Document:

Exhibit 10.6

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT  AGREEMENT is made as of the 5th day of March, 2004, (this
"Agreement") by and among COATES MOTORCYCLE COMPANY, LTD. (the "Company"),  with
its principal  offices  located  Central Avenue,  Building 3,  Farmingdale,  New
Jersey 07727 and GREGORY G. COATES (the  "Executive")  with address at 600 State
Highway Route 71, Apartment No. 1, Spring Lake, New Jersey 07762-2001.

                                   WITNESSETH:

      WHEREAS,  in recognition of Executive's  significant  contribution  to the
creation of shareholder  value and leadership  during his tenure as President of
the  Company  during its early  development  and  research  of the Coates  heavy
cruiser motorcycle product, the independent  directors of the Board of Directors
of the  Company  (the  "Committee")  wish to obtain his  commitment  to serve as
President of the Company for the next three years; and

      WHEREAS,  the  Committee has  determined  to offer  Executive the benefits
described in this  Agreement  to provide an incentive to encourage  Executive to
remain  in the  employ  of the  Company  so that the  Company  may  receive  his
continued  dedication  and assure the continued  availability  of his advice and
counsel and to assure that he will not provide services for a competing business
in accordance with the terms hereof; and

      WHEREAS,  Executive has agreed to serve the Company  pursuant to the terms
and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the parties to this
Agreement hereby agree as follows:

      1. Position/Duties.  The Company hereby agrees to employ the Executive and
the Executive agrees to serve the Company as President. The Executive shall have
the normal  duties,  responsibilities  and  authority  of the  President  of the
Company on terms no less favorable to Executive  than his present  conditions of
employment.  The Executive  shall devote so much of his time and attention as is
necessary to the business of the Company.  The Executive agrees to give his best
efforts in the performance of those duties  commensurate  with such position and
his experience.  Such employment  shall continue until  terminated in accordance
with Paragraph 3 hereof.

      2. Compensation and Perquisites.

      A. During  Employment.  The Company shall provide to the Executive and the
Executive shall receive the compensation and perquisites set forth below:

      (a)  A  base  annual   minimum   salary  of  One  Hundred  Fifty  Thousand
($150,000.00),  paid in fifty-two  (52) equally weekly  installments,  (together
with a bonus,  if any,  declared in accordance  with any incentive or bonus plan
which  may be  implemented  by the  Company  at the  discretion  of the Board of
Directors of the Company;

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      (b) Health, dental, medical, optical,  hospitalization,  401K plan, profit
sharing, life insurance and long term disability insurance coverage, as the same
may be from time to time adopted by the Company;

      (c)  Annual  merit  review  and  increase  in   conformity   with  Company
guidelines;

      (d)   Reimbursement   for  costs   associated  with  travel,   meals,  and
entertainment;

      (e) Paid vacation for a minimum of four (4) weeks per year.

      (f)  The  cost of  acquiring,  servicing  and  maintaining  an  automobile
commensurate with the Executive's current automobile;

      (g) Automobile insurance;

      (h) Liability insurance; and

      (i) Telephone, pager, computer, fax machine and other means of

      3. Termination of Employment

            I. By the Company.

            The Company shall have the right to terminate the  employment of the
Executive  only by  reason of the  following  events  or  circumstances  (each a
"Terminating Event"):

      (a) The Executive's death;

      (b) The  inability of the  Executive to perform the primary  duties of his
position  due to  sickness  or  injury,  which  requires  continuing  care  of a
physician or the inability of the  Executive to discharge  his  responsibilities
due to limitations on the amount of time he may devote to his employment because
of sickness or injury if such disability  shall continue for a period of one (1)
continuous  year.  The Company  shall be  entitled to select a physician  of its
choice to verify the  condition of the  Executive.  Should the physician who has
been selected by the Company and the Executive's  treating physician disagree as
to whether the  Executive is disabled,  a third  physician  shall be selected by
agreement  of the  parties.  The  determination  of any two (2) of the three (3)
physicians selected pursuant to this paragraph shall bind the parties. All costs
and expenses connected with the determination of disability under this Agreement
shall be borne by the Company;

      (c) The  conviction  of the  Executive  for a crime  that  either  (i) was
against the Company (ii) is premised  upon alleged  fraud or misconduct or (iii)
results in a sentence and actual detention of the Executive in a prison or other
correctional  facility  for a period in excess of three  hundred and  sixty-five
(365) consecutive days; or

      (d) A material breach of this Agreement by the Executive.

