Document:

Exhibit 10.2

 

ST. PAUL TRAVELERS

PERFORMANCE SHARE AWARD NOTIFICATION AND AGREEMENT

 

	
  Participant:

  	
  Grant Date:

  
	
  Target Number of Performance Shares:

  	
   

  
	
  Performance Period: January 1, 2006 to December
  31, 2008

  	
   

  
			

 

1. Grant of
Performance Shares.  This
performance share award is granted pursuant to The St. Paul Travelers
Companies, Inc. 2004 Stock Incentive Plan (the “Plan”), by The St. Paul
Travelers Companies, Inc. (the “Company”) to you, an employee (the “Participant”).
The Company hereby grants to the Participant an award for the target number of
Performance Shares set forth above (the “Award”), pursuant to the Plan, as it
may be amended from time to time, and subject to the terms, conditions, and
restrictions set forth herein.

 

2.
Terms and Conditions. The terms, conditions, and restrictions applicable to the Award are
specified in this award notification and agreement, the Plan, the prospectus
dated [January 1, 2006] (titled “St. Paul Travelers Equity Awards”), and any
applicable prospectus supplement (together, the “Prospectus”).  The terms, conditions and restrictions in the
Prospectus include, but are not limited to, provisions relating to amendment,
vesting, cancellation, and settlement, all of which are hereby incorporated by
reference into this grant notification and agreement.  The terms, conditions and restrictions in
this award notification and agreement, the Prospectus, and the Plan constitute
the Award agreement between the Participant and the Company (the “Agreement”).
By accepting this Award, the Participant acknowledges receipt of the Prospectus
and that he or she has read and understands the Prospectus.

 

The Participant understands that this Award and all other incentive
awards are entirely discretionary and that no right to receive an award exists
absent a prior written agreement with the Company to the contrary. The
Participant also understands that the value that may be realized, if any, from
the Award is contingent, and depends on the future financial performance of the
Company, among other factors.  The
Participant further confirms his or her understanding that the Award is
intended to promote employee retention and stock ownership and to align
employees’ interests with those of shareholders, is subject to performance
conditions and will be canceled if the performance conditions are not
satisfied.  Thus, Participant understands
that (a) any monetary value assigned to the Award in any communication
regarding the Award is contingent, hypothetical, or for illustrative purposes
only, and does not express or imply any promise or intent by the Company to
deliver, directly or indirectly, any certain or determinable cash value to the
Participant; (b) receipt of this Award or any incentive award in the past is
neither an indication nor a guarantee that an incentive award of any type or
amount will be made in the future, and that absent a written agreement to the
contrary, the Company is free to change its practices and policies regarding
incentive awards at any time; and (c) performance may be subject to confirmation
and final determination by the Company’s Board of Directors or a Committee of
the Board that the performance conditions have been satisfied.  The Participant shall have no rights as a
stockholder of the Company with respect to any shares covered by this Award
unless and until the Award is earned and settled in shares of Common Stock.

 

3.
Performance Period.  For purposes of this Award, the
Performance Period shall be defined as the three-year period commencing January
1, 2006 and ending December 31, 2008.

 

 

4. Vesting.
The Participant’s right to the Performance Shares vests on the last day of the
Performance Period if the Participant remains continuously employed by the
Company or one of its subsidiaries on such day. 
If the Participant’s employment with the Company and its subsidiaries
terminates during the Performance Period, the Participant’s rights to the
Performance Shares will be determined in accordance with Exhibit A.

 

5. Settlement
of Award.  The number of
Performance Shares earned by the Participant (which shall include any
additional Performance Shares credited to the Participant’s account pursuant to
Section 6) shall be calculated based on the Performance Earnout Schedule table
set forth in Exhibit B.  The Company
shall deliver to the Participant, subject to any certification of satisfaction
of the performance goal as required by the Plan in order to comply with Section
162(m) of the Internal Revenue Code, a number of shares of Common Stock equal
to the number of vested and earned Performance Shares on the later of (a)
January 1 of the year following the end of the Performance Period or (b) as
soon as administratively practicable thereafter but no later than December 31
of the year following the end of the Performance Period.  The number of shares of Common Stock
delivered to the Participant shall be reduced by a number of shares of Common
Stock having a Fair Market Value on the date of delivery equal to the tax
withholding obligation, unless the Plan administrator is notified in advance of
the Award settlement and the
Participant elects another method for tax withholding.

