Document:

Exhibit 4.2

                                UNIT CERTIFICATE

                                      FRONT

      1. Logo: COATES MOTORCYCLE COMPANY, LTD. (Same as Common Stock
Certificate.)

      2. Certificate Number: Should have the prefix: "U"

      3. CUSIP NO.: "____________."

      4. Centered below the Logo:

      ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE

      EACH UNIT CONSISTING OF TWO SHARES OF COMMON STOCK,

      AND ONE WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK

      5. In the shaded area:

"THIS CERTIFIES THAT __________________________"

      6. Below the shaded area:

      "or  registered  assigns  (the  "Registered  Holder")  is the owner of the
number of Units specified above.  Each Unit ("Unit")  consists of two (2) shares
of common  stock,  $.001 par value (the "Common  Stock"),  of Coates  Motorcycle
Company,  Ltd. (the "Company") and one (1) redeemable warrant (the "Warrant") to
purchase one share of Common Stock for $ 6.00 per share  (subject to adjustment)
until 5:00 p.m. Eastern Time ______________  2009. On or prior to the Separation
Time (as defined below), the securities  evidenced by this certificate cannot be
traded  separately.  Each Unit will  automatically  separate  into two shares of
Common Stock and one Warrant as of the close of business on ______________, 2004
(the "Separation  Time"). The Common Stock and the Warrants comprising the Units
shall be separately  tradable  commencing on the first day after the  Separation
Time on which the principal exchange on which the Company's stock trades is open
for  trading.  The  Warrants  comprising  part of the Units are issued under and
pursuant to a certain Warrant  Agreement dated as of  ______________,  2004 (the
"Warrant  Agreement"),  between the Company and American  Stock Transfer & Trust
Company,  as Warrant Agent (the "Warrant  Agent"),  and are subject to the terms
and provisions  contained  therein and on the face of the  certificates  covered
thereby,  to all  of  which  terms  and  provisions  the  holder  of  this  Unit
Certificate  consents by acceptance  hereof.  The Warrant Agreement provides for
adjustment  in the  number of shares of Common  Stock to be  delivered  upon the
exercise  of the  Warrant  evidenced  hereby and to the  exercise  price of such
Warrant in certain events therein set forth.

      Copies of the Warrant  Agreement are available for inspection at the stock
transfer  office of the Warrant  Agent or may be obtained  upon written  request
addressed to the Company at: Central Avenue, Building 3, Farmingdale, New Jersey
07727, Attention: Chief Financial Officer.

<PAGE>

      "This Unit  Certificate is not valid unless  countersigned by the Transfer
Agent and Registrar of the Company."

      7. Signatures: Same as Common Stock Certificate, including Transfer Agent.

      8. Corporate Seal: Same as Common Stock Certificate.

BACK

                         COATES MOTORCYCLE COMPANY, LTD.

      The  Registered  Holder  hereby is entitled,  at any time, to exchange the
Units  represented  by this Unit  Certificate  for Common  Stock  Certificate(s)
representing  two shares of Common Stock, for each Unit represented by this Unit
Certificate and one Warrant Certificate  representing one Warrant, for each Unit
represented by this Unit Certificate, upon surrender of this Unit Certificate to
the Transfer  Agent and Registrar  together with any  documentation  required by
such agent.

      REFERENCE IS MADE TO THE WARRANT AGREEMENT REFERRED TO ON THE FACE HEREOF,
AND THE  PROVISIONS  OF SUCH WARRANT  AGREEMENT  SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH ON THE FACE OF THIS CERTIFICATE. COPIES OF
THE WARRANT  AGREEMENT  MAY BE OBTAINED  UPON WRITTEN  REQUEST FROM THE TRANSFER
AGENT AND REGISTRAR, AMERICAN STOCK TRANSFER & TRUST COMPANY.

      The following  abbreviations,  when used in the inscription on the face of
this  certificate,  shall be  construed  as though they were written out in full
according to applicable laws or regulations.

