Document:

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Exhibit 4.1       Letter Agreement

                       CONSULTING and MARKETING AGREEMENT

         THIS  AGREEMENT,  made and entered into as of the 25th day of May, 2004
by and between Edward Meyer, Jr. (EMJ) and Marx Toys & Entertainment ("MRXT")

                              W I T N E S S E T H:

         WHEREAS,  EMJ provides  consultation and advisory  services relating to
business management and marketing; and

         WHEREAS,  MRXT desires to utilize EMJ services in  connection  with its
operations.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants hereinafter set forth, EMJ and MRXT hereby agree as follows:

1.       Consulting and Marketing Services. Effective as of the 25th day of May,
         2004 by and subject to the terms and conditions herein  contained,  EMJ
         shall provide business management,  marketing consultation and advisory
         services to MRXT . Such services shall include:

         (a)      the preparation, implementation and monitoring of business and
                  marketing plans,

         (b)      advice concerning  production layout and planning and internal
                  controls,

         (c)      Assistance  in  Marketing  of products and setting up meetings
                  with prospective clients and representatives of the retail toy
                  industry,

         (d)      Assistance in internet related sales and marketing  strategies
                  and

         (e)      such other  managerial  assistance as EMJ shall deem necessary
                  or appropriate for MRXT's business.

                  In  addition,  EMJ agrees to act as Company  Contact  for MRXT
                  with regards to telephone  inquiries  and investor  relations,
                  and by  providing  this service  will be fully  authorized  to
                  represent MRXT in answering all investor related questions.

2.       Payment.  In  consideration  for  the  services  of EMJ to be  provided
         hereunder  for ONE YEAR,  MRXT agrees to transfer to EMJ  2,500,000(Two
         Million, Five Hundred Thousand) Free Trading shares of common stock.

                                       7
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3.       Personnel.  EMJ shall be an  independent  contractor  and no  personnel
         utilized  by EMJ in  providing  services  hereunder  shall be deemed an
         employee of MRXT.  Moreover,  neither EMJ nor any such person shall be
         empowered  hereunder to act on behalf of MRXT.  EMJ shall have the sole
         and exclusive  responsibility  and liability for making all reports and
         contributions,  withholdings,  payments  and  taxes  to  be  collected,
         withheld,  made and paid with respect to persons providing  services to
         be  performed  hereunder  on behalf of MRXT,  whether  pursuant  to any
         social security,  unemployment insurance,  worker's compensation law or
         other  federal,  state  or  local  law now in force  and in  effect  or
         hereafter enacted.

4.       EMJ  Assistance.  MRXT  agrees to  provide  EMJ with such  secretarial,
         clerical and bookkeeping  assistance as EMJ may reasonably  request and
         shall  otherwise  cooperate  with EMJ  personnel in their  rendering of
         services  hereunder.  MRXT  further  agrees to  provide  EMJ  monthly a
         certified shareholder's list and on a weekly basis the DTC sheets.

5.       Term and  Termination.  This Agreement shall be effective from the 25th
         day of May, 2004 and shall  continue in effect for a period of ONE YEAR
         thereafter.   This  Agreement  may  be  renewed  and  Optioned  for  an
         additional One Year term, upon mutual agreement of the parties.

6.       Non-Assignability. The rights, obligations, and benefits established by
         this  Agreement  shall not be assignable  by either party hereto.  This
         Agreement shall,  however, be binding and shall inure to the benefit of
         the parties and their successors.

7.       Confidentiality.   Neither  EMJ  nor  any  of  its  consultants,  other
         employees,   officers,   or  directors  shall  disclose   knowledge  or
         information concerning the confidential affairs of MRXT with respect to
         MRXT 's  business  or  finances  that was  obtained  in the  course  of
         performing services provided for herein.

8.       Limited  Liability.  Neither  EMJ  nor  any of its  consultants,  other
         employees,  officers or directors shall be liable for  consequential or
         incidental  damages  of any kind to MRXT  that may  arise  out of or in
         connection with any services performed by EMJ hereunder.

