burnett in the ordinary course of business (including with respect to approval rights and payment of expenses), provided, however, that each such additional definitive agreement shall, with respect to all material terms thereof, be on such terms that are at least as favorable as such terms have been provided to any third party who shall have, prior to the date that such agreement is entered into by and between JMBP and/or Burnett, on the one hand, and SLS, on the other hand, entered into a similar definitive agreement with JMBP and/or Burnett.
14.	Expenses:	Each Party will bear its own costs and expenses related to the transactions contemplated by the Transaction Agreements, except as otherwise required by Section 13 and/or as may be set forth in any Product Placement agreement, Product Integration agreement or License agreement.
15.	Publicity:	Any press release or other public disclosure regarding the Transaction Agreements or the relationship contemplated therein will be subject to the mutual approval of SLS and JMBP, such approval not to be unreasonably withheld or delayed. The Parties acknowledge that SLS intends to file a Form 8-K attaching such press release within the time period required under applicable securities laws. For the avoidance of doubt, the Parties agree that any disclosure reasonably necessary to carry out the terms of the Transaction Agreements is permitted.
16.	Independent Contractor	The Parties intend and agree that Burnett and JMBP are independent contractors and that nothing in the Transaction Agreements shall be interpreted or construed as creating or establishing the relationship of employer and employee, agency, partnership, or joint venture between SLS, on the one hand, and Burnett or JMBP, on the other hand. Burnett and JMBP are not engaged by SLS on a full-time, exclusive basis and shall retain the right to perform services for others during the Term.
17.	Governing Law; Arbitration:	(a) This Agreement is, and the definitive agreements shall be, governed by California law.

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		(b) Any and all disputes and controversies arising in connection with this Agreement or the transactions contemplated hereby shall be resolved by binding arbitration before JAMS, under its Streamlined Arbitration Rules and Procedures, in Los Angeles, California and on a confidential basis. Any such arbitration shall be conducted by one (1) arbitrator, which shall be a retired judge selected mutually by the Parties. If the Parties are unable to agree on a single arbitrator, then within ten (10) days after the initiation of an arbitration proceeding, the arbitrator shall be a retired judge appointed by the commercial panel of JAMS. The written decision of the arbitrator shall be final and binding upon the Parties. While the proceeding is pending, each Party will bear its own fees and expenses with respect to the arbitration and any proceeding related thereto, and the fees and other costs of JAMS and the arbitrator shall be borne one-half (1/2) by SLS, on the one hand, and one-half (1/2) by JMBP and Burnett, on the other hand; provided, however, that the non-prevailing party in any such dispute (as declared by the arbitrator, if at all) shall pay all of the prevailing party's fees and expenses (including legal fees and expenses, and any expenses of JAMS or the arbitrator).
18.	Notices:	All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, facsimiled (which is confirmed) or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):
		If to JMBP or Burnett, to:
		JMBP, Inc. 640 North Sepulveda Boulevard 2nd Floor Los Angeles, CA 90049 Facsimile: (310) 903-5500 Attention: Jordan Yospe, Esq.
		With a copy (which shall not constitute notice) to:
		Irell & Manella LLP 1800 Avenue of the Stars Suite 900 Los Angeles, CA 90067 Facsimile: (310) 203-7199 Attention: Rick Wirthlin, Esq.

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		If to SLS, to
		SLS International, Inc. 1650 West Jackson Street Ozark, MO 65721 Facsimile: (417) 883-2723 Attention: Chief Executive Officer and President
		With a copy (which shall not constitute notice) to:
		Drinker Biddle & Reath LLP 50 Fremont Street 20th Floor San Francisco, CA 94109 Attention: Scott Joachim, Esq. Facsimile: (415) 591-7510
		The address to which such notices or other communications are to be given by either Party may be changed by written notice given by such Party to the other Party pursuant to this Section 18.
19.	Assignment:	Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto without the prior written consent of the other Parties, except that (a) SLS may assign, in its sole discretion, any or all of its rights and interests hereunder to any of its subsidiaries in existence at such time, (b) JMBP may delegate its obligations hereunder to any of its affiliated production companies or any entity controlled by Burnett and (c) any Party may transfer its rights and obligations hereunder to any entity to which all or substantially all of the assets of such Party are assigned. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns.
20.	Entire Agreement; No Third-Party Beneficiaries:	The Transaction Agreements (including the documents and the instruments referred to therein and any other writings signed by each of the Parties with respect to any related matters) (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter thereof, and (b) are not intended to confer upon any person or entity other than the Parties thereto any rights or remedies thereunder.

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21. Amendments;
Waivers. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the Party against whom such amendment, modification or alteration is sought to be enforced. Any of the terms and conditions of this Agreement may be waived in writing at any time by the Party which is entitled to the benefits thereof. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of such provision at any time in the future or a waiver of any other provision hereof.

[Signature Page Follows]

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In witness whereof, the Parties have caused this Agreement to be executed as of the date first written above.

SLS INTERNATIONAL, INC.

By:__________________________

Name:

Title:

JMBP, INC.

By:__________________________

Name:

Title:

MARK BURNETT

______________________________

Signature Page to Promotion Agreement

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Exhibit A

Option Agreement

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Exhibit B

Warrant Certificate

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EX-10.2

EXHIBIT 10.2

OPTION AGREEMENT

This Option Agreement (this “Agreement”) is entered into and made effective as of June 14, 2005, by and between SLS International, Inc., a Delaware corporation (the “Company”), and Mark Burnett (“Consultant”).

WHEREAS, the Company desires to grant to Consultant options to purchase shares of its common stock, $.001 par value per share (“Common Stock”), in consideration for services provided and to be provided by Consultant pursuant to that certain Promotion Agreement by and among the Company, JMBP, Inc., a California corporation, and Consultant dated as of the date hereof (the “Promotion Agreement”); and

WHEREAS, each of the Company and Consultant intends that the options granted herein shall be Non-Qualified Stock Options.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:

1.      Grant of Options; Exercise Price. On the date hereof (“Grant Date”), the Company hereby grants to Consultant options (“Options”) to purchase one million (1,000,000) shares of Common Stock (“Shares”), at an exercise price per share of Two Dollars and Five Cents ($2.05) (the “Exercise Price”), subject to adjustment as set forth in Section 7 hereof.