         TEN COM  as tenants in common
         TEN ENT  as tenants by the entireties
         JT TEN as joint tenants with rights of survivorship and not as tenants
         in common COM PROP as community property

         UNIF GIFT MIN ACT _________________ Custodian _______________
                                      (Cust)                   (minor)

                            under Uniform Gifts to Minors Act

                           ___________________________________
                                             (State)

         UNIF TRF MIN ACT _________________ Custodian _______________
                                      (Cust)                   (minor)

                            under Uniform Gifts to Minors Act

                           ___________________________________
                                          (State)

<PAGE>

                               FORM OF ASSIGNMENT
                       (TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder

(------------------------)
(Please insert social security or other identification number of Registered
Holder) hereby sells, assigns and transfers unto

--------------------------------------------------------------------------------
                Please Print Name and Address including Zip Code)

Units evidenced by the within Unit Certificate, and irrevocably constitutes and
appoints ____________________________________________________________ attorney
to transfer this Unit Certificate on the books of Coates Motorcycle Company,
Ltd, with the full power of substitution in the premises.

Dated: __________________, ________

Signature: __________________________________

(Signature  must  conform in all  respects to the name of  Registered  Holder as
specified  on the face of this Unit  Certificate  in every  particular,  without
alteration or any change whatsoever, and the signature must be guaranteed in the
usual manner.)

Signatures Guaranteed:

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

The  signatures  should  be  guaranteed  by  an  eligible   institution  (banks,
stockbrokers,  savings and loan association and credit unions with membership in
an approved signature medallion program), pursuant to S.E.C. Rule 17Ad-15.Exhibit 4.5

                         COATES MOTORCYCLE COMPANY, LTD.
                            2004 STOCK INCENTIVE PLAN

      1.  Purpose.  The purpose of this Plan is to attract and retain  qualified
officers,  directors  and other key  employees  of, and  consultants  to, Coates
International,   Ltd.,  a  Delaware   corporation  (the   "Company"),   and  its
Subsidiaries  and to provide  such  persons  with  appropriate  incentives.  The
Company  has  adopted  the Plan  effective  as of March 5, 2004,  subject to the
approval of the  Company's  shareholders,  and unless  extended by  amendment in
accordance  with the terms of the Plan, no Option Rights,  Appreciation  Rights,
Restricted  Shares or Deferred Shares will be granted  hereunder after the tenth
anniversary of such effective date.

      2. Definitions. As used in this Plan,

      "APPRECIATION  RIGHT" means a right granted  pursuant to Section 5 of this
Plan,  including a Free-standing  Appreciation  Right and a Tandem  Appreciation
Right.

      "BASE PRICE" means the price to be used as the basis for  determining  the
Spread upon the exercise of a Free-standing Appreciation Right.

      "BOARD" means the Board of Directors of the Company.

      "CODE"  means the Internal  Revenue Code of 1986,  as amended from time to
time.

      "COMMITTEE" means the Compensation Committee of the Board, as described in
Section 13(a) of this Plan, or, in the absence of a Compensation Committee,  the
full Board.

      "COMMON SHARES" means (i) shares of the Common Stock,  $.001 par value, of
the Company and (ii) any security  into which Common  Shares may be converted by
reason of any  transaction or event of the type referred to in Section 9 of this
Plan.

      "DATE OF GRANT" means the date specified by the Committee on which a grant
of Option Rights or Appreciation  Rights or a grant or sale of Restricted Shares
or Deferred Shares shall become  effective,  which shall not be earlier than the
date on which the Committee takes action with respect thereto.

      "DEFERRAL  PERIOD" means the period of time during which  Deferred  Shares
are subject to deferral limitations under Section 7 of this Plan.

      "DEFERRED SHARES" means an award pursuant to Section 7 of this Plan of the
right to receive Common Shares at the end of a specified Deferral Period.

      "FREE-STANDING  APPRECIATION  RIGHT" means an  Appreciation  Right granted
pursuant  to Section 5 of this Plan that is not granted in tandem with an Option
Right or similar right.

      "INCENTIVE STOCK OPTION" means an Option Right that is intended to qualify
as an  "incentive  stock  option" under Section 422 of the Code or any successor
provision thereto.

<PAGE>

      "MARKET  VALUE PER SHARE" means the fair market value of the Common Shares
as determined by the Committee from time to time.

      "NONQUALIFIED  OPTION"  means an  Option  Right  that is not  intended  to
qualify as an Incentive Stock Option.

      "OPTIONEE"  means the person so designated  in an agreement  evidencing an
outstanding Option Right.

      "OPTION  PRICE" means the purchase  price  payable upon the exercise of an
Option Right.

