**EXHIBIT
      10.16**




**AMENDED
      AND RESTATED** **EMPLOYMENT
      AGREEMENT**




**THIS** **AMENDED
      AND RESTATED** **EMPLOYMENT
      AGREEMENT** (the
“ **Agreement** ”),
      dated
      April 6, 2007




**by
      and between:**




**COATES
      INTERNATIONAL, LTD.** .,
      a
      Delaware corporation (the “ **Company** ”
or
      the
“ **Employer** ”),




**AND**




**GEORGE
      J. COATES** ,
      an
      individual having an address at


1811
      Murray Drive


Wall
      Township, New Jersey 07719


**“Employee** ”)




**WHEREAS,** Executive is a research scientist in the field of design and development of
      power units and propulsion system of all types, including combustion engines,
      gas turbines, steam turbines and pulse detonation rocket engines; and




**WHEREAS,** Executive is the inventor and designer of the Coates Spherical Rotary Valve
      Combustion Engine and has been awarded eighteen U.S. patents and numerous
      corresponding patents in various countries throughout the world;
      and




**WHEREAS,** the
      Company and
      the
      Employee signed on October 23, 2006 (the “ **Effective
      Date** ”),
      an
      employment agreement (the “ **Original
      Employment Agreement** ”) ;
      and




**WHEREAS,**  the
      parties wish to amend and restate the terms of the Original Employment
      Agreement ;




**NOW
      THEREFORE THIS AGREEMENT WITNESSETH THAT** in
      consideration of the premises and the mutual covenants, agreements,
      representations and warranties contained herein, and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      Employee and the Company hereby agree as follows:




Upon
      the
      effectiveness of this Agreement, the Original Employment Agreement shall become
      null and void and of no further effect.









**ARTICLE
      1**




**EMPLOYMENT**




1,.1  Employee
      shall continue to be employed with the Company and Employee hereby affirms
      and
      accepts such employment by Employer for the Term (as defined in Article 3
      below), and further agrees that commencing on the date hereof Employee shall
      serve as the Chief Executive Officer and President of the Company, upon the
      terms and conditions set forth herein.




1.2  The
      Employer shall utilize its best efforts to cause its Board of Directors to
      appoint the Employee as a member of the Employer’s Board of Directors commencing
      on the date hereof throughout the Term.




**ARTICLE
      2**




**DUTIES**




During
      the Term, Employee shall serve Employer faithfully, diligently and to the best
      of his ability, under the direction and supervision of the Board of Directors
      of
      Employer (“ **Board
      of Directors** ”)
      and
      shall use his best efforts to promote the interests and goodwill of Employer
      and
      any affiliates, successors, assigns, parent corporations, subsidiaries, and/or
      future purchasers of Employer. Employee shall render such services during the
      Term at Employer’s principal place of business or at such other place of
      business as may be determined by the Board of Directors, as Employer may from
      time to time reasonably require of him, and shall devote all of his business
      time to the performance thereof. Employee shall have those duties and powers
      as
      are assigned to him from time to time by the Board of Directors.




**ARTICLE
      3**




**TERM**




The
      term
      of this Agreement (the “ **Term** ”)
      has
      commenced on the Effective Date, and will continue thereafter for a term of
      five
      (5) years, as may be extended or earlier terminated pursuant to the terms and
      conditions of this Agreement. The Term is renewable upon the agreement of the
      parties hereto.




**ARTICLE
      4**




**GOVERNANCE
      AND COMPENSATION**




4.1  Governance.
      During the term of this Agreement, Employee agrees to vote all shares of the
      Company’s Common Stock owned by him or as to which he had voting power to elect
      to the Company’s Board of Directors at least two directors who qualify as
“independent directors” under the rules of the Securities Exchange Commission
      and NASDAQ.




