EXHIBIT 10.14
AMENDMENT NO. 1 TO LICENSE AGREEMENT
THIS AMENDMENT NO.1 TO LICENSE AGREEMENT, (the "Amendment"), is made as of
this 5th day of March, 2004, by and between THE XXXXXX TRUST, having a
business address at Katherina Court, 000 Xxxx Xxxx Xxxxx, Xxxxxx Xxxxxx
Xxxxx, Xxxxxx, the Bahamas, XXXXXX X. XXXXXX AND XXXXXXX X. XXXXXX, having
a business address c/o Coates International, Ltd., 0000 Xxxxxxx #00 &
Xxxxxxxxx Xxxx, Xxxx Xxxxxxxx, Xxx Xxxxxx 00000-0000 ( collectively, the
"LICENSOR") and XXXXXX MOTORCYCLE COMPANY, LTD., having its principal
offices located at Xxxxxxx Xxxxxx, Xxxxxxxx 0 Xxxxxxxxxxx, Xxx Xxxxxx 00000
( the " LICENSEE").
BACKGROUND
WHEREAS, LICENSOR and LICENSEE entered into a certain License
Agreement, dated April 30, 2003 (the "License Agreement") pursuant to the
general terms of which LICENSOR granted LICENSEE a non-exclusive license to
use and sell motorcycles utilizing the CSRV Valve System in all of the
countries and their territories and possessions of the World except all of
the countries and their territories comprising North America, Central
America and South America (the "Territory"), for a period equal to the
duration of the patents, including the periods covering any continuations
and reissuances thereof as well as any additional patents that may be
issued and that relate to the CSRV Valve System;
WHEREAS, LICENSEE is engaged in the preparation of an initial
public offering of its securities and LICENSEE has determined that it would
be in the best interests of the LICENSEE and its present and future
shareholders to amend the License Agreement to seek an expansion of its
rights under the License Agreement by modifying the license from a
non-exclusive license to utilize the CSRV Valve System in the Territory to
an exclusive license as well as to expand LICENSEE'S rights under the
original License Agreement to include the rights to manufacture, sublicense
and franchise the technology;
WHEREAS, LICENSOR has agreed to so expand LICENSEE'S rights under
the License Agreement, provided LICENSEE pays to LICENSOR an additional
licensing fee payment, all as more fully described in this Amendment; and
WHEREAS, LICENSOR and LICENSEE desire and intend to set forth in
this Amendment all of the express modifications to the License Agreement
that shall govern their business relationship.
NOW, THEREFORE, in consideration of the premises and covenants,
and other good and valuable consideration, and the mutual promises of the
performance of the undertakings set forth herein, it is agreed by and among
the LICENSOR and LICENSEE as follows:
I. AMENDMENT OF LICENSE AGREEMENT.
Subject to the terms and conditions set forth herein, LICENSOR and
LICENSEE agree to amend the License Agreement in the following manner:
1. Article 1.5, Field of Use, shall be amended by deleting Article 1.5
in its entirety and substituting the following new Article 1.5 in lieu
thereof:
See notes to financial statements 28
1.5 Field of Use shall mean utilizing in the Territory the
CSRV Valve System solely, and for no purpose other than, the
manufacturing, use and sale of motorcycles and
gasoline-powered internal combustion engines, used in
motorcycles. This License and Field of Use shall also include
the right to sublicense and/or make franchise agreements with
third parties.
2. Article 1.14, Manufactured Unit, shall be amended by deleting
Article 1.14 in its entirety and substituting the following new Article
1.14 in lieu thereof:
1.14.(A) Manufactured Unit shall mean a Licensed Product that
has completed the manufacturing process by a permitted
sublicensee or franchisee of LICENSEE under the terms of this
Agreement and as a result, is included in the determination of
royalty payments due and owing to LICENSOR pursuant to the
terms of this Agreement.
(B) Sold Unit shall mean a Licensed Product that has
been sold by LICENSEE under the terms of this Agreement and
the sales price from such sale has been received or collected
by the LICENSEE and as a result, is included in the
determination of royalty payments due and owing to LICENSOR
pursuant to the terms of this Agreement.