      "OPTION RIGHT" means the right to purchase  Common Shares from the Company
upon the exercise of a Nonqualified  Option or an Incentive Stock Option granted
pursuant to Section 4 of this Plan.

      "PARTICIPANT"  means a person who is selected by the  Committee to receive
benefits  under this Plan and (i) is at that time an officer,  director or other
key employee of, or a consultant  to, the Company or any  Subsidiary or (ii) has
agreed to commence serving in any such capacity.

      "RELOAD  OPTION  RIGHTS"  means  additional  Option  Rights  automatically
granted to an Optionee  upon the exercise of Option  Rights  pursuant to Section
4(f) of this Plan.

      "RESTRICTED  SHARES"  means  Common  Shares  granted or sold  pursuant  to
Section 6 of this Plan as to which  neither the  substantial  risk of forfeiture
nor the restriction on transfer referred to in Section 6 hereof has expired.

      "RULE 16B-3"  means Rule 16b-3,  as  promulgated  and amended from time to
time by the Securities and Exchange Commission under the Securities Exchange Act
of 1934, or any successor rule to the same effect.

      "SPREAD"  means, in the case of a Free-standing  Appreciation  Right,  the
amount by which  the  Market  Value per Share on the date when the  Appreciation
Right is exercised exceeds the Base Price specified therein or, in the case of a
Tandem Appreciation Right, the amount by which the Market Value per Share on the
date when the Appreciation Right is exercised exceeds the Option Price specified
in the related Option Right.

      "SUBSIDIARY"   means   a   corporation,    partnership,   joint   venture,
unincorporated  association or other entity in which the Company has a direct or
indirect  ownership  or  other  equity  interest;  provided,  however,  that for
purposes of determining  whether any person may be a Participant for purposes of
any grant of Incentive  Stock  Options,  "Subsidiary"  means any  corporation in
which the Company owns or controls  directly or indirectly  more than 50% of the
total combined  voting power  represented by all classes of stock issued by such
corporation at the time of the grant.

      "TANDEM  APPRECIATION  RIGHT" means an Appreciation Right granted pursuant
to Section 5 of this Plan that is granted in tandem with an Option  Right or any
similar right granted under any other plan of the Company.

<PAGE>

      "10% SHAREHOLDER"  means an individual who, at the time an Option Right is
granted,  owns stock possessing more than 10% of the total combined voting power
of all  classes of stock  issued by the  Company or by any parent or  subsidiary
corporation,  within  the  meaning  of  Section  422(b)(6)  of the  Code  or any
successor provision thereto.

      3. Shares Available under the Plan.

      (a)  Subject to  adjustment  as  provided  in Section 9 of this Plan,  the
number of Common Shares which may be (i) issued or transferred upon the exercise
of Option Rights or Appreciation  Rights,  or (ii) awarded as Restricted  Shares
and released from  substantial  risk of forfeiture  thereof or Deferred  Shares,
shall not in the aggregate  exceed 450,000  Common  Shares,  which may be Common
Shares of original  issuance or Common  Shares held in treasury or a combination
thereof. For the purposes of this Section 3(a):

            (i)  Upon  payment  in cash of the  benefit  provided  by any  award
      granted under this Plan, any Common Shares that were covered by that award
      shall again be available for issuance or transfer hereunder; and

            (ii) Upon the full or partial  payment  of any  Option  Price by the
      transfer  to the  Company  of Common  Shares or upon  satisfaction  of tax
      withholding  obligations in connection with any such exercise or any other
      payment  made or  benefit  realized  under  this Plan by the  transfer  or
      relinquishment of Common Shares, there shall be deemed to have been issued
      or  transferred  under  this  Plan only the net  number  of Common  Shares
      actually  issued or  transferred  by the Company less the number of Common
      Shares so transferred or relinquished.

      (b) Notwithstanding  anything in Section 3(a) hereof, or elsewhere in this
Plan, to the contrary,  the aggregate number of Common Shares actually issued or
transferred  by the Company upon the  exercise of the  Incentive  Stock  Options
shall not exceed the total number of Common  Shares  first  specified in Section
3(a) hereof.

      (c) Notwithstanding  any other provision of this Plan to the contrary,  no
Participant  shall be granted  Option  Rights and  Appreciation  Rights,  in the
aggregate,  for more than  100,000  Common  Shares  during  any two  consecutive
calendar years, subject to adjustment as provided in Section 9 of this Plan.

