EXHIBIT 10.2
Steerpike (Overseas) Limited
c/o WJB Chiltern, plc
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As of May 19, 2003
SLS Loudspeakers
A Division of SLS International, Inc.
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Re: SLS Loudspeakers
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Gentlemen:
This letter sets forth the mutual understanding between Steerpike
(Overseas) Limited ("us", "we" or "Steerpike") and SLS Loudspeakers, A Division
of SLS International, Inc. ("SLS") concerning certain limited rights that
Steerpike is granting to SLS hereunder regarding the use of the name and
likeness of ▇▇▇▇▇▇ ▇▇▇▇▇▇ p/k/a "Sting" ("Artist") solely in connection with the
advertising, promotion and sale of SLS Loudspeakers (such SLS Loudspeakers are
sometimes referred to herein as the "Products"), subject to all of the terms and
conditions contained in this letter.
(1) Steerpike hereby grants to SLS, for a period commencing with the
date hereof and continuing until July 31, 2005 (such period being referred to
herein as the "Term", and being subject to the early termination provisions of
Articles 4 and 5 of Exhibit A attached hereto), the following non-exclusive
rights:
(a) Solely during the Term and in the United States, the right (as
further described below) to exhibit an audiovisual recording (the "Videotape")
provided by Steerpike to SLS which contains footage of Artist discussing his
endorsement of the Products. The Videotape will be provided to SLS no later than
ninety (90) days after the complete execution hereof (provided any production
activities undertaken by SLS in connection with the Videotape [and approved by
Steerpike] do not delay such provision of the Videotape to SLS), and any costs
incurred in connection with the production, shipping and exhibition of the
Videotape shall be SLS' sole responsibility. The Videotape may only be exhibited
by SLS in: (1) "internal", non-public corporate meetings; (2) shareholder
meetings and (3) audio equipment industry trade shows, and
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such exhibition may only occur in connection with the promotion, advertising,
marketing and sale of the Products. The specific content and length of the
Videotape shall be determined in Steerpike's sole discretion; however: (i)
Steerpike will consult with SLS in good faith in connection with the content of
the Videotape; (ii) the final script for the Videotape shall be mutually
approved by Steerpike and SLS; and (iii) provided that SLS has made the Products
available to Steerpike (and installed them) at the location where the Videotape
is to be recorded (it being acknowledged and agreed that the choice of such
location is to be determined solely by Steerpike), Steerpike agrees to cause
Artist to appear with the Products in the Videotape.
(b) Solely during the Term and in the United States, the right (as
further described below) to use, solely in trade and/or consumer print
advertisements for the Products (which such print advertisements may be placed
solely in music-related trade and/or consumer magazines/periodicals), a
photograph provided by Steerpike to SLS which features Artist's likeness.
Steerpike agrees that it will provide SLS with three (3) different photographs
(the "Photos") for SLS' use in accordance with this paragraph 1(b). The Photos
will be provided to SLS no later than 90 days after the complete execution
hereof (provided any production activities undertaken by SLS in connection with
the Photos [and approved by Steerpike] do not delay such provision of the Photos
to SLS), and any costs incurred in connection with the production, shipping and
use of the Photos shall be SLS' sole responsibility. Any advertisement embodying
any of the Photos, as well as the manner and specific use of the particular
Photo and the particular magazine (or other periodical) in which the
advertisement is to be run, shall be subject to Steerpike's prior written
approval, which may be withheld for any reason whatsoever. Notwithstanding the
provision of the Photos to SLS by Steerpike, SLS shall be solely responsible for
obtaining any and all necessary rights, licenses and approvals from any third
parties who have any rights or interest in the Photos. Steerpike agrees that,
provided that SLS has made the Products available to Steerpike (and installed
them) at the location where the Photos are to be taken (it being acknowledged
and agreed that the choice of such location is to be determined solely by
Steerpike), Steerpike will cause Artist to appear with the Products in the
Photos.
(c) Solely during the Term and in the United States, the right to issue
one (1) press release (the "Press Release") in connection with the subject
matter hereof. The content and release date of the Press Release shall be
subject to Steerpike's prior written approval (provided, however, that any such
release date which is within ten (10) business days of the date of complete
execution hereof shall be deemed approved by Steerpike).
(d) SLS acknowledges and agrees that all such approvals or disapprovals
are within Steerpike's sole discretion, and any item or use not approved by
Steerpike in writing is deemed to be disapproved. If SLS so requests, Steerpike
will provide SLS with specific reasons for any such disapproval so that SLS can
attempt to address Steerpike's concerns and correct any stated problem and, if
applicable, resubmit materials for Steerpike's approval or disapproval.
