Exhibit No. 10.9

                                LICENSE AGREEMENT


     THIS AGREEMENT, dated this 19th day of April, 1996, by and between COATES
INTERNATIONAL, LTD., having its principal place of business at Route #34 and
Ridgewood Road, Wall Township, New Jersey 07719 (hereinafter referred to as
LICENSOR) and NICHOLSON MCLAREN ENGINES LTD., GREENLANE, HOUNSLOW, MIDDLESEX,
TW4 6DE, LONDON, U.K. (hereinafter referred to as LICENSEE).

                                   BACKGROUND

     WHEREAS, LICENSOR owns and /or has the right to license certain PATENT
RIGHTS and TECHNICAL INFORMATION (as hereinafter defined) relating to LICENSED
PRODUCTS (as hereinafter defined) used in the design and construction of
internal combustion engines employing spherical rotary valves (the "Coates'
Spherical Rotary Valve System");

     WHEREAS, LICENSOR desires to grant to LICENSEE certain rights under such
PATENT RIGHTS and TECHNICAL INFORMATION in the TERRITORY (as hereinafter
defined).

     WHEREAS, LICENSEE desires to acquire certain rights in accordance with the
terms and conditions hereinafter set forth.



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<PAGE>

     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 herein, it is agreed by and between the parties hereto a
follows:

ARTICLE I - DEFINITIONS

          1.1 - "CSRV Valve System" shall mean a cylinder head or heads for an
     internal combustion engine manufactured in accordance with the Patent
     Rights and/or Technical Information (as hereinafter defined) of the Coates'
     Spherical Rotary Valve System.

          1.2 - "CSRV Valve Seal" shall mean a valve seal for use with a CSRV
     Rotary Valve Sphere (as hereinafter defined) in the Coats' Spherical Rotary
     Valve System.

          1.3 - "CSRV Rotary Valve Sphere" shall mean a spherical rotary valve
     used in the CSRV Valve System in accordance with the Technical
     Specifications.

          1.4 - "CSRV Components" shall mean that parts that when assembled
     comprise the LICENSED PRODUCT (as hereinafter defined).

          1.5 - "Dollars" and "$" shall mean the official currency of the
     Government of the United States of America.

          1.6 - "FIELD OF USE" shall mean liquid cooled racing engines for
     automobiles. Motorcycle engines are specifically excluded. Engines for
     ordinary street or road use are specifically excluded. Air-cooled engines
     are specifically excluded. Marine engines are specifically excluded.


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<PAGE>

          1.7 - "Improvement" shall mean any improvement, change or modification
     which may be developed, created or acquired by either party to this
     Agreement, but only to the extent that the same comes within the scope of
     one or more claims in the PATENT RIGHTS (as hereinafter defined).

          1.8 - "LICENSED PRODUCT" shall mean internal combustion engines
     incorporating the PATENT RIGHTS and/or TECHNICAL INFORMATION in its design
     and manufacture incorporating the components identified in paragraphs 1.1;
     1.2; 1.3 and 1.4 with the FIELD OF USE as defined in paragraph 1.6.

          1.9 - "LICENSEE" shall mean the LICENSEE as specified on the title
     pate of this Agreement and any subsidiary thereof having more than 50% of
     its ordinary voting shares held and/or controlled by LICENSEE.

          1.10 - "MANUFACTURED UNIT" shall mean a LICENSED PRODUCT that has
     completed the manufacturing process and as a result, is included in the
     determination of royalty payments due and owing pursuant to the terms of
     the Agreement.

          1.11 - "PATENT RIGHTS" shall mean the patents and patent applications
     and all patents which may be issued pursuant to such patent applications,
     as listed in Appendix 1.11, together with any continuations or
     continuations-in-part thereof, and all patents issuing thereon or therefrom
     including reissues, patents of addition and any registration or
     confirmation patents corresponding thereto and all corresponding foreign
     patents and patent applications.

          1.12 - "Payment Computation Period" shall mean each three (3) month
     period, or any portion thereof, ending on March 31, June 30, September 30,
     and December 31 of any given year.