 

6. Dividend
Equivalents.  The Participant shall be entitled
to receive additional Performance Shares with respect to any cash dividends
declared by the Company.  The number of
additional Performance Shares shall be determined by multiplying the number of
Performance Shares credited to the Participant’s account (which shall include
the target number of Performance Shares set forth above, plus any Performance
Shares credited in connection with dividend payments under this Section 6),
times the dollar amount of the cash dividend per share of Common Stock, and
then dividing by the Fair Market Value of the Common Stock as of the dividend
payment date.  The Participant’s right to
any Performance Shares credited to the Participant’s account in connection with
dividends shall vest in the same manner described in Section 4.  As described in Section 5, such additional
Performance Shares shall be included in the total number of Performance Shares
credited to the Participant’s account for purposes of applying the Performance
Earnout Schedule.

 

7. Consent to Electronic
Delivery.
In lieu of receiving documents in paper format, the Participant agrees, to the
fullest extent permitted by law, to accept electronic delivery of any documents
that the Company may be required to deliver (including, but not limited to,
prospectuses, prospectus supplements, grant or award notifications and
agreements, account statements, annual and quarterly reports, and all other
forms or communications) in connection with this and any other prior or future
incentive award or program made or offered by the Company or its predecessors
or successors. Electronic delivery of a document to the Participant may be via
a Company e-mail system or by reference to a location on a Company intranet or
internet site to which Participant has access.

 

8. Administration. In administering the Plan, or to
comply with applicable legal, regulatory, tax, or accounting requirements, it may
be necessary for the Company or the subsidiary employing the Participant to
transfer certain Participant data to the Company, its subsidiaries, outside
service providers, or governmental agencies. 
By accepting the Award, the Participant consents, to the fullest extent
permitted by law, to the use and transfer, electronically or otherwise, of his
or her personal data to such entities for such purposes.

 

 

9.
Entire Agreement; No Right to Employment. The Agreement constitutes the entire
understanding between the parties hereto regarding the Award and supersedes all
previous written, oral, or implied understandings between the parties hereto
about the subject matter hereof.  Nothing
contained herein, in the Plan, or in the Prospectus shall confer upon the
Participant any rights to continued employment or employment in any particular
position, at any specific rate of compensation, or for any particular period of
time.

 

10.
Arbitration; Conflict.  Any disputes under this
Agreement shall be resolved by arbitration in accordance with the Company’s
arbitration policies. In the event of a conflict between the Plan and this
award notification and agreement, or the terms, conditions, and restrictions of
the Award as specified in the Prospectus, the Plan shall control.

 

11. Acceptance and
Agreement by Participant. By clicking the button below, Participant accepts the Award and
agrees to be bound by the terms, conditions, and restrictions set forth in the
Prospectus, the Plan, this notification and agreement, and the Company’s
policies, as in effect from time to time, relating to the Plan.

 

 

EXHIBIT A

 

To St. Paul Travelers Performance Share Award
Notification and Agreement

 

When you leave the Company

 

References to “you” or “your” are to the Participant

 

If you terminate your
employment or if there’s a break in your employment, your Award may be canceled
before the end of the Performance Period and your rights to vesting and
settlement of your Award may be affected.

 

The provisions in the chart
below apply to Awards made under the Plan. Additional rules for vesting and
settlement of your Award apply in cases of termination if you satisfy certain
age and years of service requirements (“Retirement Rule”),
as set forth in “Retirement Rule” below.

 

	
  If you:

  	
   

  	
  Here’s what happens to Your Award:

  
	
  Resign,
  or retire (and do not meet the Retirement Rule)

  	
   

  	
  Your rights under the
  Award are cancelled and your right to the Performance Shares is forfeited.

  
	
   

  	
   

  	
   

  
	
  Become disabled (as
  defined under the Company’s applicable long-term disability plan)

  	
   

  	
  You will be entitled to
  receive a payout equal to the number of shares of Common Stock you would have
  received, if any, if your employment had not terminated due to disability,
  multiplied by a fraction equal to the number of days worked in the Performance
  Period divided by the total number of days in the Performance Period. Any
  such payout will be made at the time of settlement of the Performance Shares
  after the end of the Performance Period.

  
	
   

  	
   

  	
   

  
	
  Take an approved
  personal leave of absence

  	
   

  	
  Your rights under the
  Award continue when you are on such leave of absence for up to three months.
  Once your approved leave of absence exceeds three months, your rights under
  the Award are suspended until you return to work and remain actively employed
  for 30 calendar days, after which your rights under the Award will be
  restored retroactively. If you terminate employment during the leave for any
  reason, the applicable termination provisions will apply. If your personal
  leave of absence exceeds one year, your rights under the Award are cancelled
  and your right to the Performance Shares is forfeited.

