AMENDMENT

         This  Amendment  dated this 1st day of April,  2004 by and among Coates
International, Ltd., having a business address at Highway 34 and Ridgewood Road,
Wall Township,  New Jersey 07719-0738,  and George Coates,  having an address at
Highway 34 and Ridgewood Road, Wall Township,  New Jersey  07719-9738 (the above
identified  parties are collectively  referred to as the "Licensor") and McLean,
England and Associates, LLC, having its principal offices located at One Innwood
Circle, Suite 2004, Little Rock, Arkansas 72211 (the "Licensee").

         WHEREAS,  Licensor  and  Licensee  entered  into  a  License  Agreement
originally  on April 12,  2002 and have  operated  pursuant  to their  agreement
through the date of this Amendment ("License Agreement");

         WHEREAS,   Licensor  has   retrofitted   the  No.1  Diesel  855  engine
incorporating  the Coates CSRV  System,  which engine is  operational  on a test
stand. This engine is not ready for final testing and many costly  modifications
are to be carried out before it is ready for final testing.

         WHEREAS,  Licensee has requested Licensor to retrofit another 855 No. 2
engine  to  gasoline  incorporating  the CSRV by doing  so has  placed  an extra
expense and burden on Licensor.  Currently,  it is not financially  feasible for
Licensor to complete both engines concurrently  without considerable  additional
funding and staff.

         WHEREAS,  in the interest of time and efficiency  Licensor and Licensee
have  agreed  to  allow  Licensee  at  its  own  expense  to  undertake  various
modifications and refinements to the No. 1 855 Diesel powered CSRV truck engine;

         WHEREAS,  in order to  accomplish  the  aforesaid  mutual  objective of
Licensor  and  Licensee,  it is necessary to  supplement  the License  Agreement
solely as specified in, and limited by, this Amendment.  The permission  granted
by Licensor pursuant to this Amendment is not intend to, and does not constitute
a novation of the License Agreement.

         NOW,  THEREFORE,  in consideration  of the premises and covenants,  and
other  good  and  valuable  consideration,   and  the  mutual  promises  of  the
performance of the  undertaking  set forth in the License  Agreement and in this
Amendment, it is agreed, by and among Licensor and Licensee, as follows:

      1.    DEFINED  TERMS.   Except  as  specifically   defined   herein,   all
            definitions  of terms used herein  shall be in  accordance  with the
            License Agreement.

      2.    POSSESSION.  For the limited purpose set forth in paragraph 6 below,
            Licensor shall permit  Licensee to take possession of, but not title
            to, and to remove from Licensor's business premises, a single diesel
            powered  internal  combustion  engine that Licensor has retro-fitted
            with the CSRV Valve System ("No. 1 Test  Engine")  together with one
            of the two trucks containing an 855 Cummins Engine owned by Licensee
            ("Test Truck").  Unless or until otherwise  specified in the License
            Agreement,  Licensor  shall retain  title to the Test  Engine,  with
            exception  of the trucks  which are the  property of  Licensee.  The
            parties  agree  that  the Test  Engine  is  currently  in a state of
            development,  which Licensee will attempt to refine. The Test Engine
            is not ready for testing and certification,  and does not constitute
            a delivery  of such an engine as  contemplated  by the  Confidential
            Addendum to the License Agreement.



                                       18
<PAGE>

      3.    TEST MATERIAL.  Licensor shall provide  Licensee with, but not title
            to, the Test  Engine on test stand,  all  related  drawings or other
            intellectual property, that Licensor feels would aid Licensee in its
            refinement efforts  (collectively the "Test Material").  If Licensee
            requires any parts from  Licensor,  Licensee must pay for parts made
            by Licensor.

      4.    SHIPPING.  Licensee  shall  be  responsible  for  packing,  crating,
            shipping and transporting the Test Material and all costs associated
            therewith.  Licensee  shall  be  responsible  for  all  damage  from
            whatever cause or source caused to the Test Material, while the Test
            Material is off of  Licensor's  business  premises.  Within five (5)
            days of  taking  possession  of the  Test  Material  Licensee  shall
            deliver the Test Material to Ram Industries 7200 Industry Dr., North
            Little Rock, 72117 ("Ram Premises").

      5.    INSURANCE.  Licensee  shall  insure the Test  Material  against  all
            damage and loss for its full  replacement  value which is  currently
            estimated to be $250,000 with Licensor named as the sole loss payee;
            Licensor calculates it has expended  approximately  $2,500,000.00 on
            Licensee's  Diesel 855  engine.  Moreover,  Licensee  shall  provide
            Licensor with an insurance  policy providing  general  comprehensive
            liability  coverage  for  Licensor in relation to the Test  Material
            that  meets  the  specifications  of  the  License  Agreement.   The
            insurance  policy(ies)  shall be  delivered  by Licensee to Licensor
            before  the  Test  Material  is  removed  from  Licensor's  business
            premises.  Each  insurance  policy  shall be issued by an  insurance
            company  that is  reasonably  acceptable  to  Licensor  and which is
            authorized to do business both in the State of New Jersey and in the
            State of Arkansas.