<PAGE>

            II. By the Executive.

      The Executive  shall have the right to terminate his  employment  with the
Company at any time,  subject to the following  conditions:  the Executive shall
give the Company nine month's advance  written  notice.  During the ensuing nine
(9) month period the  Executive  shall comply with the items and  provisions  of
this Agreement in return for which the Executive  shall, for that nine (9) month
period, continue to receive compensation pursuant to paragraph 2A.

      4. Effect of Termination.  Termination of the Executive by the Company for
any reason,  even cause,  except pursuant to Paragraph 3.I.(c) shall require the
Company to continue to pay to the Executive the then  existing  compensation  of
the Executive as set forth in paragraph 2 for a period of two (2) years from the
date of termination by the Company.

      5. Non-competition.  Executive acknowledges that he performs services of a
unique nature for the Company that are  irreplaceable,  and that his performance
of such services to a competing  business will result in irreparable harm to the
Company.  Accordingly,  during Executive's employment hereunder,  and continuing
for the period during which Executive remains a "control person" as that term is
defined  under  U.S  securities  laws or while  rendering  any  services  to the
Company,  its subsidiaries or affiliates that may follow any termination  hereof
(the "Restricted Period"), Executive agrees that Executive will not, directly or
indirectly,  own,  manage,  operate,  control,  be  employed  by  (whether as an
employee,  consultant,  independent contractor or otherwise,  and whether or not
for compensation) or render services to any person,  firm,  corporation or other
entity,  in  whatever  form,  engaged  in any  business  of the same type as any
business  in which the  Company or any of\ its  subsidiaries  or  affiliates  is
engaged on the date of termination  or in which they have proposed,  on or prior
to such date, to be engaged in on or after such date and in which  Executive has
been  involved  to any extent  (other  than DE INIMIS) at any time during the 12
-month period ending with the date of  termination  of employment or termination
of Mr. Coates' services  following any termination hereof , in any locale of any
country in which the Company conducts business. This shall not prevent Executive
from  owning  not more than one  percent of the total  shares of all  classes of
stock outstanding of any publicly held entity engaged in such business, nor will
it restrict  Executive from rendering services to charitable  organizations,  as
such term is defined in Section 501(c) of the Code.

      6. Non-Solicitation.

      During Executive's  employment with the Company and continuing  throughout
the  Restricted  Period,   Executive  agrees  that  he  will  not,  directly  or
indirectly,  individually or on behalf of any other person, firm, corporation or
other entity, knowingly solicit, aid or induce (a) any managerial level employee
of the Company or any of its subsidiaries or affiliates to leave such employment
in order to  accept  employment  with or  render  services  to or with any other
person,  firm,  corporation  or other  entity  unaffiliated  with the Company or
knowingly  take any action to materially  assist or aid any other person,  firm,
corporation  or other entity in  identifying  or hiring any such employee or (b)
any customer of the Company or any of its subsidiaries or affiliates to purchase
goods  or  services  then  sold by the  Company  or any of its  subsidiaries  or
affiliates from another person,  firm,  corporation or other entity or assist or
aid any other persons or entity in identifying or soliciting any such customer.

