Document:

EXHIBIT
      10.17

    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

    

    GREGORY
      COATES,
      an
      individual having an address at 1811 Murray Drive, Wall Township, New Jersey
      07719 (“Executive”)

    

    WHEREAS,
      the
      Company and the Executive 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,
      Executive 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 Employer
      hereby hires the Executive as a President Technology Division of the Company
      and
      Executive hereby affirms and accepts such position and employment by Employer
      for the Term (as defined in Article 3 below), 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 Executive as a member of the Employer’s Board of Directors
      throughout the Term.

     

    ARTICLE
      2

     

    DUTIES

     

    During
      the Term, Executive 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
      the Company’s Chief Executive Officer 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.
      Executive 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. Executive
      shall have those duties and powers as generally pertain to each of the offices
      of which he holds, as the case may be, subject to the control of the Board
      of
      Directors. Employer and Executive also agree that Executive shall serve as
      a
      member of the Employer’s Board of Directors during the Term.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      3

     

    TERM

     

    3.1 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, Executive 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 Salary
      and Equity Compensation

    

    (a) In
      consideration of Executive’s services to Employer, Employer shall pay to
      Executive an annual salary (the “Salary”)
      of Two
      Hundred Fifty Thousand Dollars ($250,000.00), 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 Seventy Nine Thousand Eight Hundred Ninety Eight Dollars
      ($79,898), 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.

    

    (b) In
      addition to the Salary, Employer shall issue to Executive a Stock Option to
      purchase 500,000 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.
      Executive 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 Executive 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 Executive 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
      Executive 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. 

     

    
      
         

      

      
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    (c) Executive
      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 Executive 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 therefrom, and; the Executive further acknowledges
      that he may be required to hold such securities for an indeterminable amount
      of
      time.

    

    (d)
       Executive
      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 during the Term, Executive 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 the 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, but only to the extent
      that
      the cost thereof is determined to be reasonable by the independent directors
      of
      the Board. The beneficiary of the life insurance policy shall be Executive’s
      spouse, and if he has no spouse as directed by Executive. Executive also agrees
      to cooperate with the Company in obtaining for the benefit of the Company “key
      man” life insurance on Executive’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 Executive 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. 

    

    4.5  Performance
      Bonus

     

    In
      addition to the compensation payable under Section 4.1, Executive shall be
      eligible to receive during the Term an annual discretionary performance bonus,
      the amount of which shall be determined by the Board of Directors based on
      the
      performance of the Executive during the period intended to be covered by such
      bonus (the “Performance Bonus”). Employer shall make a determination as to the
      sufficiency of its cash flow and profits for purposes of awarding a Performance
      Bonus, to Executive in connection with each performance period. Each year’s
      Performance Bonus shall be paid to the Executive within 110 days of the
      Employer’s fiscal year end.

    

    4.6 Other
      Compensation

     

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

     

    
      
         

      

      
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    ARTICLE
      5

     

    OTHER
      EMPLOYMENT

     

    During
      the Term, Executive 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 Executive’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 Executive. Nothing
      in this Agreement shall preclude Executive 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 Executive 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 Executive must obtain the prior written approval of the
                independent members of the Board of Employer and where it does not
                conflict with the interests of Employer;
                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

     

    Confidential
      Information

    

    
      	
              6.1

            	
              Executive
                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.

            

    

     

    
      
         

      

      
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Documents

    

    
      	
              6.2

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

            

    

     

    Inventions
      and Intellectual Property

    

    6.3 Inventions
      and Intellectual Property. The Company’s rights in patents, ideas, inventions,
      and other intellectual property rights, including 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 Executive that (i) do not relate to the CRSV System
      technology.

    

    Disclosure

    

    6.4 During
      the Term, Executive will promptly disclose to the Board of Directors full
      information concerning any interest, direct or indirect, of Executive (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 Executive 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, Executive 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 Executive is terminated for Cause, or if Executive
      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 Executive,
      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
      Executive 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 Executive.

     

    
      
         

      

      
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    ARTICLE
      8

     

    SURVIVAL

     

    Except
      as
      otherwise provided, Executive 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

     

    Executive
      acknowledges and agrees that the covenants and obligations of Executive 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, Executive agrees that if Executive
      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 Executive from committing any violation of the covenants
      and obligations referred to in this Article 9. Executive 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

     

    Termination
      by Executive

    

    10.1 Executive
      shall be entitled to terminate this Agreement, for any, or no reason, upon
      providing a 60 days’ written notice. 

