|
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.
<PAGE>
"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.
2
<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.
3
<PAGE>
2.5 The Licensors confirm that WWE is entitled to a right of first
refusal
from the Licensee to market the
|