<PAGE>

      7. Confidential Information.

      Executive  agrees that he shall not,  directly or  indirectly,  use,  make
available,  sell, disclose or otherwise communicate to any person, other than in
the course of  Executive's  assigned  duties and for the benefit of the Company,
either during the period of  Executive's  employment or at any time  thereafter,
any  nonpublic,  proprietary  or  confidential  information,  knowledge  or data
relating  to the  Company,  any of its  subsidiaries,  affiliated  companies  or
businesses,  which shall have been  obtained  by  Executive  during  Executive's
employment by the Company. The foregoing shall not apply to information that (i)
was known to the public prior to its disclosure to Executive; (ii) becomes known
to the public  subsequent to disclosure to Executive  through no wrongful act of
Executive or any representative of Executive;  or (iii) Executive is required to
disclose by applicable law, regulation or legal process (provided that Executive
provides  the  Company  with prior  notice of the  contemplated  disclosure  and
reasonably  cooperates  with the Company at its expense in seeking a  protective
order or other  appropriate  protection  of such  information).  Notwithstanding
clauses  (i) and  (ii) of the  preceding  sentence,  Executive's  obligation  to
maintain such disclosed information in confidence shall not terminate where only
portions of the information are in the public domain.

      8. Notice. All notices, requests, demands, instructions, consents or other
communications  required or permitted to be given under this Agreement  shall be
in writing and shall be deemed to have been duly given if an when (a)  delivered
personally, (b) transmitted by prepaid, confirmed, telegram, telex or facsimile,
(c) mailed by first class  certified  mail,  return receipt  requested,  postage
prepaid, or (d) sent by a nationally recognized express courier service, postage
or  delivery  charges  prepaid,  and  receipt  confirmed,  to the parties at the
addresses  first stated above,  or to such other  addresses of which the parties
may give notice in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

      9.  Assignment;  Binding  Agreement.  The  Executive  may not assign  this
Agreement or his rights,  duties or obligations  hereunder.  The Company may not
assign this Agreement or any of its rights  hereunder  without the prior written
consent of the Executive which will not be unreasonably withheld. This Agreement
is binding  upon and shall inure to the benefit of the  Executive,  the Company,
and their respective successors and assigns.

      10. Entire Agreement;  Modification.  This Agreement represents the entire
understanding  of the parties with respect to the subject  matter  hereof.  This
Agreement may not be amended,  modified or  supplemented  at any time whatsoever
unless such amendment, modification or supplementation is reduced to writing and
executed by all of the parties hereto.

      11. No Waiver.  Except as otherwise  expressly provided herein, no failure
to exercise,  delay in  exercising  or single or partial  exercise of any right,
power or remedy by any party hereto shall  constitute a waiver  thereof or shall
preclude any other or further exercise of the same or any other right,  power or
remedy.

      12.  Validity.  The  invalidity  or  unenforceability  of any provision or
provision of this Agreement shall not affect the validity or  enforceability  of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

<PAGE>

      13.  Governing Law. This  Agreement is made under,  and shall be construed
and  enforced  in  accordance  with,  the laws of the State of New  Jersey.  The
parties hereto  irrevocably  consent to the exclusive  jurisdiction of the state
and federal courts located in the Sate of New Jersey in any action to which they
are parties, whether arising hereunder or otherwise.

      IN WITNESS  WHEREOF,  the parties hereto have hereunto set their hands and
seals,  or  caused  these  presents  to be  properly  executed  by their  proper
corporate officers the date and year first above written.

WITNESS                             EXECUTIVE

                                    /s/ Gregory G. Coates
--------------------------          --------------------------------------
                                    Gregory G. Coates

ATTEST:                             COATES MOTORCYCLE COMPANY, LTD.