2.   Character of Options. The Options shall be considered Non-Qualified Stock Options.

3.      Vesting Schedule. The Options shall become exercisable in accordance with the following vesting schedule:

Vesting Date	Number of Options Vesting
As of the date of this Agreement	400,000
As of the date on which the first Product Placement (as referred to in the Promotion Agreement) is initially aired	100,000
As of the date on which the first Product Integration (as referred to in the Promotion Agreement) is initially aired	400,000
As of the date on which the second Product Placement or Product Integration (as referred to in the Promotion Agreement) is initially aired	100,000
Total:	1,000,000

Notwithstanding the foregoing, vesting of the Options shall accelerate and the Shares shall become issuable upon exercise of the Options therefor in full upon the consummation of any sale of all or substantially all of the Company’s voting stock, assets or business or any merger of the Company with another entity (excluding a merger with a wholly owned subsidiary of the Company or any merger in which the Company is the surviving or continuing entity). The Company shall provide Consultant at least seven (7) days written notice prior to the consummation of any such transaction.

4. Payment of Exercise Price.

(a)To the extent vested pursuant to Section 3 hereof, Options represented hereby may be exercised in whole or in part by delivering to the Company a written notice of exercise substantially in the form of the Exercise Notice attached hereto as Exhibit A and payment of the Exercise Price of the Options so exercised (i) in cash, (ii) by check, (iii) by delivering a written direction to the Company that the Option be exercised pursuant to a net/“cashless” exercise procedure, pursuant to which funds to pay for exercise of the Option are delivered to the Company by a surrender of a portion of this Option with a Fair Market Value (as defined below) equal to the aggregate Exercise Price for the shares of Common Stock purchased pursuant to the exercise of the Option, as set forth in more detail below (a “Cashless Exercise”) or (iv) any combination of the foregoing. Exercise of this Option to the extent above stated may be made in whole or in part at any time and from time to time, subject to the limitations stated herein, except that no fractional share will be issued pursuant to this Agreement. An Exercise Notice shall be deemed to have been received by the Company five (5) days after being placed in the mail, if mailed, or one (1) Business Day after being sent via nationally recognized overnight carrier, upon receipt or refusal of receipt, if delivered personally, or upon confirmed facsimile transmission (or, if such transmission does not occur on a Business Day or occurs later than 5:00 p.m. Central Time, then upon the next Business Day following such transmission). The Company shall issue to Consultant stock certificates representing the Shares exercised in accordance with this Section 4 within three (3) Trading Days (as defined in Section 8(b) hereof) of receipt of a completed and duly executed Exercise Notice. “Business Day” means any day, other than a Saturday or Sunday or a day on which banking institutions in the State of Missouri are authorized or obligated by law, regulation or executive order to close.

(b)In connection with any Cashless Exercise, the Consultant may elect to receive Shares equal to the value (as determined below) of this Option (or the portion thereof being exercised) by surrender of this Option at the principal office of the Company together with the properly endorsed Exercise Notice in which event the Company shall issue to the Holder a number of Shares computed using the following formula:

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X=(Y)	x	(A-B)
		A

Where X =	the number of Shares to be issued to the Consultant
Y =	the number of Shares purchasable under the Option or, if only a portion of the Option is being exercised, the portion of the Option being exercised (at the date of such calculation)
A =	the Fair Market Value of one Share (at the date of such calculation)
B =	Exercise Price (as adjusted to the date of such calculation)

(c)For purposes hereof, the "Fair Market Value" of a Share as of a particular date (the “Determination Date”) shall mean the average of the closing bid price for the Common Stock in the over-the-counter market (or the closing price on the Nasdaq Stock Market or any principal exchange for the Common Stock) (the “Closing Price”) reported for the last five (5) Trading Days immediately preceding the Determination Date.

5.Term of Options. The term of the Options granted herein shall be for five (5) years commencing with the Grant Date (the “Term”). The Options shall expire and no longer be exercisable at the end of such term.

6.Transfers of Options. Subject to Section 9 hereof, the Shares issuable hereunder shall be freely transferable, in whole or in part, and there are no restrictions upon any transfer, sale, monetization, pledge, alienation or other encumbrance with respect to such Shares, except as provided by law. The Options are not transferable, other than to (a) Consultant's heirs or legatees, (b) Consultant's family members or trusts for his or their benefit, or (c) one or more “affiliates” of Consultant for tax or estate planning purposes. For purposes of this Section 6, “affiliates” shall have the meaning provided to such term in Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

7. Adjustments.

(a)If the outstanding shares of the Company’s common stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares, in each case effected without receipt of consideration by the Company, occurring after the date of this Agreement, the number and kind of Shares issuable upon exercise of any outstanding Options granted hereunder shall be adjusted proportionately and accordingly by the Company. Any such adjustment in the number and kind of shares subject to the outstanding Options shall not change the aggregate Exercise Price

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payable with respect to the Shares subject to the unexercised Options outstanding but shall include a corresponding proportionate adjustment in the Exercise Price per Share.

(b)The Exercise Price and the number of Shares subject to the Options shall be subject to adjustment from time to time as follows:

(i)If the Company shall issue, after the date of this Agreement, any Additional Stock (as defined below) without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to the issuance of such Additional Stock, the Exercise Price in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this clause (i)) be adjusted to a price determined by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock deemed outstanding immediately prior to such issuance plus the number of shares of Common Stock that the aggregate consideration received by the Company for such issuance would purchase at such Exercise Price; and the denominator of which shall be the number of shares of Common Stock deemed outstanding immediately prior to such issuance plus the number of shares of such Additional Stock. Upon each adjustment of the Exercise Price pursuant to this provision, the number of Shares issuable upon the exercise of the Options shall be adjusted to the nearest full number obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Shares issuable upon exercise of the Options immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

(ii)The number of shares of Common Stock deemed outstanding shall be calculated in each case assuming that all securities (or options or rights to acquire securities) convertible into, exchangeable or exercisable for, or otherwise entitling the holder thereof to subscribe for or receive, directly or indirectly, additional Shares (referred to herein as “Common Stock Equivalents”) have been fully converted into, exercised for, or exchanged into, shares of Common Stock.

(iii)With respect to the issuance of Common Stock Equivalents, the following provisions shall apply for purposes of this Section 7:

(A)The aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such Common Stock Equivalents or upon the exercise of options to purchase or rights to subscribe for such Common Stock Equivalents and the subsequent conversion or exchange thereof (assuming the satisfaction of any conditions to convertibility, exchangeability or exerciseability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) shall be deemed to have been issued at the time such Common Stock Equivalents were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the Company for any such Common Stock Equivalents and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Common Stock Equivalents or the exercise of any related options or rights.