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<PAGE>

          1.13 - "Regulatory Approval" shall mean, with respect to a given
     country in the TERRITORY, all governmental approvals necessary for LICENSEE
     to have the right to market or use LICENSED PRODUCTS in such country.

          1.14 - "Regulatory Authority" shall mean, with respect to a given
     country, the national or multinational authority responsible for granting
     Regulatory Approval in such country.

          1.15 - "TECHNICAL INFORMATION" shall mean all information imparted by
     LICENSOR to LICENSEE, together with all proprietary information, trade
     secrets, skills and experience, recorded and unrecorded, accumulated from
     time to time and during the term of this Agreement, relating to a LICENSED
     PRODUCT and all designs, drawings, specifications and the like, owned by
     LICENSOR, insofar as the same relate to a LICENSED PRODUCT.

          1.16 - "Technical Specifications" shall mean the specifications and
     performance parameters developed by LICENSOR.

          1.17 - "Territory" shall mean the countries of the European Patent
     Community as listed in Appendix 1.17


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<PAGE>

     ARTICLE II - LICENSES GRANTED

     2.1 - Licenses Granted to LICENSEE

          (a) Subject to the terms and conditions set forth herein, a
     non-exclusive license to assemble, use, sell, and lease, LICENSE PRODUCTS
     falling within the scope of the PATENT RIGHTS and/or TECHNICAL INFORMATION,
     within the TERRITORY and with respect to the FIELD OF USE.

     2.2 - Limitation of Licenses Granted

          (1) No right is granted to LICENSEE to sublicense the right to
     assemble, sell or lease the LICENSED PRODUCT falling within the scope of
     the PATENT RIGHTS and/or TECHNICAL INFORMATION without the consent of the
     LICENSOR.

     2.3 - Furnishing Know-How and Supporting Services

     LICENSOR will promptly upon execution of this Agreement, or after
governmental validation thereof, if required, furnish to LICENSEE copies of all
documents and items comprising the TECHNICAL INFORMATION and Technical
Specifications concerning the design and specification of the LICENSED PRODUCT.

     2.4 - Improvements

     (a)  If LICENSOR has heretofore brought about or shall hereafter during the
          term of this Agreement bring about any Improvement to a LICENSED
          PRODUCT, LICENSOR shall promptly disclose such Improvement to
          LICENSEE.


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<PAGE>

     (b) If LICENSEE has heretofore brought about or shall hereafter during the
term of this Agreement bring about any Improvement, LICENSEE shall promptly
disclose such Improvement to LICENSOR. If such Improvement appears to be
patentable, LICENSOR shall have the first option within the time prescribed by
law to file a patent application thereon in LICENSEE'S name. The expense of
filing, securing and maintaining patent protection on such Improvement shall be
borne by LICENSOR. If LICENSOR shall elect not to file any such patent
application, then LICENSEE shall have the option to do so in its own name and at
its own expense.

     (c) LICENSEE agrees to grant and hereby grants to LICENSOR a nonexclusive,
royalty-free license, together with the right to grant sublicenses to other
LICENSEES under each of said patent applications and any patents issuing as set
forth in paragraph (b) of Section 2.4 of this Article.

     (d) LICENSOR receives from another licensee a non-exclusive, royalty-free
License, together with a right to grant sublicenses for an Improvement, LICENSOR
shall promptly inform LICENSEE of such Improvements and shall include such
patent applications and/or patents issuing thereon in the Appendix of PATENT
RIGHTS.

     2.5 - Patent Markings

     LICENSEE shall mark on an expose surface of all LICENSED PRODUCTS assemble,
used, sold or leased hereunder appropriate Patent Marking Identifying LICENSOR
as owner of the pertinent patents and/or patent applications. The content,


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<PAGE>

Form, location and language used in such markings shall be in accordance with a
the laws and practices of the countries where LICENSED PRODUCTS bearing such
markings are made, sold or used and shall be approved by LIICENSOR.