                                    By: /s/ Robert G. McLean
--------------------------              ----------------------------------
                                        Robert G. McLean, Independent Director

ATTEST:

                                    By: /s/ Jeffrey L. England
--------------------------              ----------------------------------
                                        Jeffrey L. England, Independent Director

ATTEST:

                                    By: /s/ John Fager
--------------------------              -----------------------------------
                                        John Fager, Independent Director

COATES GREG EMPLOYMENT AGREEMENT - CMC 02-23Exhibit 10.7

                              CONSULTING AGREEMENT

THIS CONSULTING  AGREEMENT (the "Agreement") is dated as of October 29, 2003, by
and between Coates Motorcycle Company, Ltd., a Delaware corporation,  having its
principal offices located at Central Avenue, Building 3, Farmingdale, New Jersey
07727 (the "Client") and Chapman,  Spira & Carson, LLC, having an address at 110
Wall Street, 15th Floor, New York, New York 10005 (the "Consultant").

                              B A C K G R O U N D:

WHEREAS,  Consultant  is in the  business  of  providing  business  development,
strategic analysis of marketing opportunities and intellectual property services
to public and privately-held corporations; and

WHEREAS,  Client  desires  to retain  Consultant  to provide  certain  services,
identified  below,  as well as to advise and consult  with  Client's  management
concerning its business development, licensing opportunities for it intellectual
property,  and in  connection  with  the  development  and  implementation  of a
marketing program for Client's business, and;

WHEREAS,  Client and Consultant desire to set forth in this Agreement all of the
terms and provisions that shall govern their business relationship.

NOW,  THEREFORE,  in  consideration  of  the  mutual  promises,   covenants  and
agreements contained herein, and for other good and valuable consideration,  the
receipt and adequacy of which is expressly  acknowledged,  Client and Consultant
agree as follows:

      1. ENGAGEMENT OF CONSULTANT.

            Client hereby retains Consultant to:

      (a) Provide  general  marketing  and  licensing  consulting  advice with a
particular focus on the development of Client's intellectual property portfolio,
and;

      (b) Assist in developing an effective  licensing  program covering various
aspects of Client's  technology as well as  developing an overall  marketing and
sales  program for  Client's  products,  all of which  shall  include but not be
limited to the following:

      o     Review all of Client's intellectual  property assets,  including all
            patents issued, patents pending,  trademarks and trade names, issued
            or pending, worldwide;

      o     Based upon  Consultant's  analysis,  Consultant  shall  disclose  to
            Client   recommended   enhancements   and  supplements  to  existing
            intellectual  property that will add value and/or provide additional
            legal protection to Client's intellectual property;

<PAGE>

      o     Advise  Client on  strategic  licensing  opportunities  for Client's
            technology  that shall  provide  Client  with  potential  sources of
            revenue;

      o     Consultant shall introduce Client to potential licensees of Client's
            technology and, upon Client's  request,  engage in negotiations with
            such potential licensees to finalize licensing  agreements on behalf
            of Client;

      o     Consultant  shall analyze Client's  motorcycle  product and Client's
            current  plan of  operations  to  develop,  assemble  and sell heavy
            cruiser  motorcycles;  following  such  analysis,  Consultant  shall
            propose  to Client  what other  motorcycle  products  utilizing  the
            Coates CSRV System present the best opportunities to develop revenue
            streams and further enhance Client's marketplace identity, utilizing
            general  business  operational  factors  such as  production  costs,
            distribution, marketing, competition and ease of market entry;

      o     Consultant   shall  advise  and  consult  Client  on  marketing  and
            distribution   channels   for   selling   Client's   heavy   cruiser
            motorcycles;

      o     Consultant shall analyze the broadcast and print media opportunities
            for Client's  market program for its heavy cruiser  motorcycles  and
            recommend an appropriate media advertising program for this product,
            within a budget mutually agreed upon between Client and Consultant.

In the event  either  Client or  Consultant  desires to include  any  additional
projects,  reports,  or tasks to be undertaken by Consultant and included within
the scope of services set forth above,  the parties shall mutually agree on such
additional service and execute the appropriate  addendum to include them in this
Agreement.

      All the foregoing services are collectively referred to as the "Consulting
Services" hereinafter.