4.2  Compensation.




(a)  In
      consideration of Employee’s services to Employer, Employer shall pay to Employee
      an annual salary (the “ **Salary** ”)
      of
      Three Hundred Thousand Dollars ($300,000.00), payable in equal installments
      at
      the end of each regular payroll accounting period as established by Employer,
      or
      in such other installments upon which the parties hereto shall mutually agree,
      and in accordance with Employer’s usual payroll procedures, but no less
      frequently than monthly. Notwithstanding
      the above, the salary shall be established at One Hundred Eighty Three Thousand
      Five Hundred Forty Nine Dollars ($183,549), until the
      point
      in time that Employer’s projected available working capital is sufficient to
      fund (x) the Company’s operations, and; (y) payment of the total amount of
      salary payments provided for in the Executive Employment Agreements as
      determined in the sole discretion of the Company’s Board of Directors (the
      “**Full
      Payment Date**”).
      For
      purposes of this provision, the term “Executive Employment Agreements” shall be
      the employment agreements in effect, as amended by and between the Employer
      and
      each of the following executives: George J. Coates and Gregory
      Coates.




2




(b)  In
      addition to the Salary, Employer shall issue to Employee a Stock Option to
      purchase 1,000,000 shares of the Employer’s common stock, at an exercise price
      equal to Employer’s common stock fair market value as of the date of issuance,
      as determined by the independent members of the Board (the “ **Stock
      Option** ”).
      The
      Stock Option shall vest (i.e., become exercisable) in three equal installments,
      as follows: One third of the Stock Options shall vest on April
      30,
      2007 and the balance in two equal installments on October 23, 2008 and
      2009. Employee
      must be continuously a full-time employee of the Company through the time he
      exercises part or all of the Stock Option, except, however, in the event this
      Agreement is terminated by the Employee for a Good Reason, as defined in Article
      10.1 and 10.2 below, or by the Employer without Cause, in which cases the Stock
      Option shall immediately and fully vest upon such termination provided further
      that the events surrounding any such termination have not been the subject
      of
      any claim, proceeding or lawsuit by either the Employee or the Company in which
      further case the Stock Option shall only vest upon final adjudication,
      determining that such termination was a valid termination by the Employee for
      Good Reason or by the Employer without Cause. The Stock Option shall be deemed
      a
      non-qualified stock option (i.e., not an ISO). The Stock Option will be issued
      out of the Employer’s stock incentive plan, and subject to such incentive plan.




(c)  Employee
      hereby acknowledges that the Stock Option and the shares issuable upon the
      exercise thereof shall be “restricted securities” as such term is defined under
      Rule 144, unless and until an effective registration covering these shares
      takes
      place, promulgated under the Securities Act of 1933, as amended (the
“ **1933
      Act** ”);
      that
      the Employee hereby represents that he shall accept such compensation and has
      no
      present intent to distribute or transfer such securities; that such securities
      shall bear the appropriate restrictive legend providing that they may not be
      transferred except pursuant to the registration requirements of the 1933 Act
      or
      pursuant to exemptions there from, and; the Employee further acknowledges that
      he may be required to hold such securities for an indeterminable amount of
      time.




(d)  Employee
      shall not be entitled to any other compensation from the Company unless
      unanimously approved by the independent directors of the Board.




4.3  Benefits




Upon
      the
      Full Payment Date, and thereafter d uring
      the
      Term, Employee shall be entitled to participate in all medical, dental, life
      insurance and other executive benefit plans, including vacation, sick leave,
      retirement accounts and other executive benefits provided by Employer. Such
      participation shall be subject to the terms of the applicable plan documents
      and
      Employer’s generally applicable policies. In addition, upon
      Full
      Payment Date, Employer
      shall pay the premiums for: (A) Executive’s disability insurance; and (B) life
      insurance in the amount of $2,000,000. The beneficiary of the life insurance
      policy shall be Bernadette Coates, Employee’s spouse. Employee also agrees to
      cooperate with the Company in obtaining for the benefit of the Company “key man”
life insurance on Employee’s life in the amount of at least $2,000,000. The
      amount of such insurance shall be approved by the independent directors of
      the
      Board.




4.4  Expense
      Reimbursement




Employer
      shall reimburse Employee for reasonable and necessary expenses incurred by
      him
      on behalf of Employer in the performance of his duties hereunder during the
      Term, including any and all travel and entertainment expenses related to the
      Employer’s business in accordance with Employer's then customary policies,
      provided that such expenses are adequately documented.