      (d) Notwithstanding  any other provision of this Plan to the contrary,  no
Participant  shall be granted Deferred Shares,  in the aggregate,  for more than
100,000  Common Shares during any two  consecutive  calendar  years,  subject to
adjustment as provided in Section 9 of this Plan.

      4. Option Rights.  The Committee may from time to time authorize grants to
Participants of options to purchase Common Shares upon such terms and conditions
as the Committee may determine in accordance with the following provisions:

      (a) Each  grant  shall  specify  the  number of Common  Shares to which it
pertains.

<PAGE>

      (b) Each grant  shall  specify an Option  Price per  Common  Share,  which
Option Price, in the case of Nonqualified Stock Options,  shall be determined in
the sole and absolute  discretion of the Committee,  and which Option Price,  in
the case of Incentive Stock Options, shall be no less than the Fair Market Value
of the  Common  Shares  at the  Date of  Grant . In the  case  of any  grant  of
Incentive Stock Options to a 10% Shareholder, such Option Price per Common Share
may not be less than 110% of the Market Value per Share on the Date of Grant.

      (c) Each  grant  shall  specify  the form of  consideration  to be paid in
satisfaction   of  the   Option   Price  and  the  manner  of  payment  of  such
consideration,  which may  include  (i) cash in the form of currency or check or
other  cash  equivalent   acceptable  to  the  Company,   (ii)   nonforfeitable,
unrestricted Common Shares,  which are already owned by the Optionee,  (iii) any
other legal  consideration  that the Committee may deem  appropriate,  including
without  limitation  any form of  consideration  authorized  under  Section 4(d)
below, on such basis as the Committee may determine in accordance with this Plan
and (iv) any combination of the foregoing.

      (d) Any grant of a  Nonqualified  Option may provide  that  payment of the
Option  Price  may also be made in  whole  or in part in the form of  Restricted
Shares or other  Common  Shares  that are  subject  to a risk of  forfeiture  or
restrictions  on transfer.  Unless  otherwise  determined by the Committee on or
after the Date of Grant,  whenever  any Option Price is paid in whole or in part
by means of any of the forms of  consideration  specified in this Section  4(d),
the Common Shares received by the Optionee upon the exercise of the Nonqualified
Option  shall be subject  to the same risks of  forfeiture  or  restrictions  on
transfer as those that applied to the consideration surrendered by the Optionee;
provided,  however,  that such risks of forfeiture and  restrictions on transfer
shall apply only to the same number of Common Shares received by the Optionee as
applied to the  forfeitable  or  restricted  Common  Shares  surrendered  by the
Optionee.

      (e) Any grant may, if there is then a public market for the Common Shares,
provide  for  deferred  payment of the Option  Price from the  proceeds  of sale
through a broker  of some or all of the  Common  Shares  to which  the  exercise
relates.

      (f) Any grant may  provide  for the  automatic  grant to the  Optionee  of
Reload Option Rights upon the exercise of Option Rights, including Reload Option
Rights,  for Common Shares or any other noncash  consideration  authorized under
Sections  4(c) and (d)  above;  provided,  however,  that the term of any Reload
Option  Right shall not extend  beyond the term of the Option  Right  originally
exercised.

      (g)  Successive  grants  may be made to the same  Optionee  regardless  of
whether any Option Rights previously granted to the Optionee remain unexercised.

      (h)  Each  grant  shall  specify  the  period  or  periods  of  continuous
employment, or continuous engagement of the consulting services, of the Optionee
by the Company or any  Subsidiary  that are necessary  and/or the  individual or
aggregate  performance  criteria that must be satisfied before the Option Rights
or installments thereof shall become exercisable,  and any grant may provide for
the earlier exercise of the Option Rights in the event of a change in control of
the  Company  or  other  similar  transaction  or  event.   Notwithstanding  the
foregoing,  in the case of any grant of Incentive  Stock Options,  the aggregate
Market Value per Share on the Date of Grant of the Common Shares subject to such
Incentive  Stock Options (and all other  incentive  stock options granted by the
Company or any parent or subsidiary  corporation)  that are  exercisable for the
first time by the Optionee during any calendar year shall not exceed $100,000.

<PAGE>

      (i) Option Rights granted  pursuant to this Section 4 may be  Nonqualified
Options or Incentive Stock Options or combinations thereof.

