Exhibit 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated October 23,
2006
By and Between:
COATES
INTERNATIONAL, LTD., a Delaware corporation (the "Company" or
the
"Employer"),
AND
GREGORY
COATES , an individual having an address at 1811 Murray Drive,
Wall
Township, New Jersey 07719 ("Executive")
WHEREAS, the Company desires to hire the Executive and employ him
in the
position of a President Technology Division ; and
WHEREAS, Executive has agreed to serve as the President Technology
Division of
the Company and pursuant to the terms and conditions set forth
herein.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of
the premises
and the mutual covenants, agreements, representations and
warranties contained
herein, and other good and valuable consideration, the receipt and
sufficiency
of which are hereby acknowledged, Executive and the Company hereby
agree as
follows:
ARTICLE 1
EMPLOYMENT
1.1 Employer hereby hires the Executive as a President Technology
Division of
the Company and Executive hereby affirms and accepts such position
and
employment by Employer for the Term (as defined in Article 3
below), upon the
terms and conditions set forth herein.
1.2 The Employer shall utilize its best efforts to cause its Board
of Directors
to appoint the Executive as a member of the Employer's Board of
Directors
throughout the Term.
ARTICLE 2
DUTIES
During the Term, Executive shall serve Employer faithfully,
diligently and to
the best of his ability, under the direction and supervision of the
Board of
Directors of Employer ("Board of Directors") and the Company's
Chief Executive
Officer and shall use his best efforts to promote the interests and
goodwill of
Employer and any affiliates, successors, assigns, parent
corporations,
subsidiaries, and/or future purchasers of Employer. Executive shall
render such
services during the Term at Employer's principal place of business
or at such
other place of business as may be determined by the Board of
Directors, as
Employer may from time to time reasonably require of him, and shall
devote all
of his business time to the performance thereof. Executive shall
have those
duties and powers as generally pertain to each of the offices of
which he holds,
as the case may be, subject to the control of the Board of
Directors. Employer
and Executive also agree that Executive shall serve as a member of
the
Employer's Board of Directors during the Term.
<PAGE>
ARTICLE 3
TERM
3.1 The term of this Agreement (the "Term") shall commence on the
date hereof
(the "Effective Date"), and continue thereafter for a term of five
(5) years, as
may be extended or earlier terminated pursuant to the terms and
conditions of
this Agreement. The Term is renewable upon the agreement of the
parties hereto.
ARTICLE 4
GOVERNANCE AND COMPENSATION
4.1 Governance. During the Term, Executive agrees to vote all
shares of the
Company's Common Stock owned by him or as to which he had voting
power to elect
to the Company's Board of directors at least two directors who
qualify as
"independent directors" under the rules of the Securities Exchange
Commission
and Nasdaq.
4.2 Salary and Equity Compensation
(a) In
consideration of Executive's services to Employer, Employer
shall
pay to Executive an annual salary (the "Salary") of Two Hundred
Thousand Dollars
($200,000.00), payable in equal installments at the end of each
regular payroll
accounting period as established by Employer, or in such other
installments upon
which the parties hereto shall mutually agree, and in accordance
with Employer's
usual payroll procedures, but no less frequently than monthly.
Notwithstanding
the above, payment of the Salary will be deferred until the earlier
to occur of:
(I) the closing by the Company of an equity investment of at least
$10,000,000;
or (II) December 31, 2006.
(b) In
addition to the Salary, Employer shall issue to Executive a
Stock
Option to purchase 3,000,000 shares of the Employer's common stock,
at an
exercise price equal to Employer's common stock fair market value
as of the date
of issuance, as determined by the independent members of the Board
(the "Stock
Option"). The Stock Option shall vest (i.e., become exercisable) in
three equal
installments, as follows: One third of the Stock Options shall vest
on the
Effective Date; an additional third of the Stock Option shall vest
on each of
the first and second anniversaries of the Effective Date. Executive
must be
continuously a full-time employee of the Company through the time
he exercises
part or all of the Stock Option, except, however, in the event this
Agreement is
terminated by the Executive for a Good Reason, as defined in
Article 10.1 and
10.2 below, or by the Employer without Cause, as defined in Article
10.3 below,
in which cases the Stock Option shall immediately and fully vest
upon such
termination provided further that the events surrounding any such
termination
have not been the subject of any claim, proceeding or lawsuit by
either the
Executive or the Company in which further case the Stock Option
shall only vest
upon final adjudication, determining that such termination was a
valid
termination by the Executive for Good Reason or by the Employer
without Cause
pursuant to the applicable above referenced articles of this
Agreement. The
Stock Option shall be deemed a non-qualified stock option (i.e.,
not an ISO).