    

    Executive
      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. 

    

    Good
      Reason

    

    
      	
              10.2

            	
              In
                this Agreement, “Good Reason” means, without Executive’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 Executive 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;

            

    

     

     

    
      
         

      

      
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              (iv)

            	
              any
                diminution in authority or responsibility to a non-executive
                position;

            

    

    

    The
      written notice given for Good Reason by Executive 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 Executive’s notice
      and cure the breach or other event giving rise to the termination.

    

    Termination
      by Employer

    

    10.3 Employer
      may terminate its employment of Executive under this Agreement only with Cause
      and only by written notice to Executive. For purposes of this Agreement, the
      term Cause for termination by Employer shall be (a) a conviction of or plea
      of
      guilty or nolo
      contendere by
      Executive to a felony, or any crime involving fraud, securities laws violations,
      embezzlement or moral turpitude; (b) the refusal by Executive 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)
      Executive’s willful or intentional misconduct in the performance of his duties
      and obligations; or (d) conduct that is known or that should have been known
      by
      Executive to be detrimental to the best interests of the Company, as determined
      by the independent members of the Board; (e) if Executive 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 Executive. The written notice given hereunder by Employer
      to
      Executive 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
      Executive’s receipt of such notice, during which time Executive shall have the
      right to respond to Employer’s notice and cure (if curable) the breach or other
      event giving rise to the termination. 

    

    Severance

    

    10.4 Upon
      a
      termination of this Agreement with Good Reason by Executive, Employer shall
      pay
      to Executive 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 Executive under
      Section 4.2 of this Agreement for a period of two years . 

    

    Termination
      Upon Death

    

    10.5 If
      Executive dies during the Term, this Agreement shall terminate, except that
      Executive’s legal representatives shall be entitled to receive any earned but
      unpaid compensation or expense reimbursement due hereunder through the date
      of
      death.

    

    Termination
      Upon Disability

    

    10.6
       If,
      during the Term, Executive suffers and continues to suffer from a “Disability”
(as defined below), then Employer may terminate this Agreement by delivering
      to
      Executive 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, Executive 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.

     

    
      
         

      

      
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    ARTICLE
      11

     

    PERSONNEL
      POLICIES, CONDITIONS, AND BENEFITS

     

    

    During
      the Term, Executive 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 Executive
      the
      right to use any accrued and unused vacation of Executive, or (ii) pay Executive
      for such vacation in a lump sum in accordance with its standard payroll
      practices. 

     

    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 and the Chief Executive Officer 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
      12

     

    BENEFICIARIES
      OF AGREEMENT

     

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

     

    ARTICLE
      13

     

    GENERAL
      PROVISIONS

     

    No
      Waiver

    

    13.1 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.

     

    
      
         

      

      
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    Modification

    

    13.2 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.

    

    Submission
      to Jurisdiction; Consent to Service of Process. 

    

    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.

     

    Entire
      Agreement

    

    13.4 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 Executive 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.

    

    Severability

    

    13.5
       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. 

    

    Headings

    

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

     

    
      
         

      

      
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    Independent
      Legal Advice

    

    13.7 Employer
      and Executive each acknowledge that he or it has obtained legal advice
      concerning this Agreement. 

    

    No
      Assignment

    

    13.8
       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/ Gregory
              Coates
	 	
              

              Barry
                C. Kaye

              Chief
                Financial Officer

            	 	 	
              

              Gregory
                Coates

            

    

     

    
      
         

      

      
        10EXHIBIT
      10.18

     

    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

    

    BARRY
      C. KAYE,
      an
      individual having an address at 15 Susan Drive, Marlboro, New Jersey 07746
      (“Executive”)

    

    WHEREAS,
      the
      Company and the Executive signed on October 18, 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 including a release by the parties of all claims relating to
      the
      Original Employment Agreement, the receipt and sufficiency of which are hereby
      acknowledged, Executive 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. 