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(2) The parties acknowledge that the Videotape and the Photos were
created outside of the United States and the United Kingdom, and that, as
between Steerpike and SLS, Steerpike is the sole owner and copyright holder of
such items.
(3) Steerpike hereby designates Artist's manager, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as
its authorized representative for purposes of providing SLS with any approvals
SLS is required to receive from Steerpike pursuant to this letter agreement, and
all requests hereunder for Steerpike's approval shall be submitted to ▇▇▇▇▇
▇▇▇▇▇▇▇▇, KSM, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
(4) In consideration for the rights granted hereunder, SLS agrees to
grant (pursuant to the option agreement between the parties attached hereto as
Exhibit B [the "Option Agreement"]) to Steerpike options to purchase One Million
(1,000,000) shares of the common stock of SLS International, Inc. at the
exercise price of Twenty Five Cents ($.25) per share commencing on the date
hereof. The terms and conditions of such grant are more fully described in the
Option Agreement. Notwithstanding anything to the contrary contained herein,
this agreement shall not be deemed effective unless and until the Option
Agreement is fully and completely executed by Steerpike and SLS.
(5) SLS will provide Steerpike with two (2) SLS HT 600 5.1 Speaker
Systems (the "Artist Speakers") at no charge. SLS will pay for all shipping and
handling charges associated with delivering the Artist Speakers to the parties
specified by Steerpike to SLS, and will provide Steerpike (and those parties
specified by Steerpike) with all of SLS' standard Product warranty(ies) in
connection with the Artist Speakers.
(6) SLS acknowledges and agrees that Steerpike reserves all rights not
expressly granted to SLS hereunder, and Steerpike shall have no obligation of
any nature whatsoever to SLS in connection therewith. SLS acknowledges and
agrees that the rights granted herein do not transfer any title or interest in
or to Artist's name, likeness, image, voice or quotes, all of which are owned
(as applicable) by Steerpike, Artist and/or their affiliated entities.
(7) During the Term and in the United States, Steerpike agrees that it
shall use reasonable efforts to ensure that Artist does not make any public
statements in derogation of SLS or the Products.
(8) In addition to the terms set forth above in this letter agreement,
the Standard Terms and Conditions attached hereto as "Exhibit A" is incorporated
herein by reference and shall be deemed a part hereof.
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If the foregoing is acceptable to SLS, please sign and return to us the
enclosed counterpart of this letter, whereupon this letter shall be effective in
accordance with its terms. Facsimile and photocopied signatures shall be treated
as originals for all purposes relating to this agreement.
Very truly yours,
STEERPIKE (OVERSEAS) LIMITED
By:_______________________________
An Authorized Signatory
ACCEPTED AND AGREED:
SLS LOUDSPEAKERS
A Division of SLS International, Inc.
By:___________________________
An Authorized Signatory
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In order to induce SLS Loudspeakers, A Division of SLS International, Inc.
("SLS") to enter into the foregoing agreement ("Agreement") with Steerpike
(Overseas) Limited ("SOL"), the undersigned (referred to in the Agreement as
"Artist") hereby:
(a) acknowledges that he has read and is familiar with all
the terms and conditions of the Agreement;
(b) assents to the execution of the Agreement and agrees to be
bound by the terms and conditions thereof that relate to the undersigned in any
way, directly or indirectly, and hereby guarantees to SLS the full and faithful
performance of all the terms and conditions of the Agreement by the undersigned
and by SOL; and
(c) acknowledges and agrees that SLS shall be under no
obligation to make any payments to the undersigned or otherwise, for or in
connection with this inducement and for or in connection with the services
rendered by the undersigned or in connection with the rights granted to SLS
thereunder and the fulfillment of the undersigned's obligations pursuant to the
Agreement.
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ p/k/a "Sting"
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EXHIBIT A
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STANDARD TERMS AND CONDITIONS
These Standard Terms and Conditions shall be deemed fully incorporated
in the letter agreement (the "Underlying Agreement") to which this Exhibit A is
attached, and these Standard Terms and Conditions and the Underlying Agreement
shall hereinafter be collectively referred to as the "Agreement". SLS
Loudspeakers, A Division of SLS International, Inc. is herein referred to as
"Licensee" and Steerpike (Overseas) Limited is herein referred to as "Licensor".
All terms shall, unless expressly provided otherwise herein, have the same
respective meanings as set forth in the Underlying Agreement.