The Stock Option will be issued out of the Employer's stock
incentive plan, and
subject to such incentive plan.
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<PAGE>
(c)
Executive hereby acknowledges that the Stock Option and the
shares
issuable upon the exercise thereof shall be "restricted securities"
as such term
is defined under Rule 144, unless and until an effective
registration covering
these shares takes place, promulgated under the Securities Act of
1933, as
amended (the "1933 Act"); that the Executive hereby represents that
he shall
accept such compensation and has no present intent to distribute or
transfer
such securities; that such securities shall bear the appropriate
restrictive
legend providing that they may not be transferred except pursuant
to the
registration requirements of the 1933 Act or pursuant to exemptions
therefrom,
and; the Executive further acknowledges that he may be required to
hold such
securities for an indeterminable amount of time.
(d) The
Company undertakes, that it shall file a Form S-8, that will
cover
the shares issuable upon exercise of the Stock Option, within a
reasonable time
after a registration statement covering the securities issued in
connection with
the Investment becomes effective.
(e)
Executive shall not be entitled to any other compensation from
the
Company unless they have been unanimously approved by the
independent directors
of the Board.
4.3 Benefits
Upon the earlier to occur of: (I) the closing by the Company of an
equity
investment of at least $10,000,000; or (II) December 31, 2006, and
thereafter
during the Term, Executive shall be entitled to participate in all
medical and
other executive benefit plans, including vacation, sick leave,
retirement
accounts and other executive benefits provided by Employer to any
of the other
senior officers of Employer on terms and conditions no less
favorable than those
offered to such senior officers. Such participation shall be
subject to the
terms of the applicable plan documents and Employer's generally
applicable
policies. In addition, upon the earlier to occur of: (I) the
closing by the
Company of an equity investment of at least $10,000,000; or (II)
December 31,
2006, Employer shall pay the premiums for : (A) Executive's
disability
insurance; and (B) life insurance in the amount of $2,000,000, but
only to the
extent that the cost thereof is determined to be reasonable by the
independent
directors of the Board. The beneficiary of the life insurance
policy shall be
Executive's spouse, and if he has no spouse as directed by
Executive. Executive
also agrees to cooperate with the Company in obtaining for the
benefit of the
Company "key man" life insurance on Executive's life in the amount
of at least
$2,000,000. The amount of such insurance shall be approved by the
independent
directors of the Board.
4.4 Expense Reimbursement
Employer shall reimburse Executive for reasonable and necessary
expenses
incurred by him on behalf of Employer in the performance of his
duties hereunder
during the Term, including any and all travel and entertainment
expenses related
to the Employer's business in accordance with Employer's then
customary
policies, provided that such expenses are adequately
documented.
4.5 Bonus
In addition to the compensation payable under Section 4.2,
Executive shall be
entitled to receive during the Term an annual bonus, the amount of
which shall
be determined by the unanimous vote of the independent members of
the Board of
Directors ("Bonus"). Each year's Bonus shall be paid to the
Executive within 110
days of the Employer's calendar year end.
4.6 Other Compensation
Employer shall provide Executive with a leased automobile for his
exclusive use
throughout the Term, including costs for gasoline, maintenance and
comprehensive
insurance including an "umbrella" policy.
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<PAGE>
ARTICLE 5
OTHER EMPLOYMENT
During the Term, Executive shall devote all of his business and
professional
time and effort attention, knowledge, and skill to the management,
supervision
and direction of Employer's business and affairs as Executive's
highest
professional priority. Employer shall be entitled to all benefits,
profits or
other remuneration arising from or incidental to all work, services
and advice
performed or provided by Executive. Nothing in this Agreement shall
preclude
Executive from:
(a)
serving as a
director or member of a committee of any organization
or corporation involving no conflict of interest with the
interests
of Employer, provided that Executive must obtain the prior
written
approval of the independent members of the Board;
(b)
serving as a
consultant in his area of expertise (in areas other
than in connection with the business of Employer), to
government,
industrial, and academic panels provided that only de minimis
time
shall be devoted thereto and Executive must obtain the prior
written
approval of the independent members of the Board of Employer
and
where it does not conflict with the interests of Employer,
provided
that such written consent shall not be unreasonably withheld,
delayed or conditioned; and
(c)
managing his
personal investments or engaging in any other
non-competing business; prov