      2. COMPENSATION.

            A base fee for the Consulting  Services  provided during the Initial
Consulting  Period (as defined  below)  shall be eight  thousand  three  hundred
thirty three dollars ($8,333) per month,  fifty thousand  (50,000) shares of the
company's common stock and warrants to purchase one hundred  thousand  (100,000)
shares  of the  company's  common  stock at the  exercise  price of six  ($6.00)
Dollars per share.

                  All cash will be payable by wire to:

                  Chapman, Spira & Carson, LLC

                  Acct. # 140079969465 ABA # 021000128

                  Manhattan Bank Chase
                  1 Chase Manhattan Plaza
                  New York, N.Y. 10081

<PAGE>

                  All  stock  and  warrant  certificates  shall be issued in the
                  following name:

                  Chapman, Spira & Carson, LLC and send to:

                  110 Wall Street  (15th Floor)
                  New York, New York 10005

      3. TERM OF AGREEMENT, EXTENSIONS AND RENEWALS

            This  Agreement  shall have a minimum  term of six (6)  months  (the
"Consulting  Period").  Thereafter,  the Consulting Period will automatically be
extended on a month-to-month  basis (the "Extension Period") at the same rate as
that during the six (6) month  period at $8,333 per month unless  Consultant  or
Client shall serve written notice on the other party terminating this Agreement.
Such notice shall be in writing and shall be delivered at least  twenty-one (21)
days  prior to the end of the  Consulting  Period  or any  subsequent  extension
period.  In the event of termination  pursuant to this paragraph,  neither party
shall have any further rights or obligations  hereunder after the effective date
of such  termination  except  the  obligation  of Client to pay any fees due and
owing and to  reimburse  agreed upon costs and  expenses as provided for in this
Agreement.

      4. DUE DILIGENCE

            Client  shall  supply and  deliver  to  Consultant  all  information
relating to its business as may be reasonably  requested by Consultant to enable
Consultant to make such investigation of Client and it's business prospects, and
Client shall make  available  to  Consultant  names,  addresses,  and  telephone
numbers as Consultant may need to verify or  substantiate  any such  information
provided.

      5. BEST EFFORTS BASIS

            Consultant  agrees that it will at all times  faithfully  and to the
best of its  experience,  ability,  talents,  perform all the duties that may be
required of and from Consultant pursuant to the terms of this Agreement.  Client
specifically  acknowledges and agrees,  however, that the Consulting Services to
be provided by Consultant  shall be conducted on a "best  efforts" basis and has
not,  cannot,  and does not guarantee  that  Consultant's  efforts will have any
impact on Clients  business or that any subsequent  financial  improvement  will
result due to the Consultant's efforts. Client understands and acknowledges that
the success or failure of  Consultant's  efforts  will be  predicated  on Client
management  skills,  assets and operating  results along with its cooperation in
Consultant's efforts on Client's behalf.

      6. CLIENT'S RIGHT TO APPROVE TRANSACTIONS.

            Client  expressly  retains  the  right  for  approve,  in it's  sole
discretion,  each and every  transaction  introduced by Consultant that involves
Client as party to any  agreement.  Consultant  and Client  mutually  agree that
Consultant is not authorized to enter into agreements on behalf of Client.

<PAGE>

      7.  CLIENT  UNDER  NO  DUTY  OR  OBLIGATION  TO  ACCEPT  OR  CLOSE  ON ANY
TRANSACTIONS.

            It is mutually understood and agreed that Client is not obligated to
accept or close any proposal,  acquisition  or merger  transaction  submitted by
Consultant.

      8. PLACE OF SERVICES.

            The Consulting  Services  contemplated to be performed by Consultant
or its agents will be  performed  through  Consultant  offices in New York,  New
York, in the field where existing  opportunities may be located,  and such other
places deemed to be appropriate by Consultant.

      9. COSTS AND EXPENSES.

            Consultant  shall be  entitled to  reimbursement  of all agreed upon
third party and  out-of-pocket  expenses that Consultant may incur in performing
Consulting  Services  under  this  Agreement.  Such  reimbursement  shall  be in
addition to any fees otherwise earned by Consultant hereunder, and shall be paid
by Client within twenty-one (21) days of Consultant's  delivery of its statement
of costs.