1. INDEMNIFICATION.
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(a) (i) Licensor shall indemnify, hold harmless and defend Licensee,
and its parents, subsidiaries, affiliates, officers, directors and employees
(each an "SLS Indemnitee", and collectively "SLS Indemnitees"), against any
claims, liabilities, demands, causes of action, judgments, settlements and
expenses (including, but not limited to, reasonable attorneys' fees and court
costs) ("Claim") arising out of (i) a breach of any representation, warranty or
covenant made by Licensor hereunder, or (ii) the failure of Licensor to perform
any of its obligations contained in this Agreement; provided, however, that
Licensee shall notify Licensor in writing within ten (10) days after Licensee
receives notification of any Claim or suit related thereto. In no event shall
Licensor be liable for any consequential damages or loss of profits which
Licensee may suffer arising out of same. The foregoing indemnity shall not be
construed to cover any claim with respect to which Licensee has committed to
indemnify Licensor under paragraph 1(b) below.
(ii) If any Claim is initiated against any SLS Indemnitee with
respect to which such SLS Indemnitee may make a claim against Licensor pursuant
to paragraph 1(a)(i), then the SLS Indemnitee shall give prompt written notice
of such Claim to the Licensor; provided, however, that the failure to so notify
the Licensor shall not relieve the Licensor from any liability under paragraph
1(a)(i) unless, and only to the extent that, such failure results in prejudice
to or forfeiture of, substantive rights or defenses of the Licensor. Licensor,
at Licensor's own expense, shall have the option to assume the defense of such
Claim. If Licensor assumes the defense of such Claim, (i) Licensor shall keep
the SLS Indemnitee informed of all material developments and events relating to
such Claim, (ii) the SLS Indemnitee shall have the right to participate, at its
own expense, in the defense of such Claim (but such participation shall not be
deemed to give the SLS Indemnitee the right to control such defense), (iii) the
SLS Indemnitee shall cooperate as reasonably requested by Licensor in the
defense of such Claim, and (iv) Licensor shall not settle such Claim without the
prior written consent of the SLS Indemnitee, which consent shall not be
unreasonably withheld. If Licensor fails to assume the defense of such Claim, or
fails to diligently defend such Claim, the SLS Indemnitee may assume the defense
of such Claim and
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Licensor shall reimburse Indemnitee for all reasonable expenses (including
reasonable attorneys' fees) as such expenses are incurred, relating to the
defense of such Claim.
(b) (i) Licensee shall indemnify and hold harmless Licensor and Artist,
and their respective parents, subsidiaries, affiliates, officers, directors,
representatives, employees and agents (each, an "Indemnitee" and collectively
"Indemnitees") from and against any and all Claims (including, but not limited
to, reasonable attorneys' fees and court costs) arising out of or in connection
with (i) the design, manufacture, packaging, distribution, shipment,
advertising, promotion, sale, or exploitation of the Products (including,
without limitation, any Claim arising out of or in connection with (A) any
injury to or death of any person directly or indirectly arising out of or
resulting from the Products or any goods or services manufactured, sold or
offered by Licensee; (B) any damage to or loss of any property directly or
indirectly arising out of or resulting from the Products or any goods or
services manufactured, sold or offered by Licensee or (C) any injury or damage
arising from any claim or representation regarding the Products in any
advertising or other materials), (ii) any breach of any representation,
warranty, or covenant made by Licensee hereunder, or (iii) the failure of
Licensee to perform any of its obligations contained in this Agreement. Without
limiting the generality of the foregoing, Licensee's indemnity shall
specifically apply to claims relating to or based upon defects in the Products,
whether hidden or obvious, it being agreed that any governmental order of recall
or injunction against distribution and/or sale shall, as between Licensee and
Licensor, be deemed conclusive proof of such defect for purposes of triggering
Licensee's indemnity hereunder. The foregoing indemnity shall not be construed
to cover any claim with respect to which Licensor has committed to indemnify
Licensee under Paragraph 1(a) above.