      6.    PURPOSE.  Licensor  grants its  permission  for  Licensee at its own
            expense to use third party firms in its  refinement  efforts,  which
            will be  required  to  protect  the  confidentiality  of  Licensor's
            patents and trade secrets; each such consultant shall be required to
            sign  a  confidentiality  agreement.  The  required  confidentiality
            agreement  is  attached   hereto  as  Exhibit  A   ("Confidentiality
            Agreement").   Licensee   shall  be   responsible   to  enforce  the
            Confidentiality  Agreement and shall indemnify the Licensor  against
            any loss associated with a breach of the  Confidentiality  Agreement
            caused by, or related to, an act or omission of  Licensee.  Licensor
            will be the owner of all work and improvements  made by Licensee and
            its third party  contractors.  Licensee's  efforts  are  intended to
            supplement  those of Licensor  and to  accelerate  the time when the
            Test Engine can be tested at Southwest  Research  Institute  for EPA
            certification  purposes.   Licensor,  however,  without  having  any
            obligation  to do so,  may,  in its  sole and  absolute  discretion,
            continue to work on the No. 2 gasoline engine project to completion.

      7.    PAYMENT. All payments due Licensor by Licensee shall become due, and
            will be paid, in accordance with the License Agreement,  except that
            if Licensee  through its efforts  produces an engine that  satisfies
            the  criteria  specified  in the License  then the  precondition  to
            Licensee's  payment  obligation  shall have been satisfied as if the
            Licensor  had  produced  an  engine  that   satisfied  the  criteria
            specified in the License and payment  shall be due from the Licensee
            pursuant to the terms of the License Agreement.

      8.    REPORTS.  Licensee  shall provide  Licensor with a written  progress
            report every fifteen (15) days  detailing the progress that is being
            made on the Test Engine.



                                       19
<PAGE>

      9.    LOCATION.  Licensee  shall not remove the Test Material from the Ram
            Premises  without  the  prior  written  approval  of  the  Licensor.
            Licensor and its agents, employees,  contractors and consultants, on
            two (2) business days notice, shall have the absolute right, but not
            the  obligation,  to enter the Ram Premises,  during normal business
            hours,  to  inspect  the Test  Engine  and/or the Test Truck and all
            related data, plans, results,  reports and documents relating to the
            Test Engine and/or the Test Truck.

            Licensee  represents  to Licensor that the Ram Premises are safe and
            secure and that access to the Test  Material  will be limited to the
            Licensee  and its  consultant  which access shall be governed by the
            terms of the Confidentiality Agreement.

      10.   INDEMNIFICATION.  Indemnification  between  the  parties  will be in
            accordance  with the License  Agreement  and  paragraphs  4, 6 and 9
            hereof.

      11.   CONFIDENTIALITY. The confidentiality of Licensor's patents and trade
            secretes  shall  be  maintained  in  accordance   with  the  License
            Agreement and paragraphs 6 and 9 hereof.

      12.   BREACH;  REMEDIES.  In the event of a breach by either party of this
            Amendment   the  remedies  of  the  parties  shall  be  governed  in
            accordance with the License Agreement.

      13.   NOTICES. All notices between the parties shall be made in accordance
            with License Agreement.

      14.   APPLICABLE LAW. The law applicable to this Amendment Agreement shall
            be in accordance with License Agreement.

      15.   SEVERABILITY.  If any term, covenant, condition or provision of this
            Amendment, or the application thereof to any person or circumstance,
            shall,  at any time or to any extent,  be invalid or  unenforceable,
            the remainder of this Amendment,  or the application of such term or
            provision to persons or  circumstances  other than those as to which
            it is held invalid or unenforceable,  shall not be affected thereby,
            and each term,  covenant,  condition and provision of this Amendment
            shall be valid and be enforced to the fullest  extent  permitted  by
            law.

      16.   INTERPRETATION.  Wherever  herein the singular  number is used,  the
            same shall  include  the  plural,  and the  masculine  gender  shall
            include the  feminine  and neuter  genders,  and vice versa,  as the
            context shall require.

      17.   COUNTERPARTS.   This   Amendment   may  be   executed   in   several
            counterparts,  each of which shall be an original,  but all of which
            shall constitute one and the same instrument.

      18.   SECTION  HEADINGS.  The  section  headings  in  this  Amendment  are
            inserted only as a matter of convenience in reference and are not to
            be given any effect  whatsoever in construing  any provision of this
            Amendment.



                                       20
<PAGE>

      19.   ASSIGNMENT.  Neither this Amendment nor the License Agreement may be
            assigned by Licensee except as permitted by the License Agreement.



ATTEST:                                     COATES INTERNATIONAL, LTD.


   /s/ Shirley Naidel                       BY: /s/ George J. Coates
---------------------------------              --------------------------------
       Shirley Naidel                               George J. Coates, President
       Notary Public - New Jersey
My Commission Expires Dec. 27, 2005
       as to Both Signatures of
       George J. Coates

   /s/ Shirley Naidel                           /s/ George J. Coates
---------------------------------              --------------------------------
       Shirley Naidel                            George J. Coates, Individually


ATTEST:                                     McLEAN, ENGLAND & ASSOCIATES, LLC


         (Illegible)                        By: /s/ Jeff England
---------------------------------               -------------------------------
                                                 Jeff England



                                       21