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(B)In the event of any change in the number of shares of Common Stock deliverable by or in the consideration payable to the Company upon exercise of such Common Stock Equivalents or upon conversion of or in exchange for such Common Stock Equivalents, including, but not limited to, a change resulting from the antidilution provisions thereof, the Exercise Price to the extent in any way affected by or computed using such Common Stock Equivalents, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such Common Stock Equivalents or the conversion or exchange of such Common Stock Equivalents.

(C)Upon the expiration of any such Common Stock Equivalents, the termination of any rights to convert or exchange or the expiration of any options or rights related to such Common Stock Equivalents, the Exercise Price to the extent in any way affected by or computed using such Common Stock Equivalents or options or rights related to such Common Stock Equivalents, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable Common Stock Equivalents which remain in effect) actually issued upon the exercise of such Common Stock Equivalents, upon the conversion or exchange of such Common Stock Equivalents or upon the exercise of the options or rights related to such Common Stock Equivalents.

(iv)“Additional Stock” means any shares of the Company’s common stock or Common Stock Equivalents issued by the Company after the date of this Agreement other than: (A) shares of common stock or Common Stock Equivalents issuable or issued to employees, consultants, directors or vendors (if in transactions with primarily non-financing purposes) of the Company directly or pursuant to a stock option plan or restricted stock plan approved by the Board of Directors of the Company; and (B) shares of the Company’s common stock issued upon the exercise or conversion of options, warrants, rights or convertible or exchangeable securities outstanding on the date of this Agreement.

(c)Merger or Consolidation. In case of any consolidation of the Company with, or merger of the Company with or into another corporation during the Term (other than a consolidation or merger in which the Company is the surviving or continuing entity or that does not otherwise result in any reclassification or change of the outstanding Common Stock) (a “Corporate Change”), then Consultant shall thereafter have the right to receive upon exercise of the Options, in lieu of the Shares otherwise issuable, such shares of stock, securities and/or other property as would have been issued or payable in such Corporate Change with respect to or in exchange for the number of Shares which would have been issuable upon exercise had such Corporate Change not taken place, and in any such case, appropriate provisions (in form and substance reasonably satisfactory to the holder hereof) shall be made with respect to the rights and interests of the holder to the end that the economic value of the Options and this Agreement is in no way diminished by such Corporate Change and that the provisions hereof shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter deliverable upon the exercise thereof. This provision shall similarly apply to successive consolidations or mergers.

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8. Redemption.

(a)Up to all of the Options (whether or not then vested pursuant to Section 3 above) shall be redeemable by the Company, in its sole discretion, at a price of $.001 per Share at any time during any Redemption Period (as defined below), provided that (i) the Company has given written notice to Consultant of the date of, and number of Options subject to, such redemption (a “Redemption Notice”) no later than 11:59 p.m., Central Time, on the fifth (5^th) Trading Day (as defined below) after the Redemption Conditions (as defined below) in respect of such redemption have been met and (ii) the Ability-to-Sell Conditions (as defined below) are satisfied on each Trading Day during the period beginning on the Trading Day on which the Redemption Notice is deemed received and ending on the twentieth (20^th) Trading Day after the Redemption Notice is deemed received. Consultant shall be entitled to exercise the Options subject to the Redemption Notice, regardless of whether such Options have otherwise vested pursuant to Section 3 above, following his receipt of the Redemption Notice. “Ability-to-Sell Conditions” means: (i) the Registration Statement shall be effective and the Company shall not have informed Consultant that the prospectus contained therein may not be used; (ii) the Registration Statement shall not be subject to a stop order by the Securities and Exchange Commission (“SEC”); and (iii) the Common Stock shall not be suspended from trading on any of, and shall be listed or quoted for trading (and authorized) on the principal United States securities exchange or trading market where the Common Stock is then listed or traded.

(b)“Redemption Period” shall mean the period beginning on the twentieth (20^th) Trading Day after the Redemption Notice is deemed received pursuant to paragraph (a) above and ending at 11:59 p.m., Central Time, on the thirtieth (30^th) Trading Day after the Redemption Notice is deemed received pursuant to paragraph (a) above. “Redemption Conditions” means: (i) the Closing Price shall be equal to or greater than three hundred and fifty percent (350%) of the Exercise Price therefor as then in effect, for a consecutive twenty (20) Trading Day period; and (ii) the average daily trading volume for the Common Stock during such twenty (20) Trading Day period shall be at least Two Hundred Thousand (200,000) shares. “Trading Day” means any day on which the principal United States securities exchange or trading market where the Common Stock is then listed or traded is open for trading.

9. Registration Rights; Black-Out Periods.

(a)The Company will file, at its sole cost and expense, within one hundred and twenty (120) days of the Grant Date, a Registration Statement on Form SB-2 (the “Registration Statement”) (or such other registration form then available, as determined by the Company) covering the Shares. The Company will use its commercially reasonable good-faith efforts to have the Registration Statement declared effective as soon as practicable and to maintain its effectiveness, subject to the “black-out” periods below, until the date that all of the Shares may be sold pursuant to Rule 144(k) under the Securities Act. Consultant will at all times comply with applicable securities laws and regulations with respect to the Options and Shares, including, without limitation, Rule 10b-5 under the Securities Act. Consultant agrees to cooperate with the Company and to furnish information reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder.

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(b)Upon (i) the issuance by the SEC of a stop order suspending the effectiveness of the Registration Statement or the initiation of proceedings with respect to the Registration Statement under Section 8(d) or 8(e) of the Securities Act, (ii) the occurrence of any event or the existence of any fact as a result of which any Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or any related prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) the occurrence or existence of any pending development that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Registration Statement and the related prospectus, the Company shall be entitled to suspend the availability of the Registration Statement and any related prospectus, provided that any such suspension period shall not exceed sixty (60) days in any three (3) month period or ninety (90) days in any twelve-month period. The Company shall give prompt written notice of such suspension to Consultant.

(c) Indemnification and Contribution.

(i)The Company agrees to indemnify and hold harmless Consultant against any and all losses, claims, damages or liabilities to which Consultant may become subject under the Securities Act, the Securities Exchange Act of 1934, as amended (“Exchange Act”) or any other federal or state statutory law or regulations, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (“Claims”) arise out of or are based upon (A) any untrue statement or alleged untrue statement of a material fact in the Registration Statement (as originally filed or in any amendment thereto) or the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein not misleading, (B) any untrue statement or alleged untrue statement of a material fact contained in the prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading (any of the matters in the foregoing clauses (A) and (B), a “Violation”), and agrees to reimburse each such indemnified party for any out-of-pocket legal or other expenses reasonably incurred by Consultant in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained in this Agreement, the indemnification covenants contained in this Section 9(e)(i): (x) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by Consultant expressly for use in the Registration Statement or any such amendment thereof or supplement thereto; and (y) with respect to any prospectus, shall not inure to the benefit of Consultant if (I) the untrue statement or omission of material fact contained in the prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, (II) such corrected prospectus was timely made available by the Company, and (III) Consultant was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a Violation and such Consultant, notwithstanding such advice, used it.