(ii) If any Claim is initiated against any Indemnitee with
respect to which such Indemnitee may make a claim against Licensee pursuant to
paragraph 1(b)(i), then the Indemnitee shall give prompt written notice of such
Claim to the Licensee; provided, however, that the failure to so notify the
Licensee shall not relieve the Licensee from any liability under paragraph
1(b)(i) unless, and only to the extent that, such failure results in prejudice
to or forfeiture of, substantive rights or defenses of the Licensee. Licensee,
at Licensee's own expense, shall have the option to assume the defense of such
Claim. If Licensee assumes the defense of such Claim, (i) Licensee shall keep
the Indemnitee informed of all material developments and events relating to such
Claim, (ii) the Indemnitee shall have the right to participate, at its own
expense, in the defense of such Claim (but such participation shall not be
deemed to give the Indemnitee the right to control such defense), (iii) the
Indemnitee shall cooperate as reasonably requested by Licensee in the defense of
such Claim, and (iv) Licensee shall not settle such Claim without the prior
written consent of the Indemnitee, which consent shall not be unreasonably
withheld. If Licensee fails to assume the defense of such Claim, or fails to
diligently defend such Claim, Indemnitee may assume the defense of such Claim
and Licensee shall reimburse Indemnitee for all reasonable expenses (including
reasonable attorneys' fees) as such expenses are incurred, relating to the
defense of such Claim.
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(c) In the event of termination or expiration of this Agreement, this
Article 1 shall survive.
2. REPRESENTATIONS AND WARRANTIES.
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(a) Licensor represents and warrants to Licensee that (i) Licensor has
the full right, authority and power to enter into this Agreement and to perform
all its obligations hereunder; and (ii) Licensor's execution, delivery, and
performance of this Agreement will not infringe upon the rights of any third
party or violate the provisions of any agreement to which Licensor is a party.
(b) Licensee represents and warrants to Licensor that: (i) Licensee has
the full right, authority and power to enter into this Agreement and to perform
all its obligations hereunder; (ii) neither Licensor nor Artist has been or
shall be involved in any manner with the manufacture or design (including,
without limitation, safety concerns) of the Products and that Licensee shall be
solely responsible for the proper manufacture, design and safety of the Products
and the merchantability thereof; (iii) Licensee shall be solely responsible for
any claims or damages that may arise from any promotion or use of the Products
(other than claims or damages which solely arise from the use of Artist's name
and likeness as permitted hereunder); and (iv) Licensee's execution, delivery,
and performance of this Agreement will not infringe upon the rights of any third
party or violate the provisions of any agreement to which Licensee is a party.
3. INSURANCE.
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Licensee shall at all times while this Agreement is in effect and for
four (4) years thereafter, obtain and maintain at its own expense, from a
qualified insurance carrier, insurance, including, without limitation, products,
personal injury, advertising, and contractual liability coverage, which includes
as additional insureds Licensor and Artist, and any of their respective parents,
subsidiaries, affiliates, officers, directors, employees, representatives and
agents which Licensor reasonably requests to be added as additional insureds.
The amount of coverage shall not be less than One Million ($1,000,000) Dollars
combined single limit (with no deductible amount) for each single occurrence.
The policy shall provide for thirty (30) days written notice to Licensor from
the insurer by registered or certified mail, return receipt requested, in the
event of any modification, cancellation or termination. Upon execution of this
Agreement, Licensee shall furnish Licensor with a certificate of insurance
issued by the carrier evidencing the same. In no event shall Licensee use
Artist's name or likeness in connection with the Products prior to Licensor's
receipt of such certificate of insurance.
4. TERMINATION.
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(a) In addition to any and all other remedies available to it
hereunder, Licensor shall have the right to immediately terminate the Term of
this Agreement upon written notice to Licensee upon the occurrence of any of the
following:
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(i) Licensee uses any Photo or runs any advertisement
embodying Artist's name or likeness without having the prior written approval of
Licensor as specified in the Agreement.
(ii) Licensee makes any use of the Videotape that is not
specifically granted to Licensee in the Agreement.
(iii) Licensee becomes subject to any voluntary or involuntary
order of any government agency involving the recall of any of the Products
because of safety, health or other hazards or risks to the public.
(iv) Licensee is in breach of any term or provision of the
Option Agreement.
(v) Licensee fails to register the Shares (as defined in the
Option Agreement) in accordance with the terms of the Option Agreement by
December 31, 2003.
(b) In addition to any and all other remedies available to it
hereunder, on thirty (30) days prior written notice to Licensee, Licensor may
terminate the Term of this Agreement (in which case such termination shall be
effective immediately upon expiration of the thirty (30) day notice period),
upon the occurrence of any of the following circumstances, provided that during
such thirty (30) day period, Licensee fails to cure the breach to Licensor's
satisfaction:
(i) Licensee fails to obtain or maintain insurance as required
under Paragraph 3 hereinabove.