      (j) Any  grant of an Option  Right  may  provide  for the  payment  to the
Optionee of dividend  equivalents thereon in cash or Common Shares on a current,
deferred or  contingent  basis,  or the  Committee may provide that any dividend
equivalents shall be credited against the Option Price.

      (k) No Option  Right  granted  pursuant to this Section 4 may be exercised
more than 10 years from the Date of Grant.  In the case of any  Incentive  Stock
Option  granted to a 10%  Shareholder,  such  Incentive  Stock Option may not be
exercised more than five years from the Date of Grant.

      (l) Each grant shall be evidenced by an agreement, which shall be executed
on behalf of the Company by any designated  officer thereof and delivered to and
accepted by the Optionee  and shall  contain  such terms and  provisions  as the
Committee may determine consistent with this Plan.

      5.  Appreciation  Rights.  The  Committee  may also  authorize  grants  to
Participants of Appreciation  Rights. An Appreciation  Right shall be a right of
the Participant to receive from the Company an amount, which shall be determined
by the Committee and shall be expressed as a percentage  (not exceeding 100%) of
the Spread at the time of the exercise of an  Appreciation  Right.  Any grant of
Appreciation  Rights under this Plan shall be upon such terms and  conditions as
the Committee may determine in accordance with the following provisions:

      (a) Any grant may specify that the amount  payable upon the exercise of an
Appreciation  Right may be paid by the  Company  in cash,  Common  Shares or any
combination  thereof and may (i) either grant to the  Participant  or reserve to
the Committee the right to elect among those  alternatives  or (ii) preclude the
right of the  Participant  to receive and the Company to issue Common  Shares or
other equity securities in lieu of cash.

      (b) Any grant may specify that the amount  payable upon the exercise of an
Appreciation  Right shall not exceed a maximum specified by the Committee on the
Date of Grant.

      (c) Each grant  shall  specify  (i) the  period or  periods of  continuous
employment, or continuous engagement of the consulting services, of the Optionee
by the Company or any  Subsidiary  that are necessary  and/or the  individual or
aggregate  performance  criteria that must be satisfied  before the Appreciation
Rights or installments  thereof shall become  exercisable  and (ii)  permissible
dates or periods on or during which Appreciation Rights shall be exercisable.

      (d) Any grant may specify that an Appreciation Right may be exercised only
in the event of a change in control of the Company or other similar  transaction
or event.

<PAGE>

      (e) Any grant may provide for the payment to the  Participant  of dividend
equivalents  thereon  in  cash  or  Common  Shares  on a  current,  deferred  or
contingent basis.

      (f) Each grant shall be evidenced by an agreement, which shall be executed
on behalf of the Company by any designated  officer thereof and delivered to and
accepted by the Optionee and shall  describe  the subject  Appreciation  Rights,
identify  any related  Option  Rights,  state that the  Appreciation  Rights are
subject to all of the terms and  conditions  of this Plan and contain such other
terms and provisions as the Committee may determine consistent with this Plan.

      (g) Regarding  Tandem  Appreciation  Rights only: Each grant shall provide
that a Tandem  Appreciation  Right may be exercised  only (i) at a time when the
related  Option Right (or any similar  right granted under any other plan of the
Company) is also exercisable and the Spread is positive and (ii) by surrender of
the related Option Right (or such other right) for cancellation.

      (h) Regarding Free-standing Appreciation Rights only:

            (i) Each  grant  shall  specify  in  respect  of each  Free-standing
      Appreciation  Right a Base Price per Common Share, which shall be equal to
      or greater than the Market Value per Share on the Date of Grant;

            (ii)  Successive   grants  may  be  made  to  the  same  Participant
      regardless of whether any  Free-standing  Appreciation  Rights  previously
      granted to the Participant remain unexercised; and

            (iii) No  Free-standing  Appreciation  Right granted under this Plan
      may be exercised more than 10 years from the Date of Grant.

      6. Restricted  Shares. The Committee may also authorize grants or sales to
Participants  of  Restricted  Shares  upon  such  terms  and  conditions  as the
Committee may determine in accordance with the following provisions:

      (a) Each grant or sale  shall  constitute  an  immediate  transfer  of the
ownership  of  Common  Shares  to  the  Participant  in   consideration  of  the
performance  of services,  entitling such  Participant  to dividend,  voting and
other  ownership  rights,  subject to the  substantial  risk of  forfeiture  and
restrictions on transfer hereinafter referred to.