    

    All
      compensation provisions of this Agreement shall be subject to the Employer
      determining that it has adequate working capital for payment of such
      compensation. However, Employer agrees that this provision shall not be used
      to
      unreasonably withhold payment of compensation to Executive.

    

    ARTICLE
      1

    EMPLOYMENT

    

    1.1 Employer
      hereby hires the Executive as the Treasurer and Chief Financial Officer of
      the
      Company and Executive hereby affirms and accepts such positions and employment
      by Employer for the Term (as defined in Article 3 below), 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 Executive as a member of the Employer’s Board of Directors
      throughout the Term. 

     

    ARTICLE
      2

    DUTIES

    

    During
      the Term, Executive shall serve Employer faithfully, diligently and to the
      best
      of his ability, under the direction and supervision of the Chief Executive
      Officer and the Board of Directors of Employer (“Board
      of Directors”)
      and
      the Company’s Chief Executive Officer 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.
      Executive 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. Executive
      shall have those duties and powers as generally pertain to each of the offices
      of which he holds, as the case may be, subject to the control of the Chief
      Executive Officer and the Board of Directors. 

     

    ARTICLE
      3

    TERM

    

    The
      term
      of this Agreement (the “Term”)
      shall
      have commenced on the Effective Date, and continue thereafter for a term of
      three (3) 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

    COMPENSATION

    

    4.1 Compensation

    

    (a) In
      consideration of Executive’s services to Employer, Employer shall pay to
      Executive an annual salary (the “Salary”)
      of One
      Hundred and Twenty Five Thousand Dollars ($125,000), 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, except with respect
      to amounts to be paid as set forth in this Section 4.1(a), payment of the Salary
      will not commence until the point in time that Employer’s projected available
      working capital is sufficient, as solely determined by the Board of Directors,
      to fund (x) the Company’s operations, and; (y) payment of the salary payments
      provided for in this Agreement (the “Payment
      Date”).
      Until
      the Payment Date, the Executive will be paid only the minimum wage, and will
      be
      entitled only to minimum benefits, both as permissible under applicable
      law.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b) In
      addition to the Salary, Employer shall issue to Executive a Stock Option to
      purchase 125,000 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 Board (the “Stock
      Option”).
      The
      stock options shall fully vest (i.e., become fully exercisable) as follows:
      25,000 stock options on April 30, 2007 and the balance in three equal
      installments on October 18, 2007, 2008 and 2009. Executive 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:

    

    
      	 	
              (i)

            	
              prior
                to one year from the effective date of this Agreement, by the Employer
                without Cause or by Executive for Good Reason, in which cases the
                first
                tranche of the Stock Option scheduled to vest on October 18, 2007,shall
                immediately and fully vest upon such termination;
                or

            

    

    

    (ii)
      after one year from the effective date of this Agreement, by the Employer
      without Cause or by Executive for Good Reason, 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 Executive 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
      Executive 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) Executive
      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 Executive 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 therefrom, and; the Executive further acknowledges
      that he may be required to hold such securities for an indeterminable amount
      of
      time. Employer agrees to include all shares of its Common Stock reserved for
      exercise of stock options under any of its then effective stock option plans
      in
      any undertaking to register its shares of Common Stock for any other purpose.
      

     

    4.2 Benefits

    

    Commencing
      on the Payment Date and thereafter during the Term, Executive shall be entitled
      to participate in all medical and other executive benefit plans, including
      vacation, sick leave, retirement accounts and other executive benefits provided
      by Employer to any of the other senior officers of Employer on terms and
      conditions no less favorable than those offered to such senior officers, other
      than the Coates members of the Coates family. 
      Such
      participation shall be subject to the terms of the applicable plan documents
      and
      Employer’s generally applicable policies. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4.3 Expense
      Reimbursement

    

    Employer
      shall reimburse Executive 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. Executive shall provide
      Employer with an estimate of anticipated travel and entertainment expenses
      to be
      incurred for approval in advance by the Chief Executive Officer, or his
      designee.

    

    
      	
              4.4

            	
              Performance
                Bonus

            

    

    

    In
      addition to the compensation payable under Section 4.1, Executive may be
      eligible to receive during the Term an annual discretionary performance bonus,
      the amount of which shall be determined by the Board of Directors based on
      the
      performance of the Executive during the period intended to be covered by such
      bonus (the “Performance Bonus”). Employer shall make a determination as to the
      sufficiency of its cash flow and profits for purposes of awarding a Performance
      Bonus, to Executive in connection with each performance period. Each year’s
      Performance Bonus shall be paid to the Executive within 110 days of the
      Employer’s fiscal year end.