  
	
   

  	
   

  	
   

  
	
  Are on an approved
  family leave, medical leave, dependent care leave, military leave, or other
  statutory leave of absence

  	
   

  	
  Your rights under the
  Award continue when you are an such leave of absence.

  

 

 

	
  Die

  	
   

  	
  Your estate will be
  entitled to receive a payout equal to the number of shares of Common Stock
  you would have received at the target level of performance (which is equal to
  the target number of Performance Shares set forth at the beginning of this
  Award), multiplied by a fraction equal to the number of days worked in the
  Performance Period divided by the total number of days in the Performance
  Period. Any such payout will be made as soon as administrative possible
  following your death.

  
	
   

  	
   

  	
   

  
	
  Are terminated
  involuntarily for gross misconduct or for cause

  	
   

  	
  Your rights under the
  Award are cancelled and your right to the Performance Shares is forfeited.

  
	
   

  	
   

  	
   

  
	
  Are terminated
  involuntarily other than for gross misconduct or for cause (including under
  the Company’s applicable separation pay plan or any successor or comparable
  arrangement)

  	
   

  	
  Your rights under the
  Award are cancelled and your right to the Performance Shares is forfeited.

  

 

Retirement Rule

 

If, as of your termination
date, you are at least (i) age 65, (ii) age 62 with one or more full years of
service, or (iii) age 55 with 10 or more full years of service, then you meet
the “Retirement Rule.”  If you are
terminated under the Company’s applicable separation pay plan or any successor
or comparable arrangement, if any, your termination date for purposes of
determining whether you qualify under the Retirement Rule is your last day of
active employment with the Company.

 

The Retirement Rule does not
apply if you were involuntarily terminated for gross misconduct or for
cause.  If you retire and do not meet the
Retirement Rule, you will be considered to have resigned.

 

If
you:

 

	
  Meet the Retirement Rule

  	
   

  	
  You will be entitled to
  receive a payout a number of shares of Common Stock equal to the shares you
  would have received, if any, if your employment had not terminated due to
  retirement in accordance with the Retirement Rule, multiplied by a fraction
  equal to the number of days worked in the Performance Period divided by the
  total number of days in the Performance Period. Any such payout will be made
  at the time of settlement of the Performance Shares after the end of the
  Performance Period.

  

 

Notes to the
termination provisions

•                  The Committee determines what
constitutes “gross misconduct” and “cause.”Exhibit 10.13

                     AMENDMENT NO. 1 TO SUBLICENSE AGREEMENT

THIS AMENDMENT NO.1 TO SUBLICENSE AGREEMENT, (the "Amendment"), is made as of
the 5th day of March, 2004, by and between COATES INTERNATIONAL, LTD., A
Delaware corporation, having its principal offices located at 2100 Highway #34 &
Ridgewood Road, Wall Township, New Jersey 07719-9738 ( SUBLICENSOR") and COATES
MOTORCYCLE COMPANY, LTD., having its principal offices located at Central
Avenue, Building 3 Farmingdale, New Jersey 07727 ( the " SUBLICENSEE").

                                   BACKGROUND

      WHEREAS, SUBLICENSOR owns the exclusive license (the "Exclusive License")
to make, use and sell combustion engines utilizing the CSRV Valve System as well
as the rights to franchise and sublicense certain Patent Rights* and Technical
Information* relating to Licensed Products* utilizing the CSRV Valve System*
throughout the countries, their territories and possessions, of North America,
Central America and South America (the "Territory");

      WHEREAS, pursuant to its rights under the Exclusive License, SUBLICENSOR
and SUBLICENSEE entered into a certain Sublicense Agreement, dated April 30,
2003 (the "Sublicense Agreement") pursuant to the general terms of which
SUBLICENSOR granted SUBLICENSEE an exclusive sublicense to make, use and sell
motorcycles utilizing the CSRV Valve System in all of the countries and their
territories and possessions 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 relating to the CSRV Valve System
as well as a certain "anti-dilution" right in order that the SUBLICENSOR have
the right at all times to maintain a fifty percent plus ownership and control
position over the SUBLICENSEE;