3




4.5  Bonus




In
      addition to the compensation payable under Section 4.1, Employee shall be
      entitled to receive during the Term an annual bonus, the amount of which shall
      be determined by the unanimous vote of the independent members of the Board
      of
      Directors (“ **Bonus** ”). Each
      year’s Bonus shall be paid to the Employee within 110 days of the Employer’s
      calendar year end.




4.6  Other
      Compensation




Commencing
      upon the Full Payment Date, Employer shall provide Employee with an automobile
      for his exclusive use throughout the Term, including costs for gasoline,
      maintenance and comprehensive insurance including an “umbrella”
policy.




**ARTICLE
      5**




**OTHER
      EMPLOYMENT**




During
      the Term, Employee shall devote all of his business and professional time and
      effort attention, knowledge, and skill to the management, supervision and
      direction of Employer’s business and affairs as Employee’s highest professional
      priority. Employer shall be entitled to all benefits, profits or other
      remuneration arising from or incidental to all work, services and advice
      performed or provided by Employee. Nothing
      in this Agreement shall preclude Employee from:




(a)
            serving
                as a director or member of a committee of any organization or corporation
                involving no conflict of interest with the interests of Employer,
                provided
                that Employee must obtain the prior written approval of the independent
                members of the Board;




(b)
            serving
                as a consultant in his area of expertise (in areas other than in
                connection with the business of Employer), to government, industrial,
                and
                academic panels provided that only de minimis time shall be devoted
                thereto and Employee must obtain the prior written approval of the
                independent members of the Board consent of Employer and where it
                does not
                conflict with the interests of Employer, provided that such written
                consent shall not be unreasonably withheld, delayed or conditioned;
                and




(c)
            managing
                his personal investments or engaging in any other non-competing business;
                provided that such activities do not materially interfere with the
                regular
                performance of his duties and responsibilities under this
                Agreement.




**ARTICLE
      6**




**CONFIDENTIAL
      INFORMATION/INVENTIONS**




6.1  Confidential
      Information




Employee
      shall not, in any manner, for any reasons, either directly or indirectly,
      divulge or communicate to any person, firm or corporation, any confidential
      information concerning any matters not generally known in the internal
      combustion engine industry (the “ **Engine
      Industry** ”)
      or
      otherwise made public by Employer which affects or relates to Employer’s
      business, finances, marketing and/or operations, research, development,
      inventions, products, designs, plans, procedures, or other data (collectively,
      “ **Confidential
      Information** ”)
      except
      in the ordinary course of business or as required by applicable law. Without
      regard to whether any item of Confidential Information is deemed or considered
      confidential, material, or important, the parties hereto stipulate that as
      between them, to the extent such item is not generally known in the Engine
      Industry, such item is important, material, and confidential and affects the
      successful conduct of Employer’s business and goodwill, and that any breach of
      the terms of this Section 6.1 shall be a material and incurable breach of this
      Agreement. Confidential Information shall not include: information in the public
      domain other than because of a breach of this Agreement.




4




6.2  Documents.
      Employee further agrees that all documents and materials furnished to Employee
      by Employer and relating to Employer’s business or prospective business are and
      shall remain the exclusive property of Employer. Employee shall deliver all
      such
      documents and materials, and all copies thereof and extracts there from, to
      Employer upon demand therefore and in any event upon expiration or earlier
      termination of this Agreement.




6.3  Inventions
      and Intellectual Property. The Company’s rights in patents, ideas, inventions,
      and intellectual property rights with respect to the CSRV engine only, shall
      be
      as set forth in the License Agreement executed by the parties on April 6, 2007,
      as such agreement may be amended (the “ **License
      Agreement** ”).
      The
      Company shall have no rights to any intellectual property developed by Employee
      that (i) do not relate to the CRSV System technology.




6.4  Disclosure.
      During the Term, Employee will promptly disclose to the Board of Directors
      full
      information concerning any interest, direct or indirect, of Employee (as owner,
      shareholder, partner, lender or other investor, director, officer, executive,
      consultant or otherwise) or any member of his immediate family in any business
      that is reasonably known to Employee to purchase or otherwise obtain services
      or
      products from, or to sell or otherwise provide services or products to, Employer
      or any of their suppliers or customers.