9.       Governing  Law.  This  Agreement  shall be governed by and construed in
         accordance  with the laws of the  State of New  Jersey  without  giving
         effect to the conflicts of law principles thereof or actual domicile of
         the parties.

10.      Notice.  Notice  hereunder  shall be in writing  and shall be deemed to
         have been given at the time when  deposited for mailing with the United
         States Postal  Service  enclosed in a registered or certified  postpaid
         envelope addressed to the respective party at the address of such party
         first above written,  or at such other address as such party may fix by
         notice given pursuant to this paragraph.

11.      No   other   Agreements.    This   Agreement   supersedes   all   prior
         understandings,  written or oral, and constitutes the entire  Agreement
         between the parties  hereto with respect to the subject  matter hereof.
         No waiver, modification or termination of this Agreement shall be valid
         unless in writing signed by the parties hereto.

                                       8
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IN WITNESS WHEREOF, MRXT and EMJ have duly executed this Agreement as of the day
and year first above written.

                                Company: MARX Toys & Entertainment Corp.

                                By: __________________________________
                                    Print: Robert Bambery, President / CEO

                                By: ____________________________________
                                    Print: Edward Meyer, Jr.

Mailing Instructions

                 Make certificates out to Edward Meyer, Jr. and
                         ship to the following address:

                                Edward Meyer Jr.
                               c/o Xcel Associates
                                 224 Middle Rd.
                                Hazlet, NJ 07730

               If you have any questions or concerns please call:

                                  732-264-3433.

                                       9Exhibit 10.9

                                ESCROW AGREEMENT

         AGREEMENT dated this __ day of June, 2004, among Coates Motorcycle
Company, Ltd., a Delaware corporation, having an address at Central Avenue,
Building 3, Farmingdale, New Jersey 07727 (the "Company"), Baird Patrick & Co.,
Inc., having an address at 20 Exchange Place, New York, New York 10005 (the
"Underwriter") and HSBC Bank USA, a banking corporation and trust company
organized and existing under the laws of the State of New York, having offices
at 452 Fifth Avenue, New York, New York 10018, as escrow agent (the "Escrow
Agent").

                               W I T N E S S E T H

         WHEREAS, the Company has prepared and filed a Form SB-2 registration
statement and amendments thereto (Commission File No. 333-109119) with the U.S.
Securities and Exchange Commission (the "SEC") (such registration statement,
together with any amendments, supplements and exhibits thereto is hereinafter
referred to collectively as the "Registration Statement") in connection with the
planned initial public offering of a minimum 550,000 "Units" and a maximum
2,000,000 Units, at the offering price of $10.25 per Unit, for sale to the
public (the "Investors"), with each Unit being comprised of 2 shares of the
Company's common stock and 1 common stock purchase warrant; and

         WHEREAS, the Company desires to establish a non-interest bearing trust
account with the Escrow Agent into which the Underwriter shall deposit the
Investors' checks or wire transfers for the payment of money made payable to the
order of the Company's Escrow Account (as defined herein), and the Escrow Agent
is willing to accept said checks, wire transfers for the payment of money in
accordance with the terms hereinafter set forth; and

         WHEREAS, the Company represents and warrants to the Escrow Agent that
it has not stated to any individual or entity that the Escrow Agent's duties
will include anything other than those duties stated in this Agreement; and

         WHEREAS, the Company warrants to the Escrow Agent that a copy of the
         Registration Statement and amendments thereto as well as the
         Subscription Agreements to be entered into between the Company and the
         Investors, and all other documents such party has delivered to
         prospective Investors that include the Escrow Agent's name and duties,
         have been attached hereto as Schedule 1; NOW, THEREFORE, IT IS AGREED
         AS FOLLOWS:

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1.       Delivery Of Escrow Funds

         (a)(i) The Underwriter shall deliver to the Escrow Agent checks
received from each prospective Investor made payable to the order of " Coates
Motorcycle Company, Ltd. Escrow Account." The checks shall be deposited into an
account at HSBC Bank USA entitled "Coates Motorcycle Escrow Account"(the "Escrow
Account"), or

         (ii) The Escrow Agent shall receive money directly from prospective
Investors by means of check or wire transfer. If by wire transfer, money shall
be wired to HSBC Bank USA, 452 Fifth Avenue, New York, New York 10018, ABA
Number 021-001-088, HSBC Bank USA as the Escrow Agent for the Company, Account
No.10-878618. All such money shall be deposited into the Escrow Account.