      WHEREAS, SUBLICENSEE is engaged in the preparation of an initial public
offering of its securities and has determined that it would be in the best
interests of its present and future shareholders to amend the Sublicense
Agreement to terminate the "anti-dilution" rights granted by the SUBLICENSEE to
the SUBLICENSOR in the original Sublicense Agreement as well as to clarify
SUBLICENSEE's rights to further sublicense and franchise its sublicense rights;

      WHEREAS, SUBLICENSOR currently owns 2,558,000 shares of the common stock
of SUBLICENSEE and notwithstanding any dilution resulting from the contemplated
initial public offering of SUBLICENSEE's common shares, SUBLICENSOR acknowledges
that it will be a direct beneficiary and obtain material benefits as a result of
SUBLICENSEE's public offering, which may include but not be limited to enhanced
opportunities to earn royalties from licensed products sold by a
well-capitalized SUBLICENSEE as well as increased marketing awareness and brand
recognition for its technology and licensed products which could result from the
motorcycle sales, anticipated in part from the funds derived by SUBLICENSEE's
contemplated initial public offering;

      WHEREAS, SUBLICENSOR and SUBLICENSEE desire and intend to set forth in
this Amendment the express modifications to the Sublicense 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 SUBLICENSOR and
SUBLICENSEE as follows:

                                       1

<PAGE>

I.    Amendment of Sublicense Agreement.

      Subject to the terms and conditions set forth herein, SUBLICENSOR and
SUBLICENSEE agree to amend the Sublicense Agreement in the following manner:

            1. Article 1.14, Sold 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 SUBLICENSEE under the terms of this Agreement and as a
            result, is included in the determination of royalty payments due and
            owing to SUBLICENSOR pursuant to the terms of this Agreement.

            (B) Sold Unit shall mean a Licensed Product that has been sold by
            SUBLICENSEE under the terms of this Agreement and the sales price
            from such sale has been received or collected by the SUBLICENSEE and
            as a result, is included in the determination of royalty payments
            due and owing to SUBLICENSOR pursuant to the terms of this
            Agreement.

            2. 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 Sublicenses Granted to SUBLICENSEE

            Subject to the terms and conditions set forth herein, for a
            sublicense period equal to the duration of the Patents commencing
            upon the Payment Date, as defined in Section 5.1 (the "Sublicense
            Period"), unless terminated pursuant to Article VIII, SUBLICENSOR
            hereby grants to SUBLICENSEE:

            (a) Engines. An exclusive sublicense, with the right to grant
            further 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 sublicense 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.

            3. Article 5.1, Licensing Fee, 5.2, Royalties, 5.3, and 5.7 Books
and Records, shall be amended by deleting Articles 5.1, 5.2, 5.3 and 5.7 in
their entirety and substituting the following new Articles 5.1, 5.2, 5.3 and 5.7
in lieu thereof:

            5.1 - Sublicensing Fee and Undertakings.

            In consideration of the rights granted under the Sublicense
            Agreement, SUBLICENSEE paid to SUBLICENSOR a Sublicensing Fee of
            2,550,000 shares of SUBLICENSEE'S common stock and granted to
            SUBLICENSOR an antidilution right to maintain a 50%+ ownership
            position in SUBLICENSEE'S securities. SUBLICENSOR and SUBLICENSEE
            hereby agree to terminate the antidilution rights granted to
            SUBLICENSOR in the Sublicense Agreement, effective immediately. As
            consideration for the expansion of its sublicense rights granted to
            it by SUBLICENSOR in this Amendment, SUBLICENSEE and SUBLICENSOR
            agree as follows:

                                       2
<PAGE>

            (a) SUBLICENSEE hereby agrees to issue to SUBLICENSOR an additional
            1,000,000 shares of its common stock as partial consideration for
            the expanded sublicense rights granted to it in this Amendment;

            (b) SUBLICENSEE further agrees to utilize its best efforts to
            register 1,000,000 shares of its common stock transferred and paid
            to SUBLICENSOR and to include such shares in the Form SB-2
            registration statement SUBLICENSEE has filed with the U.S.
            Securities and Exchange Commission and which is currently under
            review;

            (c) SUBLICENSEE acknowledges that it is the intent of SUBLICENSOR to
            distribute the subject 1,000,000 shares to its shareholders of
            record as a stock dividend following their registration under the
            Securities Act of 1933, provided, that the subject registration
            statement, including the subject 1,000,000 shares, is declared
            effective by the Securities and Exchange Commission and its intended
            distribution to SUBLICENSOR'S shareholders is in compliance with
            applicable state securities laws;

