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:
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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 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
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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:
(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
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(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.
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
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Xxxxxx X. Xxxxxx, Trustee
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Individually
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Individually
LICENSEE:
XXXXXX MOTORCYCLE COMPANY, LTD.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President
AMENDMENT NO. 1 to Sublicense and License Agr 04-05-04 no sigs
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