         (b) The collected funds deposited into the Escrow Account are
hereinafter referred to as the "Escrow Funds".

         (c) The Escrow Agent shall have no duty or responsibility to enforce
the collection or demand payment of any funds deposited into the Escrow Account.
If, for any reason, any check deposited into the Escrow Account shall be
returned unpaid to the Escrow Agent, the sole duty of the Escrow Agent shall be
to return the check to the Company.

         (d) Promptly after checks and wire transfers are delivered to the
Escrow Agent from the Underwriter, the Underwriter shall provide the Escrow
Agent with the Investor's original Subscription Agreement, which shall include
the Investor's name, address and other applicable information (social security
number or employer identification number, if appropriate). The Escrow Agent
shall hold the Subscription Agreements pending release of the Escrow Funds as
provided in Section 2 below.

2. Release of Escrow Funds. The Escrow Funds shall be paid by the Escrow Agent
in accordance with the following:

         (a) In the event that the Company and the Underwriter advise the Escrow
Agent in writing that the public offering described in the Registration
Statement has been withdrawn, the Escrow Agent shall promptly return the funds
paid by each prospective Investor, to said prospective Investor, without
interest.

         (b) If prior to 3:00 P.M. (local New York City time) on the day, 90
days following the effective date of the Registration Statement (the
"Termination Date"), the Escrow Agent receives written notification, in the form
of Exhibit A, attached hereto and made a part hereof, and signed by the Company
and the Underwriter, stating that the Termination Date has been extended to a
date stated therein (the "Final Termination Date") the date shall be so
extended.

         (c) Provided that the Escrow Agent does not receive a notice stated in
accordance with Section 2(a) above and there is at least $5,637,500 in the
Escrow Account on or prior to the Termination Date or the Final Termination Date
(if the Escrow Agent has, prior to the Termination Date, received a notice in
accordance with Section 2(b) hereof), the Escrow Agent shall promptly notify the
Company and the Underwriter of such fact in writing. The Escrow Agent shall

<PAGE>

promptly disburse the Escrow Funds by wire transfer in accordance with written
instructions signed by the Company and the Underwriter and delivered by the
Company and the Underwriter to the Escrow Agent. After any such disbursement
that is effected prior to the Termination Date or the Final Termination Date (if
the Escrow Agent has, prior to the Termination Date, received a notice in
accordance with Section 2(b) hereof), deposits may continue to be made to the
Escrow Account in accordance with Section 1 hereof and the Escrow Agent shall
make additional disbursements of the Escrow Funds in accordance with this
Section 2(c).

         (d) If by 3:00 P.M. (local New York City time) on the Termination Date
or the Final Termination Date (if the Escrow Agent has, prior to the Termination
Date, received a notice in accordance with Section 2(b) hereof), the Escrow
Agent has not received written instructions from the Company and the Underwriter
in accordance with Section 2(c) hereof, or there is a balance in the Escrow
Account of less than $5,637,500, the Escrow Agent shall promptly return the
Escrow Funds.

         (e) The Escrow Agent shall not be required to pay any uncollected funds
or any funds which are not available for withdrawal.