      (b) Each grant or sale may be made without  additional  consideration from
the Participant or in consideration of a payment by the Participant that is less
than the Market Value per Share on the Date of Grant.

      (c) Each grant or sale shall provide that the  Restricted  Shares  covered
thereby  shall be  subject  to a  "substantial  risk of  forfeiture"  within the
meaning of Section 83 of the Code for a period to be determined by the Committee
on the  Date of  Grant,  and any  grant  or sale  may  provide  for the  earlier
termination of such period in the event of a change in control of the Company or
other similar transaction or event.

<PAGE>

      (d) Each grant or sale  shall  provide  that,  during the period for which
such substantial risk of forfeiture is to continue,  the  transferability of the
Restricted  Shares shall be  prohibited  or  restricted in the manner and to the
extent  prescribed by the Committee on the Date of Grant.  Such restrictions may
include without  limitation rights of repurchase or first refusal in the Company
or provisions subjecting the Restricted Shares to a continuing  substantial risk
of forfeiture in the hands of any transferee.

      (e) Any  grant or sale may  require  that  any or all  dividends  or other
distributions   paid  on  the  Restricted  Shares  during  the  period  of  such
restrictions  be  automatically  sequestered  and  reinvested on an immediate or
deferred  basis in additional  Common  Shares,  which may be subject to the same
restrictions as the underlying award or such other restrictions as the Committee
may determine.

      (f) Each grant or sale shall be evidenced by an agreement,  which shall be
executed  on  behalf  of the  Company  by any  designated  officer  thereof  and
delivered to and accepted by the  Participant  and shall  contain such terms and
provisions  as the Committee may  determine  consistent  with this Plan.  Unless
otherwise directed by the Committee,  all certificates  representing  Restricted
Shares,  together  with a stock  power  that shall be  endorsed  in blank by the
Participant with respect to the Restricted  Shares,  shall be held in custody by
the Company until all restrictions thereon lapse.

      7. Deferred  Shares.  The Committee may also authorize  grants or sales of
Deferred Shares to Participants  upon such terms and conditions as the Committee
may determine in accordance with the following provisions:

      (a) Each grant or sale shall  constitute  the  agreement by the Company to
issue  or  transfer   Common  Shares  to  the   Participant  in  the  future  in
consideration of the performance of services,  subject to the fulfillment during
the Deferral Period of such conditions as the Committee may specify.

      (b) Each grant or sale may be made without  additional  consideration from
the Participant or in consideration of a payment by the Participant that is less
than the Market Value per Share on the Date of Grant.

      (c) Each grant or sale shall  provide  that the  Deferred  Shares  covered
thereby  shall be  subject  to a Deferral  Period,  which  shall be fixed by the
Committee  on the Date of  Grant,  and any  grant or sale  may  provide  for the
earlier  termination of the Deferral  Period in the event of a change in control
of the Company or other similar transaction or event.

      (d) During the Deferral Period,  the Participant  shall not have any right
to transfer  any rights  under the subject  award,  shall not have any rights of
ownership  in the  Deferred  Shares  and  shall  not have any  right to vote the
Deferred  Shares,  but the Committee may on or after the Date of Grant authorize
the payment of dividend equivalents on the Deferred Shares in cash or additional
Common Shares on a current, deferred or contingent basis.

      (e) Each grant or sale shall be evidenced by an agreement,  which shall be
executed  on  behalf  of the  Company  by any  designated  officer  thereof  and
delivered to and accepted by the  Participant  and shall  contain such terms and
provisions as the Committee may determine consistent with this Plan.

<PAGE>

      8. Transferability.

      (a) No Option Right or  Appreciation  Right granted under this Plan may be
transferred  by a  Participant,  except (i) by will or the laws of  descent  and
distribution,  or (ii) in the case of an award  other  than an  Incentive  Stock
Option,  to one or more members of the  Participant's  immediate  family or to a
trust established for the benefit of the Participant  and/or one or more members
of the  Participant's  immediate family.  Option Rights and Appreciation  Rights
granted  under this Plan may not be exercised  during a  Participant's  lifetime
except by (i) the Participant,  (ii) a permissible transferee of the Participant
described  in the  preceding  sentence,  or  (iii)  in the  event  of the  legal
incapacity of the Participant or any such  transferee,  by the guardian or legal
representative of the Participant or such transferee (as applicable) acting in a
fiduciary capacity on behalf thereof under state law and court supervision.