     2.6 - Acknowledgment of License

     On each LICENSED PRODUCT, LICENSEE shall acknowledge that the same was
manufactured under license from LICENSOR. Unless otherwise agree to by the
parties, the following notice shall be used by LICENSEE on an exposed surface of
each LICENSED PRODUCT: "Manufactured under license from COATES INTERNATIONAL,
Ltd." Such notice shall also be use din all descriptive materials and
instruction and service manuals relating to LICENSED PRODUCT.

     ARTICLE III - TECHNICAL COOPERATION AND APPROVALS

     3.1 - Technical Cooperation

     Upon request by LICENSEE, LICENSOR shall furnish to LICENSEE technical
assistance with respect to the design and product engineering of LICENSED
PRODUCT. Such technical assistance will be provided under the terms of a
separate engineering contract.

     LICENSEE agrees to buy all components under the PATENT RIGHTS from LICENSOR
or from a duly-licensed Licensee, licensed to manufacture such components.
Prices to LICENSEE shall be competitive to prices charged to other Licensees for
similar Quantities of components or assemblies. By separate agreement, LICENSEE
shall have


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<PAGE>

the option to obtain a manufacturing license for the PATENT RIGHTS for the field
of use within the territory on the terms and conditions set forth in a separate
Option Agreement for nonexclusive manufacturing license to be executed
contemporaneously herewith.

     3.2 - Regulatory Approvals

     For the full term of this Agreement, LICENSEE assumes complete
responsibility for obtaining Regulatory Approval, where required, from
appropriate Regulatory Authority, for the manufacture, sale and use of LICENSED
PRODUCT in any country where such LICENSED PRODUCTS are manufactured, sold or
used, at LICENSEE'S sole cost and expense.

     LICENSOR agrees to provide LICENSEE with all reasonable assistance and
Cooperation in the preparation and submission of any application for Regulatory
Approval.

ARTICLE IV - CONFIDENTIAL INFORMATION

     4.1 - LICENSEE shall use all TECHNICAL INFORMATION and Technical
Specifications obtained heretofore or hereafter from LICENSOR for the sole
purpose of Assembling, using, selling and leasing LICENSED PRODUCT under this
Agreement.

     4.2 - LICENSEE agrees to hold in confidence any and all TECHNICAL
INFORMATION and Technical Specifications disclosed directly or indirectly, to
LICENSEE by LICENSOR under this Agreement except that such obligation does not
extend to: (a) TECHNICAL INFORMATION and Technical Specifications which at the
time of the


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<PAGE>

disclosure are in the public domain: (b) TECHNICAL INFORMATION AND Technical
Specifications which after disclosure is published or otherwise becomes part of
the public domain through no fault of the LICENSEE (but only after, and only to
the extent that, it is published or otherwise becomes part of the public
domain); c) TECHNICAL INFORMATION which LICENSEE can show was in its possession
(as evidenced by LICENSEE'S written records) at the time of the disclosure and
was not acquired, directly or indirectly from LICENSOR or from a third party
under an obligation of confidence; and (d) TECHNICAL INFORMATION and Technical
Specifications which LICENSEE can show was received by it (as evidenced by
LICENSEE'S written records) after the time of disclosure hereunder from a third
party who did not require LICENSEE to hold it in confidence and who did not
acquire it, directly or indirectly from LICENSOR under an obligation of
confidence.

     4.3 - LICENSEE agrees, upon request by LICENSOR, to obtain from its
officers, employees and other persons having access to CONFIDENTIAL INFORMATION,
a duly- binding agreement to maintain such information in confidence, each such
agreement in a form acceptable by LICENSOR.


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<PAGE>

ARTICLE V - PAYMENTS

     5.1 - Licensing Fee - In consideration of the rights granted hereunder,
LICENSEE agrees to pay the LICENSOR a total Licensing Fee of FIVE MILLION
DOLLARS in accordance with the following payment schedule:

     (a) Upon execution of this Agreement, LICENSEE shall pay the LICENSOR
25,000 pounds on receipt of the first demonstration of Coates SRV, 302, engine
delivered to LICENSEE.

     (b) LICENSEE will pay to LICENSOR a further 25,000 pounds on receipt of the
second Coates SRV, 351, Dyno engine delivered to LICENSEE.