      10. WORK STOPPAGE OR EARLY TERMINATION.

            Notwithstanding  anything to the contrary  contained herein,  Client
shall have the right to direct the work to be performed by Consultant  hereunder
on any matter.  In  addition,  Client shall have the right at any time to direct
Consultant  to cease work or abandon  its  efforts on  Client's  behalf,  and to
refrain  from  commencing  any new  work or  providing  any  further  Consulting
Services  hereunder.  If at any time Client directs Consultant to stop work, for
any reason other than a conflict of interest,  Consultant shall have thirty (30)
days   following   such   notice   termination   to   exercise   its   remaining
warrants/options, if applicable.

      11. NON-EXCLUSIVE SERVICES.

            Client  acknowledges  that  Consultant  and its agents are currently
providing  services  of the same or similar  nature to other  parties and Client
agrees that Consultant is not prevented or barred from rendering services of the
same  nature or similar  nature to any other  individual  or entity.  Consultant
understands  and  agrees  that  Client  shall not be  prevented  or barred  from
retaining  other persons or entities to provide  services of the same or similar
nature as those provided by Consultant.

      12. POTENTIAL CONFLICTS OF INTEREST.

            During  the  time of  this  Agreement,  Consultant  may  enter  into
agreement(s),  certain  activities or employment that will be in direct conflict
with  Client's  interest  and  Consultant's  obligations  under this  Agreement.
Client's sole remedy in the event of such conflict  shall be termination of this
Agreement and the immediate  cancellation of the option.  Consultant will advise
Client of its  position  with  respect  to any  activity,  employment,  business
arrangement  or  potential  conflict  of  interest  that may be relevant to this
Agreement.

<PAGE>

      13. REPRESENTATIONS AND WARRANTIES OF CLIENT TO CONSULTANT THAT:

            Client hereby represents and warrants to Consultant that:

            A.  Corporate  Existence.  Client is a corporation  duly  organized,
validly  existing,  and in good standing under the laws of the State of Delaware
with  corporate  power to own property  and carry on it's  business as it is now
being conducted and will be conducted in the future.

            B.  Financial  Statements.  Client has or will cause to be delivered
concurrently  with the execution of this  Agreement,  copies of it's most recent
financial  statements,  not to be more than ninety (90) days old,  together with
related  statements of Operations and Retained Earnings and Changes in Financial
Position for the same period (the "Client  Financials").  The Client  Financials
accurately  set forth the  financial  condition of Client as of the dates of the
Client Financials and all the financial  statements  described in this paragraph
have been prepared in conformity with generally accepted accounting  principals,
applied on a consistent  basis,  and present  fairly the  financial  position of
Client as of their  date.  Client  will  immediately  advise  Consultant  of any
material  change  in  Client's  Company  and  potential   inability  to  perform
objectives in a business like manner.

            C. No Conflict.  This Agreement has been duly executed by Client and
said execution and performance of this Agreement will not violate,  or result in
a breach of, or  constitute a default in any  Agreement,  instrument,  judgment,
decree or order to which  Client is a party or to which  Client is subject,  nor
will such  execution and  performance  constitute a violation or conflict of any
fiduciary duty to which Client is subject.

            D.  Non-disclosure.  Client  agrees  not  to  disclose  Consultant's
proprietary techniques,  technologies and methodologies without prior permission
in writing.

      14. REPRESENTATION AND WARRANTIES OF CONSULTANT.

            Consultant hereby represents and warrants to Client that:

            A.  Prior  Experience.   Consultant  has  extensive  experience  and
currently  enjoys  a  relationship  with  investment  banking  firms,  financial
analysts,   intellectual   property   attorneys,   industrial   and   government
organizations  and it has  successfully  performed the services  contemplated by
this Agreement for the benefit of other companies within the last year.