(ii)Consultant agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person, if

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any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to Consultant, but only with reference to written information relating to Consultant furnished to the Company by or on behalf of Consultant specifically for inclusion in the documents referred to in the foregoing indemnity.

(iii)Promptly after receipt by an indemnified party under this Section 9(e) of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9(e), notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party will not relieve it from liability under paragraph (i) or (ii) above unless and to the extent that the indemnifying party is actually prejudiced in its ability to defend such action. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ one separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (A) the use of counsel chosen by the indemnifying party to represent the indemnified party would create a conflict of interest, (B) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (C) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (D) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding.

(iv)In the event that the indemnity provided in paragraph (i) or (ii) of this Section 9(c) is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and Consultant severally agree to contribute to the aggregate Claims to which the Company and Consultant may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and by Consultant on the other from the offering of the Shares; provided, however, that in no case (except in the case of any fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) by Consultant) shall Consultant be responsible for any amount in excess of the proceeds received by Consultant upon the sale of the Shares hereunder. If the allocation provided by the immediately preceding

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sentence is unavailable for any reason, the Company and Consultant severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and of Consultant on the other in connection with the statements or omissions which resulted in such Claims as well as any other relevant equitable considerations. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Company on the one hand or Consultant on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and Consultant agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (iv), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

10.Representations and Warranties by Consultant. Consultant represents and warrants to the Company that:

(a)Consultant is acquiring the Options for his own account for investment purposes only and not with a present view towards the public sale or distribution thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act. Consultant understands that he must bear the economic risk of this investment indefinitely, unless the Options are registered pursuant to the Securities Act and any applicable state securities or blue sky laws or an exemption from such registration is available, and that the Company has no present intention of registering the resale of the Options or the Shares, except as contemplated by Section 9 of this Agreement.

(b)Consultant is an “Accredited Investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

(c)Consultant understands that the Options are being offered and delivered to him, and the underlying shares of Common Stock are being offered to him, in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Consultant’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Consultant set forth herein in order to determine the availability of such exemptions and the eligibility of Consultant to acquire the Options and the Shares.

(d)Consultant and his counsel have been furnished all materials relating to the business, finances and operations of the Company and materials relating to the Options and the Shares which have been specifically requested by him or his counsel. Consultant understands that his investment in the Options and the Shares involves a high degree of risk.

11. SEC Documents. The Company represents and warrants to Consultant that:

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(a) The Company has made available to Consultant true and complete copies of all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (“SEC Documents”) that such Consultant has requested, and all such documents are otherwise available at www.sec.gov.

(b) As of their respective dates, all SEC Documents filed since June 1, 2003 complied in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and none of such SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

12.Reserved Shares. The Company shall, as of and after the date upon which the Registration Statement shall have been declared effective by the SEC, but in no event later than August 25, 2005, reserve such number of shares of its authorized but unissued shares of Common Stock to provide for the issuance of shares of Common Stock upon full exercise of the Options.

13.Amendments. This Agreement may not be amended without the written consent of each of the parties hereto.

14.Withholding Taxes. The Company may withhold from sums due or to become due to Consultant from the Company any amount necessary to satisfy any tax obligation to the extent required to be withheld by law.

15.Assignment. Subject to the rights of Consultant under Section 6, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either party hereto (whether by operation of law or otherwise) without the prior written consent of the other party.

16.Notice. The initial addresses for any notices or other communications shall be as follows, and each party shall provide notice to the other party of any change in such party’s address:

(a) If to the Company:

SLS International, Inc.

1650 West Jackson Street

Ozark, MO 65721

Facsimile: (417) 883-2723

Attention: Chief Executive Officer and President

With a copy (which shall not constitute notice) to:

Drinker Biddle & Reath LLP

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50 Fremont Street, 20th Floor

San Francisco, CA 94109

Facsimile: (415) 591-7510

Attention: Scott Joachim, Esq.

(b) If to Consultant:

JMBP, Inc.

640 North Sepulveda Boulevard, 2nd Floor

Los Angeles, CA 90049

Facsimile: (310) 903-5500

Attention: Jordan Yospe, Esq.

With a copy (which shall not constitute notice) to:

Irell & Manella LLP

1800 Avenue of the Stars

Suite 900

Los Angeles, CA 90067

Facsimile: (310) 203-7199

Attention: Rick Wirthlin, Esq.

Any notice hereunder shall be deemed to have been received by the party receiving such notice five (5) days after being placed in the mail, if mailed, or one (1) Business Day after being sent via a nationally recognized overnight carrier, upon receipt or refusal of receipt, if delivered personally, or upon confirmed facsimile transmission (or, if such transmission does not occur on a Business Day or occurs later than 5:00 p.m. Central Time, then upon the next Business Day following such transmission). “Business Day” means any day, other than a Saturday or Sunday or a day on which banking institutions in the State of Missouri are authorized or obligated by law, regulation or executive order to close.

17.Governing Law. This Agreement shall be construed and enforced in accordance with the law of the State of Delaware, without giving effect to conflict of law principles thereof.

18.Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument.

19.Invalidity of Provision. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision in any other jurisdiction.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above.

SLS INTERNATIONAL, INC.

__________________________________

By: John Gott, President

MARK BURNETT

__________________________________

Signature Page to Option Agreement

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EXHIBIT A

FORM OF EXERCISE NOTICE

The undersigned hereby irrevocably exercises the right to purchase _____________ shares of the Common Stock of SLS International, Inc., a corporation organized under the laws of the State of Delaware (the “Company”), pursuant to the Option Agreement (the “Option”) between the Company and the undersigned, dated June ___, 2005, at the current Exercise Price of $____, and herewith [makes payment of the Exercise Price with respect to such shares in full][elects to effect a Cashless Exercise (as defined in Section 4 of such Option)], all in accordance with the conditions and provisions of said Option.

The undersigned agrees not to offer, sell, transfer or otherwise dispose of any shares of Common Stock purchased hereby, except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.