3. Article 2.1, LICENSES GRANTED TO LICENSEE, shall be amended by
deleting Article 2.1 in its entirety and substituting the following new
Article 2.1 in lieu thereof:
2.1 LICENSES GRANTED TO LICENSEE
Subject to the terms and conditions set forth herein, for a
license period equal to the duration of the Patents commencing
upon the Payment Date, as defined in Section 5.1 (the "License
Period"), unless terminated pursuant to Article VIII, LICENSOR
hereby grants to LICENSEE:
(a) Engines. An exclusive license, with the right to grant
sublicenses and franchises to make, use or sell to others,
throughout the Territory within the Field of Use under the
Patent Rights and Technical Information subject to the payment
of royalties as provided herein, to make or retrofit
motorcycle engines that incorporate the CSRV Valve System in
accordance with the Technical Specifications, and to sell,
lease or otherwise dispose of such motorcycle engines; and
(b) CSRV Valve Seals.Within the limitations set forth in
subsections 2.1(a), a non-exclusive license to use CSRV Valve
Seals solely in the manufacture of CSRV Valve Systems for
incorporation into motorcycle engines throughout the Territory
within the Field of Use under the Patent Rights and Technical
Information subject to the payment of royalties as provided
herein.
4.Article 2.6, Acknowledgement of License., shall be amended by
deleting Article 2.6 in its entirety and substituting the following new
Article 2.6 in lieu thereof:
2.6 - Acknowledgement of License.
On all CSRV Valve Systems, LICENSEE, as well as any
sublicensee or franchisee of LICENSEE, shall acknowledge that
the same are manufactured under license from LICENSOR. Unless
otherwise agreed to by the parties, the following notice shall
be used by LICENSEE on an exposed surface of all Licensed
See notes to financial statements 29
Products: "Manufactured under license from Xxxxxx Trust" Such
notice shall also be used in all descriptive materials and
instruction and service manuals relating to the Xxxxxx
Spherical Rotary Valve System
5. Articles 5.1, Licensing Fee, 5.2, Royalties, 5.3, and 5.7, Books and
Records, shall be deleted in their entirety and the following new
articles shall be substituted in lieu thereof:
5.1 - Licensing Fee. . In consideration of the rights granted
in the License Agreement, LICENSEE issued to LICENSOR a
licensing fee payment of 2,500,000 shares of its common stock
and such common shares were issued to the LICENSOR as follows:
500,000 shares to the Xxxxxx Trust, 1,000,000 common shares to
Xxxxxxx X. Xxxxxx and 1,000,000 common shares to Xxxxxx X.
Xxxxxx. In further consideration of the expansion of the
license granted to LICENSEE pursuant to Article II of this
Amendment, LICENSEE hereby agrees to pay to the LICENSOR an
additional licensing fee comprised of 5,924,000 shares of its
common stock, to be issued to the LICENSOR as follows:
2,500,000 shares, to the Xxxxxx Trust, 1,424,000 common shares
To Xxxxxxx X. Xxxxxx and 2,000,000 common shares to Xxxxxx X.
Xxxxxx, with such additional licensing fee shares to be issued
on the date LICENSEE executes this Amendment or as soon
thereafter as practicable (both licensing fee payments of
shares shall be collectively referred to as the "Licensing
Fee"). LICENSOR and LICENSEE acknowledge and agree that the
LICENSEE'S common stock issued and delivered pursuant to the
License Agreement and this Amendment to LICENSOR shall not
have any pre-emptive rights of any nature whatsoever and shall
be subject to future dilution in the sole and exclusive
discretion of LICENSEE for proper corporate purposes.
5.2 - Royalties.