            B. No  Litigation.  Consultant  is not a defendant,  nor a plaintiff
against whom a counterclaim  has been asserted,  in any  litigation,  pending or
threatened, nor has any material claim been made or asserted against Consultant,
nor are there any  proceedings  threatened  or pending  before any U.S. or other
territorial,  federal, state or municipal government, or any department,  board,
body or agency  thereof,  involving  as of the date  hereof,  that may entitle a
successful litigant to a claim against any of Consultant's assets.

<PAGE>

            C. Information.  No representation or warranty contained herein, nor
any  statement  in any  document,  certificate  or schedule  furnished  or to be
furnished  pursuant to this agreement by Consultant,  or in connection  with the
transaction  contemplated hereby,  contains or contained any untrue statement of
material fact.

            D. Inside Information - Securities Laws Violations. In the course of
the  performance  of  Consultant's  duties,   Consultant  may  become  aware  of
information that is considered  "inside  information"  within the meaning of the
Federal  Securities Laws, Rules and Regulations.  Consultant  acknowledges  that
it's use,  or the use of such  information  to purchase  or sell  securities  of
Client,  or it's  affiliates,  or to inform any other  party with a view to buy,
sell, or otherwise deal in Client's security is prohibited by law.

            E. Agreement  Does Not  Contemplate  Corrupt  Practice - Domestic or
Foreign. All payments under this Agreement constitute  compensation for services
performed  and this  Agreement  and all  payments,  and the use of  payments  by
Consultant,  do and shall  not  constitute  an  offer,  payment  or  promise  or
authorization  of payment of any money or gift to an official or political party
of, or candidate for political office in any  jurisdiction  within or outside of
the  United  States.  These  payments  may not be used to  influence  any act or
decision of an official,  party,  or candidate to use his / her / it's influence
with a  government  to  assist  Client in  obtaining,  retaining,  or  directing
business  to Client or any  person or their  corporate  entity.  As used in this
Paragraph, the term "official" means any officer or employee of a government, or
any person  acting in an official  capacity for or on behalf of any  government;
the term "government" applies to any department, agency, or instrumentality of a
government.

            F. Subsequent  Events.  Consultant will notify Client if, subsequent
to the date hereof,  Consultant  incurs  obligations  that could  compromise its
efforts and obligations under this Agreement.

      15. CONSULTANT NOT AN AGENT OR EMPLOYEE.

            Consultant's  obligations under this Agreement consist solely of the
Consulting Services described herein. In no event shall Consultant be considered
to act as the employee or agent of Client or otherwise represent or bind Client.
For the purposes of this Agreement Consultant is an independent contractor.  All
final  decisions with respects to acts of Client or its  affiliates,  whether or
not made  pursuant to or in  reliance  on  information  or advice  furnished  by
Consultant hereunder, shall be those of Client or such affiliates and Consultant
shall under no circumstances be liable for any expense incurred or loss suffered
by Client as a consequence of such action or decisions.

      16. MISCELLANEOUS.

            A.  Authority.  The execution and performance of this Agreement have
been  duly  authorized  by  all  requisite   corporate  action.  This  Agreement
constitutes a valid and binding obligation of the parties hereto.

            B. Amendment.  This Agreement may be amended or modified at any time
or in any matter  only by an  instrument  in  writing  executed  by the  parties
hereto.

<PAGE>

            C.  Waiver.  All the rights and  remedies of either party under this
Agreement  are  cumulative  and not  exclusive  of any other rights and remedies
provided by law. No delay or failure on the part of either party in the exercise
of any right or remedy arising from a breach of this Agreement  shall operate as
a waiver of any subsequent  right or remedy arising from a subsequent  breach of
this Agreement.  The consent of any party where required hereunder to any act of
occurrence shall not be deemed to be a consent to any other act of occurrence.

            D. Assignment:

                  (i) Neither  this entire  Agreement  nor any right  created by
this  Agreement  shall be  assignable  by either party without the prior written
consent of the other, except by the law of succession.