Dated:_________________ _____________________________________

Signature of Holder

_____________________________________

Name of Holder (Print)

Address:

_____________________________________

_____________________________________

_____________________________________

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EX-10.3

EXHIBIT 10.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS. THESE SECURITIES MAY ONLY BE RESOLD OR OTHERWISE TRANSFERRED IN ACCORDANCE WITH CERTAIN RESTRICTIONS SET FORTH HEREIN AND ONLY IF THESE SECURITIES ARE REGISTERED OR SUCH RESALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.

June 14, 2005

1,000,000 WARRANTS

Each to Purchase

1 Share of Common Stock

VOID AFTER 5:00 P.M. CENTRAL TIME ON JUNE 14, 2010, OR IF NOT A TRADING DAY AT 5:00 P.M. CENTRAL TIME ON THE NEXT FOLLOWING TRADING DAY.

SLS INTERNATIONAL, INC.

REDEEMABLE WARRANT CERTIFICATE

THIS CERTIFIES THAT, for value received Mark Burnett, or his permitted assigns (the “Warrant Holder”), is entitled to purchase, subject to the terms and conditions hereof, commencing on the date of issuance hereof, and until 5:00 P.M. Central Time, on June 14, 2010 (or, if not a Trading Day, on the next following Trading Day (the “Expiration Date”), up to one million (1,000,000) fully paid and non-assessable shares (the “Warrant Shares”) of Common Stock, par value $.001 per share (the “Common Stock”), of SLS International, Inc., a Delaware corporation (the “Company”), to the extent vested, at a price equal to Six Dollars and Fifty Cents ($6.50) per share of Common Stock (the “Warrant Price”). Payment of the Warrant Price may consist of (i) cash, (ii) check, (iii) other shares of Common Stock, (iv) delivery of a written direction to the Company that the Warrants be exercised pursuant to a net/“cashless” exercise procedure, pursuant to which funds to pay for exercise of the Warrants are delivered to the Company by a surrender of a portion of the Warrants with a Fair Market Value (as defined below) equal to the aggregate Warrant Price for the Warrant Shares purchased pursuant to the exercise of such Warrants, as set forth in more detail below (a “Cashless Exercise”) or (v) any combination of the foregoing. In the event that the Warrants or any portion represented hereby are not exercised at or before the Expiration Date, the unexercised portion of the Warrants, and this Warrant Certificate, shall be void, non-exercisable and of no further effect (unless such date is extended by the Company in its sole discretion).

In connection with any Cashless Exercise, the Warrant Holder may elect to receive Warrant Shares equal to the value (as determined below) of the Warrants subject hereto (or the portion thereof being exercised) by surrender of this Warrant Certificate at the principal office of the Company together with the properly endorsed Election to Exercise, in which event the

Company shall issue to the Warrant Holder a number of Warrant Shares computed using the following formula:

X = (Y) x	(A-B)
	A

Where X		=	the number of Warrant Shares to be issued to the Warrant Holder
Y =			the number of Warrant Shares purchasable under the Warrants subject hereto or, if only a portion of the Warrants are being exercised, the portion of the Warrants being exercised (at the date of such calculation)
A =			the Fair Market Value of one Warrant Share (at the date of such calculation)
B	=		Warrant Price per share (as adjusted to the date of such calculation)

For purposes hereof, the "Fair Market Value" of a Warrant Share as of a particular date (the “Determination Date”) shall mean the average of the closing bid price for the Common Stock in the over-the-counter market (or the closing price on the Nasdaq Stock Market or any principal exchange for the Common Stock (the “Closing Price”) for the last five (5) Trading Days immediately preceding the Determination Date.

The Warrants shall become exercisable, in whole or in part, in accordance with the following vesting schedule:

Vesting Date	Number of Warrants Vesting
As of the date of this Certificate	400,000
As of the date on which the first Product Placement (as referred to in the Promotion Agreement) is initially aired	100,000
As of the date on which the first Product Integration (as referred to in the Promotion Agreement) is initially aired	400,000
As of the date on which the second Product Placement or Product Integration (as referred to in the Promotion Agreement) is initially aired	100,000
Total:	1,000,000

where the “Promotion Agreement” means that certain Promotion Agreement by and among the Company, JMBP, Inc., a California corporation, and the Warrant Holder, dated as of the date hereof.

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Notwithstanding the foregoing, vesting of the Warrants shall accelerate and the Warrants shall vest in full upon the consummation of any sale of all or substantially all of the Company’s voting stock, assets or business or any merger of the Company with another entity (excluding a merger with a wholly owned subsidiary of the Company or any merger in which the Company is the surviving or continuing entity). The Company shall provide the Warrant Holder at least seven (7) days written notice prior to the consummation of any such transaction.

The Warrant Holder, by accepting this Warrant, consents and agrees with the Company, that the Company shall treat the registered holder hereof as the sole absolute holder hereof for all purposes notwithstanding any notice to the contrary.

If the outstanding shares of the Company’s Common Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares, effected, in each case, without receipt of consideration by the Company, occurring after the date of this Warrant Certificate, then the number and kind of shares issuable upon exercise of the outstanding Warrants granted hereunder shall accordingly be adjusted proportionately by the Company. Any such adjustment in the number and kind of shares subject to the outstanding Warrants shall not change the aggregate Warrant Price payable with respect to shares subject to the unexercised portion of the Warrants but shall include a corresponding proportionate adjustment in the Warrant Price per share.

In case of any consolidation of the Company with, or merger of the Company with or into another corporation on or prior to the Expiration Date (other than a consolidation or merger in which the Company is the surviving or continuing entity or that does not otherwise result in any reclassification or change of the outstanding Common Stock) (a “Corporate Change”), then the Warrant Holder shall thereafter have the right to receive upon exercise of the Warrants, in lieu of the Warrant Shares otherwise issuable, such shares of stock, securities and/or other property as would have been issued or payable in such Corporate Change with respect to or in exchange for the number of Warrant Shares which would have been issuable upon exercise had such Corporate Change not taken place, and in any such case, appropriate provisions (in form and substance reasonably satisfactory to the holder hereof) shall be made with respect to the rights and interests of the Warrant Holder to the end that the economic value of the Warrants and this Warrant Certificate is in no way diminished by such Corporate Change and that the provisions hereof shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter deliverable upon the exercise thereof. This provision shall similarly apply to successive consolidations or mergers.