(ii) A petition in bankruptcy is filed by or against Licensee;
Licensee is adjudicated bankrupt or insolvent, or makes an assignment for the
benefit of creditors or an arrangement pursuant to any bankruptcy law; Licensee
discontinues its business; or a receiver is appointed for Licensee or Licensee's
business and such receiver is not discharged within thirty (30) days.
(iii) Licensee or any of its controlling shareholders,
officers, directors or employees take any actions in connection with the
manufacture, sale, distribution or advertising of the Products which damages or
reflects adversely upon the Licensor and/or the Artist.
(iv) Licensee violates any of its other obligations or
breaches any of its covenants, agreements, representations or warranties
hereunder.
5. EFFECT OF TERMINATION.
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(a) On expiration or termination of the Term of this Agreement,
Licensee shall have no further right to exercise the rights granted hereunder
(including, without limitation, those granted in the Underlying Agreement) or
otherwise acquired in relation to this Agreement and
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such rights shall forthwith revert to Licensor. All materials supplied to
Licensee by Licensor hereunder, if any, shall be immediately returned to
Licensor at Licensee's expense. Licensee agrees that (i) its failure to cease
the use of Artists name and/or likeness in connection with the manufacture, sale
and/or distribution of Products upon the expiration or termination of this
Agreement will result in immediate and irreparable damage to Licensor, (ii)
there is no adequate remedy at law for such failure and (iii) in the event of
such failure, Licensor shall be entitled to injunctive relief.
(b) Upon expiration or termination of the Term of this Agreement,
Licensee shall refrain from any further use of or direct or indirect reference
to any of the rights granted hereunder (including, without limitation, the use
of Artist's name and/or likeness) in connection with the manufacture, sale,
distribution or promotion of Products or any other products or services of
Licensee.
6. NOTICES.
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All notices, demands, contracts or waivers hereunder shall be given in
writing by messenger or overnight air courier sent to the addresses set forth
for the respective parties in the Underlying Agreement or as otherwise indicated
in writing by a party hereto. The date of messengering shall be deemed to be the
date of service. One (1) business day from the date of overnight air courier
handling shall be deemed to be the date of service for courier handled notices.
A courtesy copy of all notices sent to Licensor shall be sent to Grubman
Indursky & ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
7. ENTIRE AGREEMENT.
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This Agreement shall constitute the entire understanding of the parties
with respect to the subject matter, superseding all prior and contemporaneous
promises, agreements and understandings, whether written or oral pertaining
thereto.
8. RELATIONSHIP OF THE PARTIES.
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This Agreement does not appoint either party as the agent of the other
party, or create a partnership or joint venture between the parties.
9. NO MODIFICATION; WAIVER.
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The terms of this Agreement shall not be modified except by an
agreement in writing signed by both parties hereto. No waiver by either party of
a breach or default hereunder shall be deemed a waiver by such party of a
subsequent breach or default of a like or similar nature.
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10. GOVERNING LAW.
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This Agreement shall be construed and interpreted pursuant to the laws
of the State of New York, and the parties hereto submit and consent to the
jurisdiction of the courts of the State of New York, including Federal Courts
located therein, should Federal jurisdiction requirements exist, in any action
brought to enforce (or otherwise relating to) this Agreement. Notwithstanding
the preceding sentence, nothing contained in this Agreement shall preclude
Licensor from bringing an action in any appropriate forum to enforce the terms
and provisions of this Agreement. Licensee hereby consents to the exclusive
jurisdiction of any State or Federal court empowered to enforce this Agreement
in the State of New York, New York County, and waives any objection thereto on
the basis of personal jurisdiction or venue.
11. SEVERABILITY.
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If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable, such decision shall not affect the validity or
enforceability of any of the remaining provisions, which remaining provisions
shall continue to have full force and effect.
12. ASSIGNMENT
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Licensee may not assign this agreement or any of its rights or
obligations hereunder without Licensor's express written consent (which consent
may be withheld for any reason). Any assignment in violation of the previous
sentence shall be null and void and of no force or effect. Licensor may assign
this agreement or any of its rights or obligations hereunder without
restriction.
13. CURE.
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The failure by Licensor to perform any of its obligations hereunder
shall not be deemed a breach of this Agreement unless Licensee gives Licensor
written notice of such failure to perform and such failure is not corrected
within thirty (30) days from and after Licensor's receipt of such notice, or, if
such failure is not reasonably capable of being cured within such thirty (30)
day period, Licensor does not commence to cure such failure within such thirty
(30) day period and proceed with reasonable diligence to complete the curing of
such failure thereafter.
14. COUNTERPARTS.
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This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same Agreement.
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EXHIBIT B
Option Agreement
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