**ARTICLE
      7**




**COVENANT
      NOT TO COMPETE**




7.1  No
      Competitive Activities. Except as expressly permitted in Article 5 above, during
      the Term, Employee shall not engage in any activities that are competitive
      with
      the actual or prospective business of the Company, including without limitation:
      (a) engaging directly or indirectly in any business substantially similar to
      any
      business or activity engaged in (or proposed to be engaged in) by Employer,
      including and not limited to business that relates to internal combustion
      engines; (b) engaging directly or indirectly in any business or activity
      competitive with any business or activity engaged in (or proposed to be engaged
      in) by Employer; (c) soliciting or taking away any executive, employee, agent,
      representative, contractor, supplier, vendor, customer, franchisee, lender
      or
      investor of Employer, or attempting to so solicit or take away; (d) interfering
      with any contractual or other relationship between Employer and any executive,
      employee, agent, representative, contractor, supplier, vendor, customer,
      franchisee, lender or investor; or (e) using, for the benefit of any person
      or
      entity other than Employer any Confidential Information of
      Employer.




7.2  Results
      of Termination. In the event that the employment of Employee is terminated
      for
      Cause, or if Employee terminates his employment with Company without Good
      Reason, then the foregoing covenant prohibiting competitive activities shall
      survive the termination of this Agreement, and shall extend, and shall remain
      enforceable against Employee, for the period of two (2) years following the
      date
      of termination of employment. In addition, during the two-year period following
      such termination, neither Employee nor Employer shall make or permit the making
      of any negative statement of any kind concerning Employer or their affiliates,
      or their directors, officers or agents or Employee.




5




**ARTICLE
      8**




**SURVIVAL**




Except
      as
      otherwise provided, Employee agrees that the provisions of Articles 6, 7, 8
      and
      9 shall survive expiration or earlier termination of this Agreement for any
      reasons whether voluntary or involuntary, with or without Cause, and shall
      remain in full force and effect thereafter.




**ARTICLE
      9**




**INJUNCTIVE
      RELIEF**




Employee
      acknowledges and agrees that the covenants and obligations of Employee set
      forth
      in Articles 6 and 7 with respect to non-competition, non-solicitation,
      confidentiality and Employer’s property relate to special, unique and
      extraordinary matters and that a violation of any of the terms of such covenants
      and obligations will cause Employer irreparable injury for which adequate
      remedies are not available at law. Therefore, Employee agrees that if Employee
      breaches this Agreement than Employer shall be entitled to apply for an
      injunction, restraining order or such other equitable relief as a court of
      competent jurisdiction as limited by Section 13.3 may deem necessary or
      appropriate to restrain Employee from committing any violation of the covenants
      and obligations referred to in this Article 9. Employee shall have the right
      to
      appeal from such injunction or order and to seek reconsideration, These
      injunctive remedies are cumulative and in addition to any other rights and
      remedies Employer may have at law or in equity.




**ARTICLE
      10**




**TERMINATION**




10.1  Termination
      by Employee. Employee shall be entitled to terminate this Agreement, for any,
      or
      no reason, upon providing a 60 days’ written notice. Employee may terminate this
      Agreement for Good Reason at any time upon 30 days’ written notice to Employer,
      provided the Good Reason has not been cured within such period of time.




10.2  Good
      Reason. In this Agreement, “ **Good
      Reason** ”
means,
      without Employee’s prior written consent, the occurrence of any of the following
      events, unless Employer shall have fully cured all grounds for such termination
      within thirty (30) days after Employee gives notice thereof:




(i)  any
      reduction in his then-current Salary or benefits, other than in connection
      a
      percentage pay cut that is applicable to all senior executives and which is
      the
      same percentage for all such persons or in connection with a general reduction
      in benefits;




(ii)
            any
                material failure to timely grant, or timely honor, the Stock Option
                set
                forth in Article 4.2;




(iii)
            failure
                to pay or provide required
                expenses;




The
      written notice given for Good Reason by Employee to Employer shall specify
      in
      reasonable detail the reason for termination, and such termination notice shall
      not be effective until thirty (30) days after Employer’s receipt of such notice,
      during which time Employer shall have the right to respond to Employee’s notice
      and cure the breach or other event giving rise to the termination.