This Warrant Certificate may be exercised at the office of the Company in Springfield, Missouri, by the registered holder hereof or by his duly authorized representative or attorney, upon the surrender of this Warrant Certificate with an Election to Exercise substantially in the form attached hereto as Exhibit A duly filled in and executed. If the right to purchase fewer than all of the shares of Common Stock covered hereby shall be exercised, the registered holder hereof shall be entitled to receive a new Warrant Certificate or Warrant Certificates covering in the aggregate the number of shares of Common Stock with respect to which the right to purchase

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shall not have been so exercised within three (3) Trading Days (as defined below) of such exercise. No fractional shares will be issued upon exercise of any Warrants to which a Warrant Holder might otherwise be entitled, but will be rounded up to the next whole number if the interest equals or exceeds one-half of a share of Common Stock; otherwise, the fractional interest will be rounded down. No cash or other adjustment in respect of a fractional share of Common Stock will be made. The Company shall issue to Warrant Holder stock certificates representing the shares of Common Stock exercised/purchased in accordance with this Warrant Certificate within three (3) Trading Days (as defined below) of receipt by the Company of the duly completed and executed Election to Exercise and the surrendered Warrant Certificate.

No Warrant Holder, as such, shall be entitled to vote or receive dividends or be deemed the holder of shares of Common Stock for any purpose, nor shall anything contained in this Warrant Certificate be construed to confer upon any Warrant Holder, as such, any of the rights of a shareholder of the Company or any right to vote, give or withhold consent to any action by the Company (whether upon any recapitalization, issuance of stock, reclassification of stock, consolidation, merger conveyance or otherwise), receive notice of meetings or other action affecting shareholders, receive dividends or subscription rights, or otherwise, until the Warrants shall have been exercised and the Warrant Shares have been delivered; provided, however, that any exercise of this Warrant on any date when the stock transfer books of the Company shall be closed shall be deemed effective with respect to the person or persons in whose name or names the certificate or certificates for such Warrant Shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open and the Warrants shall not be deemed to have been exercised, in whole or in part as the case may be, until such date for the purpose of determining entitlement to dividends on such Common Stock, and such exercise shall be at the actual purchase price in effect at such date.

Redemption

Up to all of the Warrants (whether or not then vested pursuant to the terms hereof) shall be redeemable by the Company, in its sole discretion, at a price of $.001 per Warrant Share at any time during any Redemption Period (as defined below), provided that the Company (i) has given written notice to the Warrant Holder of the date of, and number of Warrants subject to, such redemption (a “Redemption Notice”) no later than 11:59 p.m., Central Time, on the fifth (5th) Trading Day (as defined below) after the Redemption Conditions (as defined below) in respect of such redemption have been me and (ii) the Ability-to-Sell Conditions (as defined below) are satisfied on each Trading Day during the period beginning on the Trading Day which the Redemption Notice is deemed received and ending on the twentieth (20th) Trading Day after the Redemption Notice is deemed received. The Warrant Holder shall be entitled to exercise the Warrants subject to the Redemption Notice, regardless of whether such Warrants have otherwise vested hereunder, following his receipt of the Redemption Notice. “Ability-to-Sell Conditions” means: (i) the Registration Statement shall be effective and the Company shall not have informed the Warrant Holder that the prospectus contained therein may not be used; (ii) the Registration Statement shall not be subject to a stop order by the Securities and Exchange Commission (“SEC”); and (iii) the Common Stock shall not be suspended from trading on any

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of, and shall be listed or quoted for trading (and authorized) on the principal United States securities exchange or trading market where the Common Stock is then listed or traded.

“Redemption Period” shall mean the period beginning on the twentieth (20th) Trading Day after the Redemption Notice is deemed received hereunder and ending at 11:59 p.m., Central Time, on the thirtieth (30th) Trading Day after the Redemption Notice is deemed received hereunder.

“Redemption Conditions” means: (i) the Closing Price shall be equal to or greater than two hundred percent (200%) of the Warrant Price therefor as then in effect, for a consecutive twenty (20) Trading Day period and (ii) the average daily trading volume for the Common Stock during such twenty (20) Trading Day period shall be at least Two Hundred Thousand (200,000) shares. “Trading Day” means any day on which the principal United States securities exchange or trading market where the Common Stock is then listed or traded is open for trading.

Registration of Warrant Shares; Black-Out Periods

The Company will file, at its sole cost and expense, within one hundred and twenty (120) date hereof Date, a Registration Statement on Form SB-2 (the “Registration Statement”) (or such other registration form then available, as determined by the Company) covering the Warrant Shares. The Company will use its commercially reasonable good-faith efforts to have the Registration Statement declared effective as soon as practicable and to maintain its effectiveness, subject to the “black-out” periods below, until the date that the Warrant Shares may be sold pursuant to Rule 144(k) under the Securities Act. The Warrant Holder will at all times comply with applicable securities laws and regulations with respect to the Warrants and the Warrant Shares including, without limitation, Rule 10b-5 under the Securities Act. The Warrant Holder shall cooperate with the Company and furnish information reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder.

Upon (a) the issuance by the Securities and Exchange Commission (the “SEC”) of a stop order suspending the effectiveness of the Registration Statement or the initiation of proceedings with respect to the Registration Statement under Section 8(d) or 8(e) of the Securities Act, (b) the occurrence of any event or the existence of any fact as a result of which the Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or any related prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (c) the occurrence or existence of any pending development that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Registration Statement and the related prospectus, the Company shall be entitled to suspend the availability of the Registration Statement and any related prospectus, provided that any such suspension period shall not exceed sixty (60) days in any three (3) month period or ninety (90) days in any twelve-month period. The Company shall give prompt written notice of such suspension to the Warrant Holder.

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Indemnification

The Company agrees to indemnify and hold harmless the Warrant Holder against any and all losses, claims, damages or liabilities to which the Warrant Holder may become subject under the Securities Act, the Securities Exchange Act of 1934, as amended (“Exchange Act”) or any other federal or state statutory law or regulations, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (“Claims”) arise out of or are based upon (A) any untrue statement or alleged untrue statement of a material fact in the Registration Statement (as originally filed or in any amendment thereto) or the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein not misleading, (B) any untrue statement or alleged untrue statement of a material fact contained in the prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading (any of the matters in the foregoing clauses (A) and (B), a “Violation”), and agrees to reimburse each such indemnified party for any out-of-pocket legal or other expenses reasonably incurred by the Warrant Holder in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained in this Warrant Certificate, the indemnification covenants contained in this paragraph: (x) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by the Warrant Holder expressly for use in the Registration Statement or any such amendment thereof or supplement thereto; and (y) with respect to any prospectus, shall not inure to the benefit of the Warrant Holder if (I) the untrue statement or omission of material fact contained in the prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, (II) such corrected prospectus was timely made available by the Company, and (III) the Warrant Holder was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a Violation and the Warrant Holder, notwithstanding such advice, used it.