3. Acceptance by The Escrow Agent. The Escrow Agent hereby accepts and agrees to
perform its obligations hereunder, provided that:

         (a) The Escrow Agent may act in reliance upon any signature believed by
it to be genuine, and may assume that any person who has been designated by the
Company to give any written instructions, notice or receipt, or make any
statements in connection with the provisions hereof has been duly authorized to
do so. The Escrow Agent shall have no duty to make inquiry as to the
genuineness, accuracy or validity of any statements or instructions or any
signatures on statements or instructions. The names and true signatures of each
individual authorized to act on behalf of the Company and are stated in Schedule
A, which is attached hereto and made a part hereof.

         (b) The Escrow Agent may act relative hereto in reliance upon advice of
counsel in deference to any matter connected herewith. The Escrow Agent shall
not be liable for any mistake of fact or error of judgment or law, or for any
acts or omissions of any kind, unless caused by its willful misconduct or gross
negligence.

         (c) The Company agrees to indemnify and hold the Escrow Agent harmless
from and against any and all claims, losses, costs, liabilities, damages, suits,
demands, judgments or actual out-of-pocket expenses (including but not limited
to reasonable attorney's fees) claimed against or incurred by the Escrow Agent
arising out of related, directly or indirectly, to this Agreement, unless caused
by the Escrow Agent's willful misconduct or gross negligence.

         (d) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain
from taking any action or other than to keep safely the Escrow Funds until it
shall be directed otherwise by a court of competent jurisdiction, or (ii)
deliver the Escrow Funds to a court of competent jurisdiction.

<PAGE>

         (e) The Escrow Agent shall have no duty, responsibility or obligation
to interpret or enforce the terms of any agreement other than the Escrow Agent's
obligations hereunder, and the Escrow Agent shall not be required to make a
request that any monies be delivered to the Escrow Account, it being agreed that
the sole duties and responsibilities of the Escrow Agent shall be (i) to accept
checks and wire transfers delivered to the Escrow Agent for the Escrow Account
and deposit said checks and wire transfers into the Escrow Account, (ii) to
notify the Underwriter and the Company of its receipt of funds, (iii) to
disburse or refrain from disbursing the Escrow Funds in accordance with Section
2 hereof, provided that the checks received by the Escrow Agent have been
collected and are available for withdrawal.

4. Resignation and Termination of the Escrow Agent

         (a) Resignation. The Escrow Agent may resign at any time by giving 30
days' written notice of such resignation to the Underwriter and the Company.
Upon providing such notice, the Escrow Agent shall have no further obligation
hereunder except to hold the Escrow Funds which it has received as of the date
on which it provided the notice of resignation as depositary. In such event, the
Escrow Agent shall not take any action until the Underwriter and the Company has
designated a banking corporation, trust company, attorney or other person as
successor (the "Successor Escrow Agent"). Upon receipt of such written
instructions signed by the Underwriter and the Company and the Placement Agent,
the Escrow Agent shall promptly deliver the Escrow Funds, net of any outstanding
charges, to such successor and shall thereafter have no further obligations
hereunder. If such instructions are not received within 30 days following the
effective date of such resignation, then the Escrow Agent may deposit the Escrow
Funds and any other amounts held by it pursuant to this Agreement with a clerk
of a court of competent jurisdiction pending the appointment of a Successor
Escrow Agent. In either case provided for in this Section 4, the Escrow Agent
shall be relieved of all further obligations and released from all liability
thereafter arising with respect to the Escrow Funds and all income earned
thereon.

         (b) Termination. The Company may terminate the appointment of the
Escrow Agent hereunder upon written notice specifying the date upon which such
termination shall take effect. In the event of such termination, the Company
shall, within 30 days of such notice, appoint a Successor Escrow Agent and the
Escrow Agent shall, upon receipt of written instructions signed by the Company
and the Underwriter turn over to such Successor Escrow Agent all of the Escrow
Funds; provided, however, that if the Company fails to appoint a Successor
Escrow Agent within such 30-day period, such termination notice shall be null
and void and the Escrow Agent shall continue to be bound by all of the
provisions hereof. Upon receipt of the Escrow Funds, the Successor Escrow Agent
shall become the Escrow Agent hereunder and shall be bound by all of the
provisions hereof and the original Escrow Agent shall be relieved of all further
obligations and released from all liability thereafter arising with respect to
the Escrow Funds.

