Exhibit 10.20
LICENSE AGREEMENT
This
License Agreement (the "Agreement") is made as of October 23,
2006
between George J. Coates and Gregory Coates, as licensors
(separately and
together, "Licensors") and Coates International, Ltd., a Delaware
corporation
("Licensee"). This Agreement shall become effective as of the
Effective Date, as
defined herein.
Recitals:
1. Licensors and
Licensee are parties to a license agreement, dated
December
22, 1997 (Exhibit A), and George J. Coates and Licensee are
parties to
a license agreement, dated November 10, 2005 (Exhibit B)
(together,
the "Prior License Agreements").
2.
Licensee intends to sell additional shares of its common stock
to
certain
purchasers. As a precondition thereof the placement agent is
requiring
that the Prior License Agreements be amended and restated, and
employment
agreements, in the form of Exhibit C and Exhibit D be signed
with
George J. Coates and Gregory Coates, respectively (the
"Employment
Agreements"), and Licensors acknowledge that they will benefit
therefrom.
NOW
THEREFORE, for this and other valuable consideration, the receipt
of
which is hereby acknowledged, and intending to be legally bound,
the parties
agree as follows:
1. DEFINITIONS:
"Additional Licensed Intellectual Property Rights" means
Intellectual
Property
Rights (not including the Licensed Intellectual Property
Rights)
and any
related inventions that (i) do not relate to the CSRV and (ii)
that are
invented or developed by one of both Licensors or as to which a
Licensor
acquires the right to license or sublicense during the period
of
time that
the applicable Licensor is employed by, or a consultant to, the
Licensee
and a period of five years thereafter.
"Cause" -
with respect to each Licensor shall have the meaning ascribed
to
such term
is such Licensor's Employment Agreement.
"Commitment Period" - with respect to each Licensor shall have the
meaning
ascribed
to such term in such Licensor's Employment Agreement.
"CSRV"
means the spherical rotary valve system developed by Licensors
as
it may be
improved or modified from time to time.
"CSRV
Engine" shall mean an internal combustion engine which
incorporates
the
CSRV.
"Effective
Date" means the closing by the Company of an equity investment
of at
least $10,000,000 (the "Investment") provided that such
investment
occurs on
or before December 31, 2006.
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"Field of
Use" shall mean the development, manufacturing, sale and/or
distribution of CSRV Engines.
"Good
Reason" - with respect to each Licensor shall have the meaning
ascribed
to such term is such Licensor's Employment Agreement.
"Intellectual Property Rights" means patent rights, copyright
rights
(including, but not limited to, moral rights), Know-how, license
rights,
and any
other intellectual property rights (other than trademarks)
recognized
by the law of any applicable jurisdiction.
"Know-How"
means trade secrets (including trade secrets as defined in the
United
States Uniform Trade Secrets Act and under corresponding
foreign
statutory
law and common law), concepts, knowledge, technical
information,
and data
including, but not limited to, algorithms, engineering,
scientific
and practical information and formulae, equipment designs,
information or materials and commercial sources thereof,
technical
information recorded in reports, on drawings, in specifications and
in
other
writings, irrespective of the form of expression or media upon or
in
which it
is recorded, or transmitted.
"Letter
Agreement" shall mean a certain letter agreement dated July 7,
2006 by
and between Licensee and WWE, a copy of which is attached
hereto
as Exhibit
E.
"Licensed
Intellectual Property Rights" shall mean (a) the patents and
patent
applications listed on Appendix 1.1 hereto, (b) any patents
that
shall
issue on any of the patent applications listed on Appendix 1.1,
(c)
any
patents derived from continuation, continuation-in-part,
divisional,
reissue or
reexamination applications based on the patents and patent
applications referred to in clauses (a) or (b) above to the extent
related
to the
same subject matter, (d) foreign counterparts to any of the
foregoing,
and (e) any other patents or patent applications, in each case
owned by
one or both Licensors or as to which a Licensor has the right
to
license or
sublicense that relate to the CSRV, Licensed Intellectual
Property
Rights shall include any Intellectual Property Rights relating
to
the CSRV
invented or developed by one of both Licensors or as to which a
Licensor
acquires the right to license or sublicense during the period
of
time that
the applicable Licensor is employed by, or a consultant to, the
Licensee
and a period of five years thereafter.