The Warrant Holder agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Warrant Holder, but only with reference to written information relating to the Warrant Holder furnished to the Company by or on behalf of the Warrant Holder specifically for inclusion in the documents referred to in the foregoing indemnity.

Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party will not relieve it from liability hereunder unless and to the extent that the indemnifying party is actually prejudiced in its ability to defend such action. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified

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party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party.

Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ one separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (A) the use of counsel chosen by the indemnifying party to represent the indemnified party would create a conflict of interest, (B) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (C) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (D) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding.

In the event that the indemnity provided in the foregoing paragraphs is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the Warrant Holder severally agree to contribute to the aggregate Claims to which the Company and the Warrant Holder may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and by the Warrant Holder on the other from the offering of the Warrant Shares; provided, however, that in no case (except in the case of any fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) by the Warrant Holder) shall the Warrant Holder be responsible for any amount in excess of the proceeds received by the Warrant Holder upon the sale of the Warrant Shares hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Warrant Holder severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and of the Warrant Holder on the other in connection with the statements or omissions which resulted in such Claims as well as any other relevant equitable considerations.

Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Company on the one hand or the Warrant Holder on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Warrant Holder agree that it would not be just and equitable if contribution

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were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

Representations, Warranties and Covenants

The Warrant Holder represents and warrants to the Company that:

(a)     the Warrant Holder is acquiring the Warrants for his own account for investment purposes only and not with a present view towards the public sale or distribution thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act. The Warrant Holder understands that he must bear the economic risk of this investment indefinitely, unless the Warrant or Warrant Shares are registered pursuant to the Securities Act and any applicable state securities or blue sky laws or an exemption from such registration is available, and that the Company has no present intention of registering the resale of the Warrants or the Warrant Shares, except as contemplated by this Warrant Certificate.

(b)     the Warrant Holder is an “Accredited Investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

(c)     the Warrant Holder understands that the Warrants are being offered and delivered to him, and the underlying shares of Common Stock are being offered to him, in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Warrant Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Warrant Holder set forth herein in order to determine the availability of such exemptions and the eligibility of the Warrant Holder to acquire the Warrants and the Warrant Shares.

(d)     the Warrant Holder and his counsel have been furnished all materials relating to the business, finances and operations of the Company and materials relating to the Warrants and the shares of Common Stock issuable upon exercise thereof which have been specifically requested by him or his counsel. The Warrant Holder understands that his investment in the Warrants and the Warrant Shares involves a high degree of risk.

The Company represents and warrants to the Warrant Holder:

(a)  The Company has made available to the Warrant Holder true and complete copies of all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (the “SEC Documents”) that the Warrant Holder has requested, and all such documents are otherwise available at www.sec.gov.

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(b)  As of their respective dates, all SEC Documents filed since June 1, 2003 complied in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and none of such SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

The Company shall, as of and after the date upon which the Registration Statement shall have been declared effective by the SEC, but in no event later than August 25, 2005, reserve such number of shares of its authorized but unissued shares of Common Stock to provide for the issuance of the Warrant Shares upon full exercise of the Warrants.

Miscellaneous

The Company may withhold from sums due or to become due to the Warrant Holder from the Company any amount necessary to satisfy any tax obligation to the extent required to be withheld by law.

Neither this Warrant Certificate, the Warrants nor any of the rights, interests or obligations hereunder may be assigned or transferred by either party hereto (whether by operation of law or otherwise) without the prior written consent of the other party, except that the Warrant Holder may assign this Warrant Certificate and transfer the Warrants to (a) the Warrant Holder’s heirs or legatees, (b) the Warrant Holder’s family members or trusts for their benefit, or (c) one or more “affiliates” of the Warrant Holder for tax or estate planning purposes. For purposes of this paragraph, “affiliates” shall have the meaning provided to such term in Rule 144 promulgated under the Securities Act. Subject to the preceding two sentences, this Warrant Certificate will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

The initial addresses for any notices or other communications hereunder shall be as follows, and each party shall provide notice to the other party of any change in such party’s address:

(a) If to the Company:

SLS International, Inc.

1650 West Jackson Street

Ozark, MO 65721

Facsimile: (417) 883-2723

Attention: Chief Executive Officer and President

With a copy (which shall not constitute notice) to:

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Drinker Biddle & Reath LLP

50 Fremont Street, 20th Floor

San Francisco, CA 94109

Facsimile: (415) 591-7510

Attention: Scott Joachim, Esq.

(b) If to the Warrant Holder:

JMBP, Inc.

640 North Sepulveda Boulevard, 2nd Floor

Los Angeles, CA 90049

Facsimile: (310) 903-5500

Attention: Jordan Yospe, Esq.

With a copy (which shall not constitute notice) to:

Irell & Manella LLP

1800 Avenue of the Stars

Suite 900

Los Angeles, CA 90067

Facsimile: (310) 203-7199

Attention: Rick Wirthlin, Esq.

Any notice hereunder shall be deemed to have been received by the party receiving such notice five (5) days after being placed in the mail, if mailed, or one (1) Business Day after being sent via a nationally recognized overnight carrier, upon receipt or refusal of receipt, if delivered personally, or upon confirmed facsimile transmission (or, if such transmission does not occur on a Business Day or occurs later than 5:00 p.m. Central Time, then upon the next Business Day following such transmission). “Business Day” means any day, other than a Saturday or Sunday or a day on which banking institutions in the State of Missouri are authorized or obligated by law, regulation or executive order to close.

This Warrant Certificate may not be amended without the written consent of each of the parties hereto. This Warrant Certificate shall be construed and enforced in accordance with the law of the State of Delaware, without giving effect to the conflict of law principles thereof. The invalidity or unenforceability of any provision of this Warrant Certificate in any jurisdiction shall not affect the validity or enforceability of the remainder of this Warrant Certificate in that jurisdiction or the validity or enforceability of this Warrant Certificate, including that provision in any other jurisdiction.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Certificate to be executed by its Chairman, President or Vice President, by manual or facsimile signature, attested by its Secretary or Treasurer by manual or facsimile signature.

Dated: June ___, 2005

______________________________________

By:

______________________________________

Attest:

Signature Page to Warrant Certificate

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EXHIBIT A

FORM OF ELECTION TO EXERCISE WARRANTS

(To be executed upon exercise of Warrant(s) prior to the close of business on the Expiration Date).