      (b) Any grant made under this Plan may provide that all or any part of the
Common  Shares  that are to be issued or  transferred  by the  Company  upon the
exercise of Option Rights or Appreciation  Rights or upon the termination of the
Deferral Period  applicable to Deferred Shares,  or are no longer subject to the
substantial  risk of  forfeiture  and  restrictions  on transfer  referred to in
Section 6 of this Plan, shall be subject to further restrictions upon transfer.

      9. Adjustments.

      (a) The Committee may make or provide for such  adjustments  in the number
of Common Shares covered by outstanding Option Rights,  Appreciation  Rights and
Deferred  Shares granted  hereunder,  the Option Prices per Common Share or Base
Prices per Common Share  applicable to any such Option  Rights and  Appreciation
Rights,  and the kind of shares  (including  shares of another  issuer)  covered
thereby,  as the Committee may in good faith determine to be equitably  required
in order to prevent  dilution or  expansion of the rights of  Participants  that
otherwise would result from (i) any stock dividend,  stock split, combination of
shares,  recapitalization  or similar  change in the  capital  structure  of the
Company  or (ii)  any  merger,  consolidation,  spin-off,  spin-out,  split-off,
split-up, reorganization,  partial or complete liquidation or other distribution
of assets,  issuance of warrants or other rights to purchase  securities  or any
other  corporate  transaction  or event  having an effect  similar to any of the
foregoing.  In the event of any such  transaction  or event,  the  Committee may
provide in substitution  for any or all outstanding  awards under this Plan such
alternative  consideration  as it may in good faith  determine  to be  equitable
under the circumstances and may require in connection therewith the surrender of
all awards so  replaced.  Moreover,  the  Committee  may on or after the Date of
Grant  provide in the  agreement  evidencing  any award under this Plan that the
holder of the award may elect to  receive  an  equivalent  award in  respect  of
securities  of the  surviving  entity  of any  merger,  consolidation  or  other
transaction or event having a similar effect,  or the Committee may provide that
the holder will  automatically be entitled to receive such an equivalent  award.
The  Committee  may also make or provide  for such  adjustments  in the  maximum
numbers of Common  Shares  specified in Section 3 of this Plan as the  Committee
may  in  good  faith  determine  to be  appropriate  in  order  to  reflect  any
transaction or event described in this Section 9.

<PAGE>

      (b) If another  corporation  is merged  into the  Company  or the  Company
otherwise acquires another corporation,  the Committee may elect to assume under
this Plan any or all  outstanding  stock options or other awards granted by such
corporation  under any stock  option or other  plan  adopted by it prior to such
acquisition.  Such  assumptions  shall be on such  terms and  conditions  as the
Committee may determine; provided, however, that the awards as so assumed do not
contain any terms,  conditions or rights that are inconsistent with the terms of
this Plan. Unless otherwise  determined by the Committee,  such awards shall not
be taken into account for purposes of the limitations  contained in Section 3 of
this Plan.

      10.  Fractional  Shares.  The  Company  shall not be required to issue any
fractional  Common Shares  pursuant to this Plan.  The Committee may provide for
the elimination of fractions or for the settlement thereof in cash.

      11.  Withholding  Taxes.  To the extent  that the  Company is  required to
withhold federal,  state,  local or foreign taxes in connection with any payment
made or benefit  realized by a Participant  or other person under this Plan, and
the amounts  available to the Company for the withholding are  insufficient,  it
shall be a condition  to the receipt of any such payment or the  realization  of
any such benefit  that the  Participant  or such other person make  arrangements
satisfactory  to the Company for payment of the balance of any taxes required to
be withheld.  At the  discretion of the  Committee,  any such  arrangements  may
without limitation include voluntary or mandatory relinquishment of a portion of
any such payment or benefit or the surrender of outstanding  Common Shares.  The
Company  and  any  Participant  or such  other  person  may  also  make  similar
arrangements  with  respect to the  payment  of any taxes with  respect to which
withholding is not required.