(a) In further consideration for the grant of the License
described in Article II of this Amendment, LICENSEE and its
sublicensees and franchisees shall pay LICENSOR royalties as
follows: in the case of the LICENSEE, it shall pay a royalty
to LICENSOR for each Sold Unit in the amount of $25.00 per
each 1,000 cc. within the Territory, and; in the case of a
sublicensee or franchisee of LICENSEE, it shall pay a royalty
to LICENSOR for each Manufactured Unit that has completed the
manufacturing process in the Territory in the amount of $25.00
per each 1,000 cc. and shall accrue when a Licensed Product
becomes a Manufactured Unit produced by a sublicensee or
franchisee of the LICENSEE. The royalties provided for in this
Section 5.2 shall be payable with respect to each Sold Unit by
LICENSEE sold within the Territory and with respect to each
Manufactured Unit produced by a sublicensee or franchisee of
the LICENSEE within the Territory.
(b) Except as otherwise specified, the royalty payments
required by Section 5.2 shall accrue, in the case of the
LICENSEE when a Licensed Product becomes a Sold Unit and, in
the case of a sublicensee or franchisee of LICENSEE, shall
accrue when a Licensed Product becomes a Manufactured Unit.
5.3 - LICENSEE or a sublicensee or franchisee of LICENSEE, as
the case may be, shall pay the royalties accruing during each
Payment Computation Period (consisting of each day during each
calendar month for each calendar year, including the first and
the last day of each calendar month), ten (10) days after the
end of such Payment Computation Period and such payment shall
be accompanied by a royalty report stating the following:
See notes to financial statements 30
(a) in the case of the LICENSEE, the number of Sold Units of
each Licensed Product type sold during such Payment
Computation Period, and in the case of a sublicensee or
franchisee of the LICENSEE, the number of Manufactured Units
of each Licensed Product type manufactured during such Payment
Computation Period; and
(b) the amount of the royalty payment due for each such
Licensed Product during each such Payment Computation Period,
broken down to reflect the derivation of such amount.
5.7 - Books and Records. Until five (5) years after the
termination of the License Period, LICENSEE shall keep full
and accurate books and records setting forth the sales records
and the amount of compensation payable with respect to the
Sold Units of each Licensed Product. In the case of a
sublicensee or franchisee of LICENSEE, LICENSEE shall cause
each sublicensee and franchisee to keep full and accurate
books and records setting forth the manufacturing records and
the amount of compensation payable with respect to the
Manufactured Units of each Licensed Product. LICENSEE and its
sublicensees and franchisees shall permit an independent
certified public accountant selected by LICENSOR to examine
such books and records, upon reasonable notice during working
hours, at any time, but not later than two (2) years following
the payment in question, for the purpose of verifying the
reports, accounting and payments required by this Agreement.
6. Article 7.3, Obligations of LICENSEE, sections (a) and (b) shall be
deleted in their entirety and the following new Article 7.3, sections
(a) and (b) shall be substituted in lieu THEREOF:
7.3 - Obligations of LICENSEE. LICENSEE will, and on behalf of
its sublicensees and franchisees, cause them to:
(a) execute all such tasks as may be necessary to bring
about the speedy manufacture, sale and use of Licensed
Products consistent with good business practice;
(b) ensure that all steps within its power are undertaken
with all reasonable speed to ensure that Licensed
Products made and sold by LICENSEE and its sublicensees
and franchisees comply with all relevant governmental
regulations in the Territory; and
II. RATIFICATION AND CONFIRMATION OF BALANCE OF TERMS AND PROVISIONS OF
LICENSE AGREEMENT.
LICENSOR and LICENSEE hereby ratify and confirm all of the terms and
provisions of the License Agreement not expressly modified by this
Amendment and incorporate by reference all of such terms and provisions
into this Amendment as if set forth herein in their entirety.
See notes to financial statements 31
IN WITNESS WHEREOF, the LICENSOR and LICENSEE have executed this
Amendment as of the day, month and year first above written.
LICENSORS:
THE XXXXXX TRUST
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx, Trustee
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx, Individually
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, Individually
LICENSEE:
XXXXXX MOTORCYCLE COMPANY, LTD.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, President
AMENDMENT NO. 1 to Sublicense and License Agr 04-05-04 no sigs
See notes to financial statements 32