     (c) The balance of this license payment is to be paid out of sales of the
Coates SRV. Product payments scheduled to be mutually agreed between both
parties.

     (c) In the event of a joint venture by Coates and Nicholson McLaren this
license will automatically become null and void.

     5.2 - Royalties

     (a) Under the terms of this License, wherein LICENSEE is licensed to
assemble, use, sell and lease internal combustion engines containing the
LICENSED PRODUCT set forth herein, the LICENSEE shall pay no royalties to
LICENSOR, but rather, shall initially purchase the components of the LICENSED
PRODUCT and/or internal combustion engines embodying the components of the
LICENSED PRODUCT, from LICENSOR at the same price LICENSOR charges its retail
customers. These purchases shall be pursuant to purchase orders issued by
LICENSEE to LICENSOR which shall have


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<PAGE>

the following terms of payments: Payment within three (3) days of notice that
components are ready to be shipped.

     (b) If LICENSEE exercises the hereinbefore identified option to obtain a
manufacturing license from LICENSOR, than and in that event, LICENSEE shall pay
royalties on the manufacture of the components of the PATENT RIGHTS pursuant to
the royalty rates set forth in the hereinbefore identified option and subsequent
manufacturing license.

     (c) LICENSEE may also purchase components subject to the PATENT RIGHTS from
third party Licensees who have obtained a non-exclusive license for the
manufacture of the components subject to the PATENT RIGHTS provided said third
party Licensee is in good standing with respect to the payment of royalties.

                         ARTICLE VI - PATENT ENFORCEMENT

     6.1 - LICENSEE shall immediately inform LICENSOR of any infringement
potential or actual, of the PATENT RIGHTS by LICENSEE on any third party which
may come to LICENSEE'S attention. It shall be the responsibility of LICENSOR at
its own expense and solely at LICENSOR'S discretion to terminate any such
potential actual infringement of any of the PATENT RIGHTS. IF LICENSOR shall
elect not to pursue such third party, LICENSEE may at its sole cost and expense
and with LICENSOR'S approval, take such action to terminate such infringement
and LICENSOR agrees to cooperate with LICENSEE.


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<PAGE>

                   ARTICLE VII - REPRESENTATIONS, OBLIGATIONS,
                           WARRANTIES AND DISCLAIMERS

     7.1 - LICENSOR represents and warrants as follows:

     (a) All TECHNICAL INFORMATION delivered prior to the date of execution
hereof has been, and all TECHNICAL INFORMATION delivered hereafter will be, to
the best of LICENSOR'S knowledge, substantially accurate and complete with
respect to material matters.

     (b) LICENSOR is the rightful owner of the PATENT RIGHTS and has the
exclusive right to license all of the PATENT RIGHTS, and all such PATENT RIGHTS
under LICENSOR'S control and possession are set forth in Attachment 1.8.

     (c) LICENSOR has the power and authority to execute, deliver and perform
its obligations under this Agreement, and that neither the execution nor
delivery of this Agreement nor the performance of its obligations hereunder will
constitute a breach of the terms or provisions of any contract or agreement to
which it is a party.

     7.2 - LICENSEE represents and warrants as follows:

     (a) LICENSEE has full power and authority to enter into this Agreement and
to perform each and every covenant and agreement contained herein; and

     (b) LICENSEE has the power and authority to execute, deliver and perform
its obligations under this Agreement, and that neither the execution nor
delivery of this Agreement nor the performance of its obligations hereunder will
constitute a breach of the terms or provisions of any contract or agreement to
which it is a party.


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<PAGE>

     7.3 - Indemnities - The parties shall indemnify and save harmless the other
of, from and against any losses, damages and costs (including legal fees and
expenses) which the other may suffer or incur by reason of a breach of the
representations and warranties set forth in Section 7.1 and 7.2 hereof.

     7.4 - Obligations of LICENSEE - LICENSEE will use its best efforts to:

     (a) execute all such tasks as may be necessary to bring about the speedy
assembly, use, sale or lease 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 by LICENSEE comply with
relevant governmental regulations in markets and countries served by LICENSEE in
the field of use; and

     (c) assemble or use LICENSED PRODUCTS in a professional and workmanlike
manner to meet the general standards of the engineering industry.