            (d) In the event the SUBLICENSEE'S registration statement, including
            the 1,000,000 common shares, is not declared effective by the
            Securities and Exchange Commission on or before June 1, 2004,
            SUBLICENSEE'S obligations to continue its efforts to register said
            shares under the Securities Act of 1933 shall terminate, unless such
            obligation is extended by mutual agreement of SUBLICENSOR and
            SUBLICENSEE;

            (e) SUBLICENSEE agrees to take all necessary corporate action in
            order to register the 1,000,000 shares of its common stock under the
            Securities Act of 1933 on behalf of SUBLICENSOR in order to permit
            the lawful distribution of these shares to the shareholders of
            SUBLICENSOR;

            (f) SUBLICENSOR shall utilize its best efforts to cooperate and
            assist SUBLICENSEE in the preparation of any documents necessary in
            order to facilitate the registration and distribution of the subject
            1,000,000 common shares pursuant to the Securities Act of 1933 and
            applicable state securities laws.

            SUBLICENSOR acknowledges its receipt of the Sublicensing Fee payment
            of 2,550,000 shares of SUBLICENSEE'S common stock pursuant to the
            Sublicense Agreement, and the additional 1,000,000 shares pursuant
            to this Amendment; SUBLICENSOR further agrees that such stock
            issuances to it represents the only payment and consideration that
            constitutes the Sublicensing Fee due and payable under the
            Sublicense Agreement and this Amendment. Accordingly, SUBLICENSOR
            further acknowledges that its equity ownership position in the
            SUBLICENSEE'S common stock shall be subject to further dilution for
            proper corporate purposes and that the common shares issuable to
            SUBLICENSOR under the Sublicense Agreement and this Amendment do not
            bear any pre- emptive or similar rights.

                                       2
<PAGE>

            5.2 - Royalties.

            (a) In further consideration for the grant of the Sublicense
            described in Article II of the Sublicense Agreement, SUBLICENSEE and
            its further sublicensees and franchisees shall pay SUBICENSOR
            royalties as follows: in the case of the SUBLICENSEE, it shall pay a
            royalty to SUBLICENSOR 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 SUBLICENSEE, it shall pay a royalty to
            SUBLICENSOR 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 further sublicensee or franchisee of
            the SUBLICENSEE. The royalties provided for in this Section 5.2
            shall be payable with respect to each Sold Unit by SUBLICENSEE sold
            within the Territory and with respect to each Manufactured Unit
            produced by a further sublicensee or franchisee of the SUBLICENSEE
            within the Territory.

            (b) Except as otherwise specified, the royalty payments required by
            Section 5.2 shall accrue, in the case of the SUBLICENSEE when a
            Licensed Product becomes a Sold Unit and, in the case of a further
            sublicensee or franchisee of SUBLICENSEE, shall accrue when a
            Licensed Product becomes a Manufactured Unit.

            5.3 - SUBLICENSEE or a further sublicensee or franchisee of
            SUBLICENSEE, 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 SUBLICENSEE, the number of Sold Units of each
            Licensed Product type sold during such Payment Computation Period,
            and in the case of a further SUBLICENSEE or franchisee of the
            SUBLICENSEE, 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 Sublicense Period,
            SUBLICENSEE 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
            further sublicensee or franchisee of SUBLICENSEE, SUBLICENSEE shall
            cause each such further 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. SUBLICENSEE and its
            further sublicensees and franchisees shall permit an independent
            certified public accountant selected by SUBLICENSOR 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 Sublicense Agreement.

                                       3
<PAGE>

II.   Ratification and Confirmation of Balance of Terms and Provisions of
      Sublicense Agreement

      SUBLICENSOR and SUBLICENSEE hereby ratify and confirm all of the terms and
provisions of the Sublicense 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 SUBLICENSOR and SUBLICENSEE have executed this
Amendment as of the day, month and year first above written.

                                  SUBLICENSOR:

                                  COATES INTERNATIONAL, LTD.

                                  By: /s/ George J. Coates
                                      ---------------------------
                                      George J. Coates, President

                                  SUBLICENSEE:

                                  COATES MOTORCYCLE COMPANY, LTD.

                                  By: /s/ Gregory G. Coates
                                      ----------------------------
                                      Gregory G. Coates, President

AMENDMENT NO. 1 to Sublicense and License Agr 04-05-04 no sigs

                                       4

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