6




10.3Termination
      by Employer. Employer may terminate its employment of Employee under this
      Agreement only with Cause and only by written notice to Employee For purposes
      of
      this Agreement, theterm Cause for termination by Employer shall be (a) a
      conviction of or plea of guilty or *nolo
      contendere* by
      Employee to a felony, or any crime involving fraud, securities laws violations,
      embezzlement or moral turpitude; (b) the refusal by Employee to perform his
      material duties and obligations hereunder or to follow the proper instructions
      of the Board of Directors after a written warning with respect thereto; (c)
      Employee’s willful or intentional misconduct in the performance of his duties
      and obligations; (d) conduct that is known or that should have been known by
      Employee to be detrimental to the best interests of the Company, as determined
      by the independent members of the Board; (e) if Employee or any member of his
      family makes any personal profit arising out of or in connection with a
      transaction to which Employer is a party or with which it is associated without
      making disclosure to and obtaining the prior written consent of the independent
      members of the Board.; or (f) the entry by the Securities and Exchange
      Commission or a self-regulatory organization of a consent decree relating to
      a
      securities law violation by Employee. The written notice given hereunder by
      Employer to Employee shall specify that it is with Cause shall specify in
      reasonable detail the cause for termination. For purposes of this Agreement,
      “family” shall mean “immediate family” as defined in the rules of the Securities
      and Exchange Commission. In the case of a termination for the causes described
      in (a), (d) and (e) above, such termination shall be effective upon receipt
      of
      the written notice. In the case of the causes described in (b) and (c) above,
      such termination notice shall not be effective until thirty (30) days after
      Employee’s receipt of such notice, during which time Employee shall have the
      right to respond to Employer’s notice and cure (if curable) the breach or other
      event giving rise to the termination.




10.4  Upon
      a
      termination of this Agreement with Good Reason by Employee, Employer shall
      pay
      to Employee all accrued and unpaid compensation and expense reimbursement,
      as of
      the date of such termination and ,
      in the
      case such termination takes place after the Full Payment Date, also the
“ **Severance
      Payment** .”
The
      Severance Payment shall be payable in a lump sum, subject to Employer’s
      statutory and customary withholdings. The Severance Payment shall be paid by
      Employer within thirty (30) business days of the expiration of any applicable
      cure period. The Severance Payment shall equal the total amount of the Salary
      payable to Employee under Section 4.2 of this Agreement for a period of three
      years.




10.5  Termination
      Upon Death. If Employee dies during the Term, this Agreement shall terminate,
      except that Employee’s legal representatives shall be entitled to receive any
      earned but unpaid compensation or expense reimbursement due hereunder through
      the date of death, as well as a payment in an amount equal to the Severance
      Payment,.




10.6  Termination
      Upon Disability. If, during the Term, Employee suffers and continues to suffer
      from a “Disability” (as defined below), then Employer may terminate this
      Agreement by delivering to Employee ten (10) calendar days’ prior written notice
      of termination based on such Disability, setting forth with specificity the
      nature of such Disability and the determination of Disability by Employer.
      For
      purposes hereof, “ **Disability** ”
means
      “permanent and total disability” as defined in Section 22(e)(3) of the Internal
      Revenue Code. Upon any such termination for Disability, Employee shall be
      entitled to receive any earned but unpaid compensation or expense reimbursement
      due hereunder through the date of termination and ,
      in the
      case such termination takes place after the Full Payment Date, also the
      Severance Payment.




**ARTICLE
      11**




**PERSONNEL
      POLICIES, CONDITIONS, AND BENEFITS**




During
      the Term, Employee shall be entitled to vacation during each year of the Term
      at
      the rate of four (4) weeks per year. Within 30 days after the end of each year
      of the Term, Employer shall elect to (a) carry over and allow Employee the
      right
      to use any accrued and unused vacation of Employee, or (ii) pay Employee for
      such vacation in a lump sum in accordance with its standard payroll practices.