     7.5 - Limitation of LICENSOR'S Warranties

     (a) Nothing contained in this Agreement shall be construed as a warranty or
representation by LICENSOR as to the validity or scope of any patent included in
the PATENT RIGHTS. Furthermore, no warranty or representation is made by
LICENSOR that the manufacture, use, or sale or other disposition by LICENSEE of
LICENSED PRODUCTS will be free of infringement of any patent or other rights of
persons not a party hereto. LICENSOR shall not be obliged to defend, indemnify
or hold LICENSEE harmless against suit, claim, demand or action


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<PAGE>

based on actual or alleged infringement of any patent or other rights belonging
to persons not a party to this Agreement. Any such suit, claim, demand or action
based on actual or alleged infringement by LICENSEE shall not relieve LICENSEE
from its performance of its obligations hereunder.

     (b) LICENSOR makes no representations, extends no warranties of any kind,
express or implied, and assumes no responsibility whatever with respect to use,s
ale, other disposition by LICENSEE or its vendees or other transferees of
products incorporating or made by use of PATENT RIGHTS and/or TECHNICAL
INFORMATION furnished under this Agreement.

     7.6 - Indemnification by LICENSEE and Insurance

     (a) LICENSEE shall indemnify and hold LICENSOR harmless from and against
any and all expenses including costs and attorney's fees, claims, demands,
liabilities or money judgments for death or bodily injury arising from the
testing, manufacturing, sale or use of any LICENSED PRODUCT by LICENSEE.
LICENSEE shall give LICENSOR notice as soon as practicable of any claim or
action to which the foregoing provisions apply. LICENSOR shall have the right,
but not the obligation, to participate in any compromise, settlement or defense
of any such claim or action.

                     ARTICLE VIII - DURATION AND TERMINATION

     8.1 Subject to the provisions of Section 8.3 hereof, all rights and
obligations under this Agreement shall expire upon the expiration of the last to
expire patent of the PATENT RIGHTS and any Improvement Patents added thereto.

     8.2 If either LICENSEE or the LICENSOR commits a material breach of any
provision of this Agreement, and such breach is not cured within thirty (30)
days after the date on which notice of breach is sent to the breaching party,
the non-breaching party shall have the right to terminate this Agreement upon a
ten (10) days further written notice.


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<PAGE>

     8.3 - This Agreement shall terminate effective immediately upon:

     (a) the filing by LICENSEE of an involuntary petition in bankruptcy, the
entry of a decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver,
trustee in bankruptcy or liquidator for LICENSEE in any insolvency, readjustment
of debt, marshaling of assets and liabilities, bankruptcy or similar
proceedings, or the winding up or liquidation of its affairs, and the
continuance of any such petition, decree or order undismissed or unstayed and in
effect for a period of sixty (60) consecutive days; or

     (b) the consent by LICENSEE to the appointment of a conservator, receiver,
trustee in bankruptcy or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities, bankruptcy or similar proceedings of or
relating to LICENSEE, or relating to substantially all of its property, or if
LICENSEE shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency,
reorganization or bankruptcy statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations.

     8.4 - Termination shall not release either LICENSEE or LICENSOR from any
obligation arising prior to such termination or any requirement pursuant to
Article IV and Article VII, paragraph 7.5 and 7.6 of this Agreement.

     8.5 - In the event of any termination of this Agreement, other than because
of LICENSEE'S default, LICENSEE shall be entitled to fill orders for LICENSED
PRODUCTS already received and to make and to use and/or sell LICENSED PRODUCTS
for which commitments to customers have been made at the time of such
termination.


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<PAGE>

     8.6 - Any termination of this Agreement shall be without prejudice as to
any obligation of either party to the other accruing prior to or at such
termination. Applicable royalties shall be payable under Section 5.2 of Article
V with respect to sales of all LICENSED PRODUCTS which were manufactured or were
in the course of manufacture prior to such termination.