"Territory" shall mean the countries comprising North America,
Central
America
and South America and their respective territories and
possessions
provided,
that until the Threshold Date, "Territory" shall mean
worldwide.
After the
Threshold Date "Territory" shall include all countries outside
of North
America, Central America and South America in which Licensee
has
sold
products under this Agreement through the Threshold Date
aggregating
at least
$5 million, but any licenses hereunder with respect to such
countries
shall be non-exclusive.
"Threshold
Date" shall mean the end of any four consecutive fiscal
quarters
in which Licensee recognizes aggregate consolidated revenue
determined
in accordance with U.S. generally accepted accounting
principles
consistently applied of $200 million.
"WWE"
shall mean Well to Wire Energy Inc., a Canada-based
corporation.
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<PAGE>
2. GRANT
2.1
Licensors hereby grant to Licensee a sole and exclusive, fully
paid-up
and
royalty-free, perpetual and irrevocable (subject to the termination
of
this
Agreement) license in the Territory, with the right to
sublicense,
under the
Licensed Intellectual Property Rights, solely in the Field of
Use, to
develop, make, have made, use, sell, offer to sell, lease and
import
products and to develop and perform processes that use any of
the
Licensed
Intellectual Property Rights.
2.2
Licensors hereby grant to Licensee a fully paid-up and
royalty-free,
perpetual
and irrevocable (subject to the termination of this Agreement)
license in
the Territory, with the right to sublicense, under the
Additional
Licensed Intellectual Property Rights, solely in the Field of
Use, to
develop, make, have made, use, sell, offer to sell, lease and
import
products and to develop and perform processes that use any of
the
Additional
Licensed Intellectual Property Rights. The license described in
this
Section 2.2 shall be exclusive through the earlier of the
Threshold
Date or
December 31, 2009, and non-exclusive thereafter.
2.3
Licensors hereby grant to Licensee during the term of this
Agreement
an
exclusive license to use and display the trademarks owned by
Licensors
that are
listed on Appendix 2.3 (the "Marks") as necessary or
appropriate
to conduct
its business in the Field of Use within the Territory; provided
that
Licensors may require Licensee to cease or suspend use of
particular
Mark(s)
for good cause (for example, because of Licensor's business
decision
to modify or abandon a Mark). Each use or display of Marks by
Licensee
will be in conformance with any trademark usage guidelines that
Licensors
may communicate to Licensee from time to time, will be subject
to
Licensor's prior written pproval, and will be accompanied by
the
appropriate service mark symbol (either "tm" or "sm") and a
legend
specifying
that such Marks are trademarks or service marks of Licensors.
Licensee
will provide Licensors with a copy of any materials it has
created or
uses bearing any of Licensors' Marks. If Licensee's use of any
Marks, or
if any material bearing such Marks, is deficient in quality, as
reasonably
determined by Licensors, Licensee will promptly remedy such
deficiencies upon
receipt of written notice of such deficiencies from
Licensors.
Nothing herein will grant to Licensee any right, title or
interest
in the Marks. All goodwill resulting from Licensee's use of the
Marks will
inure solely to Licensors. Licensee will not, at any time
during or
after the term of this Agreement, register, attempt to
register,
claim any
interest in, contest the use of, or otherwise adversely affect
the
validity of any of the Marks (including, without limitation any act
or
assistance
to any act, which may infringe or lead to the infringement of
any such
Marks).
2.4 In the
event that the employment of a Licensor by Licensee is
terminated
by Licensor for Cause or if a Licensor terminates his own
employment
with Licensee without Good Reason prior to the Threshold Date,
then the
term Territory shall be permanently defined as worldwide,
provided,
however, that the license granted under Section 2.1 above shall
be
exclusive within North, South and Central America and
non-exclusive
elsewhere.
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2.5 The
Licensors confirm that WWE is entitled to a right of first
refusal
from the
Licensee to market