7




**ARTICLE
      12**





**INDEMNIFICATION**




Employer
      shall indemnify and defend the Executive to the fullest extent permitted by
      the
      laws of the State of Delaware and the Executive shall be entitled to the
      protection of any insurance policies the Employer shall maintain generally
      for
      the benefit of its directors and officers, against all losses, claims, damages,
      costs, charges, expenses, liabilities, judgments, or settlement amounts
      whatsoever incurred or sustained by him in connection with any action, suit,
      or
      proceeding to which he may be made a party by reason of his being or having
      been
      an officer of the Employer (“D&O Policies”). The Board of Directors of the
      Employer shall consult the Executive as to the terms and extent of coverage
      under any D&O policies in force. It is understood and agreed however, that
      the Employer will only indemnify the Executive for those matters that are within
      the scope of the Executive’s employment with the Employer and not conducted in
      bad faith, intentionally or with gross negligence. The Executive agrees to
      immediately notify the Employer, in writing, in the event he becomes aware
      that
      he (or the Employer), is a party to any action, suit or proceeding. The
      Executive further agrees not to enter into any settlement agreements concerning
      any action, suit or proceeding without the express written consent of the
      Employer.




**ARTICLE
      13**




**BENEFICIARIES
      OF AGREEMENT**




This
      Agreement shall inure to the benefit of the parties hereto, their respective
      heirs, successors and permitted assigns.




**ARTICLE
      14**




**GENERAL
      PROVISIONS**




13.1  No
      Waiver. No failure by either party to declare a default based on any breach
      by
      the other party of any provisions of this Agreement, nor failure of such party
      to act quickly with regard thereto, shall be considered to be a waiver of any
      such breach, or of any future breach.




13.2  Modification.
      No waiver or modification of this Agreement or of any covenant, condition,
      or
      limitation herein contained shall be valid unless in writing and duly executed
      by the parties to be charged therewith.




13.3  Submission
      to Jurisdiction; Consent to Service of Process. This Agreement shall be governed
      in all respects, by the laws of the State of New Jersey, including validity,
      interpretation and effect, without regard to principles of conflicts of law.
      The
      parties hereto irrevocably and unconditionally consent to submit to the
      exclusive jurisdiction of the state and federal courts in the State of New
      Jersey for any lawsuits, actions or other proceedings arising out of or related
      to this Agreement and agree not to commence any lawsuit, action or other
      proceeding except in such courts. The parties hereto further agree that service
      of process, summons, notice or document by mail to their addresses set forth
      above shall be effective service of process for any lawsuit, action or other
      proceeding brought against them in any such court. The parties hereto
      irrevocably and unconditionally waive any objection to the laying of venue
      of
      any lawsuit, action or other proceeding arising out of or related to this
      Agreement in such courts, and hereby further irrevocably and unconditionally
      waive and agree not to plead or claim in any such court that any such lawsuit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum.




8




13.4  Entire
      Agreement. This Agreement embodies the whole agreement between the parties
      hereto regarding the subject matter hereof and there are no inducements,
      promises, terms, conditions, or obligations made or entered into by Employer
      or
      Employee other than contained herein and except for the License Agreement. In
      particular, this Agreement restates and amends the Original Employment
      Agreement, and the parties confirm that they have no claims or demands from
      each
      other, regarding payments or other rights or liabilities, except as set forth
      in
      this Agreement.




13.5  Severability.
      In the event a court of competent jurisdiction determines that a term or
      provision contained in this Agreement is overly broad in scope, time,
      geographical location or otherwise, the parties hereto authorize such Court
      to
      modify and reduce any such term or provision deemed overly broad in scope,
      time,
      geographic location or otherwise so that it complies with then applicable law.




13.6  Headings.
      The headings contained herein are for the convenience of reference and are
      not
      to be used in interpreting this Agreement.




13.7  Independent
      Legal Advice. Employer and Employee each acknowledge that he or it has obtained
      legal advice concerning this Agreement.




13.8  No
      Assignment. No party may pledge or encumber its respective interests in this
      Agreement nor assign any of its rights or duties under this Agreement without
      the prior written consent of the other party.




IN
      WITNESS WHEREOF the parties have executed this Agreement as of the day and
      year
      first above written.




**COATES
                INTERNATIONAL, LTD**.
            
            
            **EXECUTIVE**By:
            /s/
                Barry C. Kaye
            
            
            /s/
                George J. CoatesBarry
                C. Kaye
              Chief
                  Financial Officer
            
            
            George
                J. Coates




9