     8.7 - The provisions of Article IV shall survive the termination or
expiration of this Agreement and LICENSEE shall not thereafter use such
information.

                               ARTICLE IX - WAIVER

     9.1 - No provision of this Agreement shall be deemed to have been modified
by any acts of LICENSOR, its agents or employees, or by failure to object to any
acts of LICENSEE which may be incinsistent herewith, or otherwise, except by a
subsequent agreement in writing signed by both parties. No waiver of a breach
committed by either party in one instance shall constitute a waiver or a license
to commit or continue breaches in other or like instances.

                 ARTICLE X - LIMITATIONS OF RIGHTS AND AUTHORITY

     10.1 - No right or title whatsoever in the PATENT RIGHTS or TECHNICAL
INFORMATION is granted by LICENSOR to LICENSEE, or shall be taken or assumed by
LICENSEE, except as is specifically set forth or granted in this Agreement.

     10.2 - Neither party shall in any respect whatsoever be taken to be the
agent or representative of the other party and neither party shall have any
authority to assume any obligation for or to commit or bind the other party in
any way.

     10.3 - Neither party shall at any time heretofore or hereafter publicly
state nor imply that the terms and conditions specified herein, or that the
relationships between


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<PAGE>

LICENSOR and LICENSEE, are in any way different from thos specifically set forth
in this Agreement. If requested by one party, the other party shall promptly
supply the first party with copies of all public statements and of all
promotional material relating to this Agreement and to LICENSED PRODUCTS.

                           ARTICLE XI - FORCE MAJEURE

     11.1 - Neither LICENSOR nor LICENSEE shall be liable for failure to perform
or delay in performing obligations set forth in this Agreement and neither
LICENSOR nor LICENSEE shall be deemed in breach of its obligations, if, to the
extent and for so long as such failure or delay or breach is due to natural
disaster or any cause reasonably under the control of LICENSOR or LICENSEE.
Either LICENSOR or LICENSEE desiring to invoke this Article shall notify the
other party promptly of such desire and shall use reasonable efforts to resume
performance by either LICENSOR or LICENSEE becomes impossible for more than one
twelve (12) month period by reason thereof, this Agreement will be terminated
upon either party giving thirty (30) days' written notice.

                   ARTICLE XII - INJUNCTIVE RELIEF FOR BREACH:
                         SEVERABILITY AND ENFORCEABILITY

     12.1 - LICENSEE agrees that the LICENSOR may not be adequately compensated
by damages at law for a breach or threatened breach by LICENSEE of any of the
provisions of this Agreement, and that the LICENSOR shall be entitled to
injunctive and specific performance in connection therewith, in addition to all
other remedies.

     12.2 - Each of the covenants contained in this Agreement shall be construed
as separate covenants, and if any court shal finally determine that any such
covenants are too broad as to the area, activity or time set forth therein, said
area, activity or time covered


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<PAGE>

shall be deemed reduced to whatever extent the court deems reasonable and such
covenants shall be enforced as to such reduced area, activity or time, without
limiting the scope or enforceability of the remaining provisions of those
sections.

     12.3 - If any provision of this Agreement is declared invalid by a court of
last resort or by any court from the decision of which an appeal is not taken
within the time provided by law, then and in such an event, this Agreement will
be deemed to have been terminated only as to the portion thereof which relates
to the provision invalidated by that judicial decision, but this Agreement, in
all other respects, will remain in force.

     12.4 - It is specifically agreed that no provisions in any manner violative
of the anti-trust laws of the United States of America or the similar laws of
the United Kingdom or other governmental authority within the TERRITORY as now
or hereafter enacted or construed, is intended to be or will be considered to be
incorporated into this Agreement or will be binding upon the parties.

               ARTICLE XIII - LIMITATION OF ASSIGNMENT BY LICENSEE

     13.1 - The rights, duties and privileges of LICENSEE hereunder shall not be
transferred or assigned by it, either in whole or in part.