    

    ARTICLE
      5

    OTHER
      EMPLOYMENT

    

    Until
      a
      reasonable amount of time after the Payment Date, but in no event more than
      three months thereafter, Executive shall devote his business and professional
      time and effort, attention, knowledge and skill to the management, supervision
      and direction of Employer’s business and affairs in accordance with the
      scheduling mutually agreed to between the Employer and Executive (the
“Initial
      Employment Period”).
      During the Initial Employment Period, nothing in this Agreement shall preclude
      Executive from pursuing other gainful employment, providing services to others
      on a consulting basis, or pursuing any other compensatory or for-profit
      activities, provided such other activities do not interfere with Executive’s
      performance of his duties hereunder and are not conducted on the Employer’s
      premises. Thereafter, Executive 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 Executive’s
      highest professional priority. Nothing
      in this Agreement shall preclude Executive 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 Executive must obtain the prior written approval of the independent
                members of the Board of Directors;

            

    

    

    
      	 	
              (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 Executive must obtain the prior written approval of the
                independent members of the Board 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

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              on
                his own time, 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

    

    Confidential
      Information

    

    6.1 Executive
      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.

    

    Documents

    

    6.2 Executive
      further agrees that all documents and materials furnished to Executive by
      Employer and relating to Employer’s business or prospective business are and
      shall remain the exclusive property of Employer. Executive shall deliver all
      such documents and materials, and all copies thereof and extracts therefrom,
      to
      Employer upon demand therefore and in any event upon expiration or earlier
      termination of this Agreement. Any payment of sums due and owing to Executive
      by
      Employer upon such expiration or earlier termination shall be conditioned upon
      returning all such documents and materials, and Executive expressly authorizes
      Employer to withhold any payments due and owing pending return of such documents
      and materials.

    

    Inventions

    

    6.3 All
      ideas, inventions, and other developments or improvements conceived or reduced
      to practice by Executive, alone or with others, during the Term of this
      Agreement, whether or not during working hours, that are within the scope of
      the
      business of Employer or that relate to or result from any of Employer’s work or
      projects or the services provided by Executive to Employer pursuant to this
      Agreement, shall be the exclusive property of Employer. Executive agrees to
      assist Employer, at Employer’s expense, to obtain patents and copyrights on any
      such ideas, inventions, writings, and other developments, and agrees to execute
      all documents necessary to obtain such patents and copyrights in the name of
      Employer.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Disclosure

    

    6.4 During
      the Term, Executive will promptly disclose to the Board of Directors full
      information concerning any interest, direct or indirect, of Executive (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 Executive 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, Executive 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  The
      foregoing covenant prohibiting competitive activities shall survive the
      termination of this Agreement and shall extend, and shall remain enforceable
      against Executive, for the period of two (2) years following the date this
      Agreement is terminated. In addition, during the two-year period following
      such
      expiration or earlier termination, neither Executive 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
      Executive.

     

    ARTICLE
      8

    SURVIVAL

    

    Except
      as
      otherwise provided, Executive 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. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      9

    INJUNCTIVE
      RELIEF

    

    Executive
      acknowledges and agrees that the covenants and obligations of Executive 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, Executive agrees that if Executive
      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 Executive from committing any violation of the covenants
      and obligations referred to in this Article 9. Executive 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

    

    Termination
      by Executive

    

    10.1 Executive
      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. In addition, Executive may terminate this Agreement anytime,
      upon providing 60 days’ written notice.