The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ___________ shares of Common Stock and herewith [makes payment of the Warrant Price with respect to such shares in full][elects to effect a Cashless Exercise (as defined in the Warrant Certificate)]. The undersigned requests that a certificate representing the shares be registered in the name of Warrant Holder and the address is ____________________________________________________.

If said number of shares is fewer than all the shares purchasable hereunder, a new Warrant Certificate evidencing the right to purchase the balance of shares be registered in the name of the Warrant Holder at the address ___________________________________________ _________________________________.

The undersigned agrees not to offer, sell, transfer or otherwise dispose of any shares of Common Stock purchased hereby, except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.

Dated: _____________, 20__

__________________________________________

Social Security No. or EIN

Name(s) of registered holder of Warrant Certificate:

Address: __________________________________

__________________________________

__________________________________

Signatures: ________________________________

Note: The above signature(s) must correspond with the name as written upon the face of this Warrant certificate in every particular, without alteration or enlargement or any change whatever.

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EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

SLS and Mark Burnett Sign Promotion Agreement

OZARK, MISSOURI, JUNE 20, 2005 – SLS International, Inc. (OTC Bulletin Board: SITI or "SLS"), a designer and manufacturer of innovative proprietary audio systems, including its ultra-high fidelity “Ribbon Driver” loudspeakers, and Mark Burnett, executive producer of reality programs such as Survivor, The Apprentice with Donald Trump, The Apprentice with Martha Stewart and the upcoming Rock Star:INXS and his production company announced today that they have entered into a three-year promotion agreement. Under the terms of the agreement, Mr. Burnett and his production company will work to create product integration opportunities for SLS and SLS-branded products to be integrated into his primetime network television productions and to secure product placements of SLS products. Mr. Burnett will also act as a consultant to SLS on various business development projects.

The promotion agreement contemplates collaboration toward a product integration to coincide with SLS’ planned release of its “Q Line Qube System”. The Q Line is a new line of high-quality home theater and entertainment products for global markets that SLS has co-developed with world renowned producer, arranger, composer and Grammy Award, Academy Award and Emmy Award winner Quincy Jones. The Q Line Qube System, which combines SLS’ proprietary “Ribbon Driver” technology with Quincy Jones’ innovating design for optimum sound, is expected to launch in the first quarter of 2006. The promotion agreement contemplates that Mr. Jones will act as the on-camera SLS spokesperson in connection with product integrations generated by the promotion agreement.

“This deal exemplifies synergy at the intersection of the entertainment and consumer electronics industries,” proclaims John Gott, SLS’ chief executive officer. “This is a unique opportunity for us to join forces with some of the best names in Hollywood, increase brand awareness together and show the world what we have to offer. We are very excited about our upcoming Q Line systems and couldn’t think of a better way to launch additional products from that line.”

“I discovered SLS while analyzing sound systems for my new show Rock Star:INXS, and I was amazed by the sound quality of SLS speakers,” said Mr. Burnett. “I met with the SLS executives and with Quincy Jones and quickly realized that SLS was a company to hitch my wagon to.”

“Listening to the SLS speakers is like there is a sonic carpet to your soul,” says Quincy Jones. “If you could taste it, smell it or feel it, it would be different, but you just have to hear it. When you are in the movies or listening to music you can tell that the SLS’ deliver a much clearer and better sound and the new products that we are developing together are going to be affordable enough for anybody to own. Mark Burnett is the perfect partner to enlighten the world about these products.”

As part of the deal, SLS and Mr. Burnett’s production company expect to enter into license agreements for the use of certain trademarks and phrases associated with programs where SLS products are placed or integrated. Any licenses would bear specified royalties based on certain sales of SLS products.

In addition, SLS granted to Mr. Burnett options to purchase 1,000,000 shares of SLS common stock, at an exercise price of $2.05 per share, and warrants to purchase an additional 1,000,000 shares of SLS common stock, at an exercise of $6.50 per share, subject to a vesting schedule, anti-dilution adjustments and other terms set forth in the related option agreement and warrant certificate. The options and warrants, and the common stock for which such securities are exercisable, have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption. The securities were issued in reliance upon an exemption from registration under Section 4(2) of the Securities Act. SLS has agreed to register for resale the shares of common stock issuable u pon exercise of the options and warrants.

About SLS

Based in Ozark, Missouri, SLS International, Inc. is a 30-year-old manufacturer and developer of new patent-pending ultra-high fidelity Ribbon Driver loudspeakers, patented Evenstar Digital Amplifiers and sound systems for the commercial, home entertainment, professional and music markets. SLS has perfected the ribbon-driver technology enabling their loudspeakers to achieve exceptional inner detail and accuracy with 20% to 30% less distortion of typical compression driver and dome tweeters. SLS speakers and systems are used in high-profile venues such as NBC/MSNBC's 2002 and 2004 Olympics studios, the Recording Academy's Grammy Producers SoundTable events, and for the NAMM winter show, providing sound in the AVID Technology booth, just to name a few. For more information, visit http://www.slsaudio.com.

About Mark Burnett and His Production Company

Mark Burnett is an industry leader in the world of primetime non-fiction television. Burnett revolutionized television with hits such as Eco-Challenge, Survivor, The Apprentice, The Contender and the upcoming Rock Star:INXS. He also successfully reintroduced product placement as an integral part of each of his shows and his projects have garnered a total of 24 Emmy nominations since 2001. Mark Burnett was listed as the #1 Most Valuable Player by TV Guide and in Time Magazine’s Top 100 most influential people in the world today.

Certain statements made in this press release are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. When used in this press release, the words “plan,” “intend,” “expect” and similar words identify such forward-looking statements. These statements involve risks and uncertainties, and actual events and results may differ materially from those described in this press release. Factors that could cause or contribute to such differences include, but are not limited to: the ability of the parties to successfully execute and perform any product integration or product placement; the ability of the parties to agree upon the terms of definitive agreements for product integrations, product placements and related licenses; the ti ming and success of SLS’ launch of its Q Line Qube System; the application of JMBP’s and Mr. Burnett’s creative control over all productions involving any product placements and product integrations; the application of Mr. Burnett’s reasonable discretion in promoting SLS and its products; and the success of the various television productions involving JMBP and Mr. Burnett with which any product placements and product integrations, if any, are expected to be associated. More information about potential factors which could affect SLS’ business and financial results is set forth in reports filed with the SEC, including SLS’ quarterly reports on Form 10-Q and its annual report on Form 10-K. All forward looking statements are based on information available to SLS as of the date hereof, and SLS assumes no obligation to update such statements.

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