5. Notices. All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to be
duly given when received by hand delivery, by facsimile (when confirmed by
return facsimile) followed by first-class mail, by nationally recognized

<PAGE>

overnight courier service or by prepaid registered or certified mail, return
receipt requested to the addresses set forth below:

                  Coates Motorcycle Company, Ltd.
                  Central Avenue, Building 3
                  Farmingdale, New Jersey 07727
                  Attention:  George J. Coates, Chief Executive Officer

                  If to the Placement Agent:

                  Baird Patrick & Co., Inc.
                  20 Exchange Place
                  New York, New York 10005
                  Attention:  Mr. Andrew Dorman
                              Mr. Kenneth Greenbaum

                  If to the Escrow Agent:

                           HSBC Bank USA
                           452 Fifth Avenue
                           New York, New York 10018
                           Attention:  Corporate Trust Administration

6.       General

         (a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be entirely performed within such State.

         (b) This Agreement, together with the Exhibits and Schedules annexed
hereto, sets forth the entire agreement and understanding of the parties in
respect to the matters contained herein and supersedes all prior agreements,
arrangements and understandings relating thereto

         (c) All of the terms and conditions of this Agreement shall be binding
upon, and inure to the benefits of and be enforceable by, the parties hereto.

         (d) This Agreement may be amended, modified, superseded or canceled,
and any of the terms or conditions hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver of any party of any condition, or
of the breach of any term contained in this Agreement, whether by conduct or
otherwise, in any one or more instance shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement. No party
may assign any rights, duties or obligations hereunder unless all other parties
have given their prior written consent.

         (e) Of any provision included in this Agreement shall be determined by
a court of competent jurisdiction to be invalid or unenforceable, it shall not
affect the validity of the remaining provisions.

<PAGE>

         (f) This Agreement may be executed in several counterparts or by
separate instruments and all of such counterparts and instruments shall
constitute one agreement, binding on all of the parties hereto.

7. Fees. At the time the Escrow Account is opened, the Company shall pay the
Escrow Agent its fees and expenses as agreed to seperatly in writing (including
the reasonable fees and expenses of counsel to the Escrow Agent).

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first set forth above.

COATES MOTORCYCLE COMPANY, LTD.

By:
    ---------------------------
       George J. Coates
     Chief Executive Officer

UNDERWRITER:
BAIRD PATRICK & CO., INC.

By:
   ----------------------------
       Name:
       Title:

HSBC BANK USA, AS ESCROW AGENT

By:
    ---------------------------
      Name:
      Title:

<PAGE>

   EXHIBIT A

________ __, 200_

HSBC BANK USA
452 Fifth Avenue
New York, New York 10018
Attn: Corporate Trust

Dear Sirs:

         In accordance with the terms of Section 2(b) of that certain Escrow
Agreement dated JUNE __, 2004 by and among Coates Motorcycle Company, Ltd. (the
"Company"), Baird Patrick & Co., Inc. (the "Placement Agent") and HSBC Bank, USA
(the "Escrow Agent"), the Company and the Placement Agent hereby notify the
Escrow Agent that the Final Termination Date shall be ___________ __, 2004.

COATES MOTORCYCLE COMPANY, LTD.

By:____________________________________
       George J. Coates
       Chief Executive Officer

BAIRD PATRICK & CO., INC.

By:____________________________________
       Name:
       Title:

<PAGE>

SCHEDULE A

The Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by the following on behalf of COATES MOTORCYCLE

COMPANY, LTD.

------------------------------
George J. Coates                                     True Signature

------------------------------
Name                                                 True Signature

The Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by the following on behalf of BAIRD PATRICK & CO.,
INC.

___
                                                     ---------------------------
Name                                                 True Signature

_________________
                                                     ---------------------------
Name                                                 True Signature

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