      12. Certain Terminations of Employment or Consulting  Services,  Hardship,
and Approved Leaves of Absence. Notwithstanding any other provision of this Plan
to the  contrary,  in the  event of  termination  of  employment  or  consulting
services by reason of death,  disability,  normal  retirement,  early retirement
with the  consent  of the  Company,  termination  of  employment  or  consulting
services to enter public or military  service with the consent of the Company or
leave of absence  approved by the Company,  or in the event of hardship or other
special   circumstances,   of  a  Participant  who  holds  an  Option  Right  or
Appreciation Right that is not immediately and fully exercisable, any Restricted
Shares as to which the  substantial  risk of  forfeiture or the  prohibition  or
restriction  on transfer  has not lapsed,  any  Deferred  Shares as to which the
Deferral  Period is not  complete,  or any Common Shares that are subject to any
transfer  restriction  pursuant to Section 8(b) of this Plan,  the Committee may
take any action that it deems to be equitable under the  circumstances or in the
best interests of the Company, including without limitation waiving or modifying
any limitation or requirement with respect to any award under this Plan.

      13. Administration of the Plan.

      (a) This Plan shall be administered by the  Compensation  Committee of the
Board, which shall be composed of not less than two members of the Board, or, in
the absence of a  Compensation  Committee,  by the full Board.  At any time that
awards under the Plan are subject to Rule 16b-3, each member of the Compensation
Committee shall be a "non-employee director" within the meaning of such Rule. In
addition, at any time that the Company is subject to Section 162(m) of the Code,
each member of the Compensation  Committee shall be an "outside director" within
the meaning of such  Section.  A majority of the  Committee  shall  constitute a
quorum,  and the acts of the  members of the  Committee  who are  present at any
meeting thereof at which a quorum is present,  or acts  unanimously  approved by
the members of the Committee in writing, shall be the acts of the Committee.

<PAGE>

      (b) The  interpretation and construction by the Committee of any provision
of this Plan or any agreement,  notification or document evidencing the grant of
Option Rights,  Appreciation  Rights,  Restricted Shares or Deferred Shares, and
any determination by the Committee pursuant to any provision of this Plan or any
such  agreement,  notification or document,  shall be final and  conclusive.  No
member  of  the  Committee  shall  be  liable  for  any  such  action  taken  or
determination made in good faith.

      14. Amendments and Other Matters.

      (a) his Plan may be amended from time to time by the Committee;  provided,
however,  that except as expressly  authorized by this Plan,  no such  amendment
shall cause this Plan to cease to satisfy any applicable condition of Rule 16b-3
or cause  any  award  under  the Plan to cease  to  qualify  for any  applicable
exception under Section 162(m) of the Code,  without the further approval of the
stockholders of the Company.

      (b) With the  concurrence of the affected  Participant,  the Committee may
cancel any agreement  evidencing  Option Rights or any other award granted under
this Plan.  In the event of any such  cancellation,  the Committee may authorize
the granting of new Option  Rights or other awards  hereunder,  which may or may
not cover the same number of Common  Shares as had been covered by the cancelled
Option Rights or other award,  at such Option Price,  in such manner and subject
to such other terms,  conditions  and  discretion  as would have been  permitted
under this Plan had the cancelled Option Rights or other award not been granted.

      (c) The Committee may condition the grant of any award or  combination  of
awards  authorized  under  this  Plan  on  the  surrender  or  deferral  by  the
Participant  of his or her right to receive a cash  bonus or other  compensation
otherwise payable by the Company or a Subsidiary to the Participant.

      (d) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Company or any Subsidiary
and  shall  not  interfere  in any way with any right  that the  Company  or any
Subsidiary  would  otherwise have to terminate any  Participant's  employment or
other service at any time.

      (e) To the extent that any provision of this Plan would prevent any Option
Right  that was  intended  to  qualify  as an  Incentive  Stock  Option  from so
qualifying,  any such provision  shall be null and void with respect to any such
Option Right; provided,  however, that any such provision shall remain in effect
with respect to other Option Rights, and there shall be no further effect on any
provision of this Plan.

      (f) Any award that may be made  pursuant to an amendment to this Plan that
shall have been adopted without the approval of the  stockholders of the Company
shall be null and void if it is  subsequently  determined that such approval was
required under the terms of the Plan or applicable law.

      (g) Unless otherwise determined by the Committee, this Plan is intended to
comply  with Rule 16b-3 at all times that awards  hereunder  are subject to such
Rule.

Coates - STOCK INCENTIVE PLAN

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