    

    Good
      Reason

    

    10.2 In
      this
      Agreement, “Good Reason” means, without Executive’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 Executive
      gives notice thereof:

    

    (i) any
      reduction in his then-current Salary or benefits, other than in connection
      with
      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, other than the Coates family members;

    

    
      	 	
              (ii)

            	
              any
                material failure to timely grant, or timely honor the Stock Option
                set
                forth in Article 4.1;

            

    

    

    
      	 	
              (iii)

            	
              failure
                to pay or provide required
                expenses;

            

    

    

    
      	 	
              (iv)

            	
              any
                diminution in authority or responsibility to a non-executive
                position;

            

    

    

    The
      written notice given for Good Reason by Executive to Employer shall specify
      in
      reasonable detail the cause 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 Executive’s notice
      and cure the breach or other event giving rise to the termination.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Termination
      by Employer

    

    10.3 Employer
      may terminate its employment of Executive under this Agreement with or without
      Cause at any time by written notice to Executive. For purposes of this
      Agreement, the term Cause for termination by Employer shall be (a) a conviction
      of or plea of guilty or nolo
      contendere by
      Executive to a felony, or any crime involving fraud, securities laws violations,
      embezzlement or moral turpitude; (b) the refusal by Executive to perform his
      material duties and obligations hereunder or to follow the proper instructions
      of the Board of Directors; (c) Executive’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 Executive to be detrimental to the best interests
      of
      the Company, as determined by the independent members of the Board; (e) if
      Executive 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 Executive. The written
      notice given hereunder by Employer to Executive shall specify that it is without
      Cause or if 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 Executive’s receipt of such
      notice, during which time Executive shall have the right to respond to
      Employer’s notice and cure (if curable) the breach or other event giving rise to
      the termination. In the case of termination without Cause, such termination
      notice shall not be effective until thirty (30) days after Executive’s receipt
      of such notice.

    

    Severance

    

    10.4 Upon
      a
      termination of this Agreement with Good Reason by Executive or without cause
      by
      Employer, Employer shall pay to Executive 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 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 Executive under Section 4.1 of this Agreement for a period
      of one (1) year and shall be paid subject to the Employer’s sufficiency of cash
      flow and working capital. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Termination
      Upon Death

    

    10.5 If
      Executive dies during the Term of this Agreement, this Agreement shall
      terminate, except that Executive’s legal representatives shall be entitled to
      receive any earned but unpaid compensation or expense reimbursement due
      hereunder through the date of death.

    

    Termination
      Upon Disability

    

    10.6
       If,
      during the Term, Executive suffers and continues to suffer from a “Disability”
(as defined below), then Employer may terminate this Agreement by delivering
      to
      Executive 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,
      Executive 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 Payment Date, also the Severance
      Payment. 

     

    ARTICLE
      11

    PERSONNEL
      POLICIES, CONDITIONS, AND BENEFITS

    

    Except
      as
      otherwise provided herein, Executive’s employment shall be subject to the
      personnel policies and benefit plans which apply generally to Employer’s
      Executives as the same may be interpreted, adopted, revised or deleted from
      time
      to time, during the Term of this Agreement, by Employer in its sole discretion.
      During the Term hereof, Executive 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
      Executive the right to use any accrued and unused vacation of Executive, or
      (ii)
      pay Executive for such vacation in a lump sum in accordance with its standard
      payroll practices. Executive shall take such vacation at a time approved in
      advance by the Board of Directors of Employer, which approval will not be
      unreasonably withheld but will take into account the staffing requirements
      of
      Employer and the need for the timely performance of Executive's
      responsibilities.

    

    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 and the Chief Executive Officer 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. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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

    

    No
      Waiver

    

    13.1 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.

     

    Modification

    

    13.2 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.

    

    Submission
      to Jurisdiction; Consent to Service of Process. 

     

    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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Entire
      Agreement

    

    13.4 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 Executive other than
      contained herein. 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, provided, however, that throughout the Term the Executive shall
      be entitled to be indemnified by the Company as the other officers and directors
      of the Company, including in the event that it is acknowledged or claimed that
      he were, on or after the Effective Time, a consultant rather than an employee
      of
      the Company.

    

    Severability

    

    13.5
       In
      the
      event a court of competent jurisdiction determines that a term or provisions
      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. 

    

    Headings

    

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

    

    Independent
      Legal Advice

    

    13.7 Employer
      and Executive each acknowledge that he or it has obtained legal advice
      concerning this Agreement.

    

    No
      Assignment

    

    13.8
       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/
              George J.
              Coates  	 	 	/s/
              Barry C.
              Kaye 
	 	
              
                

              

              George
                J. Coates

              
                Chief
                  Executive Officer

              

            	 	 	
              

              Barry
                C. Kaye

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