EXHIBIT 10.1


 


THIS
NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)


 


US
$45,000.00 


 


COATES
INTERNATIONAL, LTD.


8%
CONVERTIBLE REDEEMABLE NOTE


DUE
MAY 3, 2018


 


FOR
VALUE RECEIVED, Coates International, Ltd. (the “Company”) promises to pay to the order of GS CAPITAL PARTNERS, LLC
and its authorized successors and Permitted Assigns, defined below, ("Holder"), the aggregate principal face
amount of Forty Five Thousand Dollars exactly (U.S. $45,000.00) on May 3, 2018 ("Maturity Date") and to pay interest
on the principal amount outstanding hereunder at the rate of 8% per annum commencing on May 3, 2017. The interest will be paid
to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this
Note. The principal of, and interest on, this Note are payable at 110 Wall Street 3rd Floor, Suite 5-070 New York, NY 10005, initially,
and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time.
The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less
any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such
Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute
a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent
of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to
paragraph 4(b) herein. Permitted Assigns means any Holder assignment, transfer or sale of all or a portion of this Note accompanied
by an Opinion of Counsel as provided for in Section 2(f) of the Securities Purchase Agreement.


 





 



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This
Note is subject to the following additional provisions:


 


1.       This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith. To the extent that Holder subsequently transfers,
assigns, sells or exchanges any of the multiple lesser denomination notes, Holder acknowledges that it will provide the Company
with Opinions of Counsel as provided for in Section 2(f) of the Securities Purchase Agreement.


 


2.       The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.


 


3.       This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act"),
applicable state securities laws and Sections 2(f) and 5(f) of the Securities Purchase Agreement. Any attempted transfer to a
non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company
and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner
hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected
or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section
4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prequalified prospective transferee of this Note,
also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion")
in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion
shall be the Conversion Date. All notices of conversion will be accompanied by an Opinion of Counsel.


 


4.       (a)       The
Holder of this Note is entitled, at its option, at any time commencing six months after the date of funding to the Company by
the Holder, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's
common stock (the "Common Stock") at a price ("Conversion Price") for each share of Common Stock
equal to 65% of the lowest VWAP of the Common Stock as reported on the National Quotations Bureau OTC Market
exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"),
for the twelve prior trading days including the day upon which a Notice of Conversion is received by the
Company (provided such Notice of Conversion is delivered together with an Opinion of Counsel, by fax or other electronic method
of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same
day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such
conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt
by the Company of the Notice of Conversion. Accrued, but unpaid interest shall be subject to conversion. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per
share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest
value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event the Company
experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 55% instead of 65% while that
“Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along
with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding
shares of the Common Stock of the Company.


 








 



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(b)       Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company
in Common Stock ("Interest Shares"). Holder may, at any time commencing six months after the date of funding to the
Company by the Holder, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section
4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the
unpaid principal balance of this Note to the date of such notice.


 


(c)       During
the first 180 days this Note is in effect, the Company may redeem this Note by paying to the Holder an amount equal to (i) 115%
of the sum of principal plus any accrued interest if the redemption occurs within the first sixty days of issuance, (ii) 120%
of the sum of principal plus any accrued interest if the redemption occurs after the 60th daily anniversary of the
Note but before the 151st daily anniversary of the Note and (iii)130% of the sum of principal plus any accrued interest
if the redemption occurs after the 150th daily anniversary of the Note but before the 181st daily anniversary
of the Note . This Note may not be prepaid after the 180th daily anniversary. The redemption must be closed and paid
for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may
not redeem this Note.


 


(d)
       Upon (i) a transfer of all or substantially all of the assets of the Company to any
person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization (excluding an
increase in authorized capital) or other change or exchange of outstanding shares of the Common Stock, other than a forward or
reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity
in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation
of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares
of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company
shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest
through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this
Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event
at the Conversion Price.


 


(e)
       In case of any Sale Event (not to include a sale of all or substantially all of the
Company’s assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision
to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to
such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the
holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor
person or entity acting in good faith.


 








 



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5.       No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.       The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice
of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.


 


7.       The
Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the
Holder in collecting any amount due under this Note.


 


8.       If
one or more of the following described "Events of Default" shall occur:


 


(a)       The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or


 


(b)       Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or


 


(c)       The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or


 


(d)       The
Company shall (1) become insolvent (which does not include a “going concern opinion); (2) admit in writing its inability
to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its
dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part
of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against
it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or


 


(e)       A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without
its consent and shall not be discharged within sixty (60) days after such appointment; or


 








 



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(f)       Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of the Company; or


 


(g)       One
or more money judgments, writs or warrants of attachment, or similar process, in excess of one hundred thousand dollars ($100,000)
in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or


 


(h)       Defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or


 


(i)       The
Company shall have its Common Stock delisted from an exchange (including the OTC Markets exchange) or, if the Common Stock trades
on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934
act reports with the SEC;


 


(j)       Intentionally
Deleted;


 


(k)       The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a Notice of Conversion which includes an Opinion of Counsel expressing an opinion which supports the removal
of a restrictive legend; or


 


(l)       The Company shall not replenish the reserve set forth in Section 12, within 3 business
days of the request of the Holder.


 


(m)      The
Company shall be delinquent in its periodic report filings with the Securities and Exchange Commission; or


 


(n)       The Company shall cause to lose the “bid” price for its stock in a market
(including the OTC marketplace or other exchange).


 


Then,
or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option
of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per
annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In
the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th
day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case
of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at
maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or
is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price
during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency
period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per
share


 








 



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If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.


 


Make-Whole
for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the
conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder
incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable
to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:


 


Failure
to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]


 


The
Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day
from the time of the Holder’s written notice to the Company.


 


9.        In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired
thereby.


 


10.       Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.


 


11.       The
Company represents that it is not a “shell” issuer and that if it previously has been a “shell” issuer
that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a “shell
issuer.


 








 



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12.       The
Company shall internally reserve 461,538,333 shares of its Common Stock for conversions under this Note (the “Share Reserve”).
Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer
agent costs associated with issuing and delivering the share certificates to Holder. If such amounts are to be paid by the Holder,
it may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount
of shares required if the note would be fully converted.  The Holder may reasonably request increases from time to time to
reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder
in connection with its conversions.


 


13.       The
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.


 


14.       This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and
the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of
New York or in the Federal courts sitting in the county or city of New York. This Agreement may be executed in counterparts, and
the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.


 






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IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.


 


Dated:
May 3, 2017


 





	 	COATES INTERNATIONAL, LTD.
	 	 	 
	 	By:	/s/ Barry C. Kaye
	 	Title: 	Chief Financial Officer




 








 



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EXHIBIT A


 


NOTICE
OF CONVERSION


 


(To
be Executed by the Registered Holder in order to Convert the Note)


 


The
undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Coates
International, Ltd. (“Shares”) according to the conditions set forth in such Note, as of the date written below.


 


If
Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.


 


Date
of Conversion: _______________________________________________________________


Applicable
Conversion Price: ________________________________________________________


Signature: ______________________________________________________________________


[Print
Name of Holder and Title of Signer]


Address: _______________________________________________________________________


 _______________________________________________________________________


 


SSN
or EIN: ____________________


Shares
are to be registered in the following name: ____________________________________________________


 


Name: ________________________________________________________________________


Address: ______________________________________________________________________


Tel: _____________________________


Fax: _____________________________


SSN
or EIN: _______________________


 


Shares
are to be sent or delivered to the following account:


 


Account
Name: _________________________________________________________________


Address: ______________________________________________________________________


 








 



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