                           ARTICLE XIV - GOVERNING LAW

     14.1 - This Agreement shall be governed by and construed and enforced in
accordance with the laws of the United States of America as to patents only and
the laws of the State of New Jersey and each party hereby submits to the
jurisdiction of the state or federal courts in the State of New Jersey in the
event of any claims arising under this Agreement.


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<PAGE>

                          ARTICLE XV - ENTIRE AGREEMENT

     15.1 - This Agreement sets forth the entire agreement and understanding by
and between LICENSOR and LICENSEE as to the subject matter hereof and has
priority over all documents, verbal consents and understanding made before the
execution of this Agreement, and none of the terms of this Agreement shall be
amended or modified except in a written document signed by LICENSOR and LICENSEE
hereto.

     15.2 - In the event of an inconsistency between any of the terms of this
Agreement and any translation thereof into another language, the English
language version shall control.

     15.3 - Should any portion of this Agreement be declared null and void, the
remainder of this Agreement shall remain in full force and effect.

                              ARTICLE XVI - NOTICES

     16.1 - Any notice, consent or approval required under this Agreement shall
be in English and in writing, and shall be delivered to the following addresses
(a) personally by hand, (b) by Certified Air Mail, postage prepaid, with return
receipt requested, or (c) by telefax, confirmed by such Certified Air Mail.

     If to the LICENSOR:

          Coates International, Ltd.
          Route 34 & Ridgewood Road
          Wall Township, NJ 07719
          Attention:  Mr. George J. Coates


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<PAGE>

          With copy to:

          ----------------------

          ----------------------

     All notices shall be deemed effective upon the date delivered by hand or
sent. If either party desires to change the address to which notice is sent to
such party, it shall so notify the other party in writing in accordance with the
foregoing.

                          ARTICLE XVII - MISCELLANEOUS

     17.1 - Headings and References - Headings in this Agreement are included
herein for ease of reference only and have no legal effect. References herein to
Sections or Attachments are to Sections and Attachments to this Agreement,
unless expressly stated otherwise.

     17.2 - Restriction on Disclosure of Terms and Provisions

     (a) This Agreement shall be distributed solely to: (i) those personnel of
LICENSOR and LICENSEE who shall have a need to know its contents; (ii) those
persons whose knowledge of its contents will facilitate performance of the
obligations of the parties under this Agreement; (iii) those persons, if any,
whose knowledge of its contents is essential in order to permit LICENSEE or
LICENSOR to place or maintain or secure benefits under policies of insurance; or
(iv) as may be required by law, regulation or judicial order.

     (b) In the event disclosure is required by law, regulation or judicial
order, the disclosing party shall request that any disclosure be kept secret and
shall attempt to minimize disclosure of the financial terms of this Agreement.
Any party may publicly announce the existence of this Agreement, the manner in
which the parties shall operate, and


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<PAGE>

the area of responsibility of each party. Except as legally required, no party
may disclose the amount of payments or royalty rates without the consent of the
other party. The parties will consult with each other prior to any press release
relating to this Agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written in duplicate by their duly
authorized representatives.

ATTEST:  19/4/96                              COATES INTERNATIONAL, LTD.

/s/ B. Coates                                 By: /s/ George J. Coates
-------------------------                         ---------------------------
B. COATES                                         George J. Coates, President
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Feb. 8, 19998


ATTEST:  19/4/96                              NICHOLSON MCLAREN

/S/ B. Coates                                 By: /s/ John Nicholson
-------------------------                         ---------------------------
B. COATES                                         John Nicholson, President
NOTARY PUBLIC OF NEW JERSEY                       Nicholson McLaren Engines Ltd.
My Commission Expires Feb. 8, 1998


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<PAGE>

                                  APPENDIX 1.8

     The patents licensed under this License Agreement by LICENSOR to LICENSEE
on a non-exclusive basis for the FIELD OF USE and Territories specified are as
follows:

     EPC Application Serial No. 94103 967.9 corresponding to U.S. Patent _______

(MK II)

     EPC Patent 03 69 099 corresponding to U.S. Patent 4,953,527 (MK II).

     EPC Patent 04 23 444 corresponding to U.S. Patent 4,944,261 (MK IIB).



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