                  (ii) Except as limited by the provisions of subparagraph  (1),
the  Agreement  shall be binding on and inure to the  benefit of the  respective
successors and assignees of the parties.

                  (iii)  Nothing in this  Agreement,  expressed  or implied,  is
intended  to confer  upon any person , other than the  parties  hereto and their
successors, any right or remedies under this Agreement.

            E. Notices.  Any other  communication  required or permitted by this
Agreement  must be in  writing  and shall be deemed to be  properly  given  when
delivered  in person to an officer of the other  party,  when  deposited  in the
United  States  mails or  transmittal  by  certified  registered  mail , postage
prepaid,  or when  deposited  by a public  telegraph  company  for  transmittal,
charges  prepaid,  provided that the  communication  is addressed to (or to such
person as designated by Client to receive such notice):

                      (I)        In the case of Consultant to:
                                 Chapman, Spira & Carson LLC 110 Wall
                                 Street, (15th Floor) New York, NY
                                 10005 Telephone: (212) 425-6100 Fax:
                                 (212) 425-6229

                      (ii)        In the case of Client to:
                                  Coates Motorcycle Company, Ltd.
                                  2100 Highway 34 & Ridgewood Rd.
                                  Wall Township, NJ 07719

            F.  Headings and Captions.  The headings of Paragraphs  are included
solely for convenience. If a conflict exists between any heading and the text of
this Agreement, the text shall control.

            G.  Entire  Agreement.  This  instrument  and the  exhibits  to this
instrument  contain the entire Agreement between the parties with respect to the
transaction  contemplated by the Agreement.  It may be executed in any number of
counterparts but the aggregate of the counterparts  together constitute only one
and the same instrument.

<PAGE>

            H. Partial Effect or  Invalidity.  In the event that any one or more
of the  provisions  contained  in  Agreement  shall  for any  reason  held to be
invalid, illegal, or unenforceable in any respect, such invalidity,  illegality,
or unenforceability shall not effect any other provisions of this Agreement, but
this  Agreement  shall be  construed  as if it  never  contained  such  invalid,
illegal, or unenforceable provisions.

            I. Controlling Law. The validity,  interpretation and performance of
this Agreement  shall be controlled by and construed under the laws of the state
of New York  applicable  to  agreements  made and wholly to be performed in such
state.

            J. Attorney's Fees. If any action at law or in equity,  including an
action for declaratory relief, is brought to enforce or interpret the provisions
of this  Agreement,  the  prevailing  party shall be entitled to recover  actual
attorney's fees from the other party.  The attorney's fees may be ordered by the
court in the trial of any action  described in this paragraph or may be enforced
in a separate action in order to determine attorney's fees.

            K. Time is of the Essence.  Time is of the essence of this Agreement
and of each and every provision hereof.

            L. Mutual Cooperation.  The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transactions described herein.

            M. Further  Actions.  At any time and from time to time,  each party
agrees,  at it's or their  expense,  to take  actions and to execute and deliver
documents  as may be  reasonably  necessary to  effectuate  the purposes of this
Agreement.

            N. Indemnification. Client and Consultant agree to indemnify, defend
and to hold each other  harmless from and against all demands,  claims  actions,
losses, damages, liabilities, costs and expenses, including without limitations,
interest, penalties and attorney's fees and expenses asserted against or imposed
or  incurred  by either  party by reason  of or  resulting  from a breach of any
representation, warranty, covenant, condition or agreement of the other party to
this Agreement.

            O.  Facsimile  Counterparts.  If a party  signs this  Agreement  and
transmits an electronic  facsimile of the signature page of the other party, the
party who receives the transmission may rely upon the electronic  facsimile as a
signed original of this Agreement.

            P.  Arbitration.  In the event of a dispute,  the parties agree that
this  Agreement  shall  be  resolved  by  arbitration  in  accordance  with  the
requirements of the American Arbitration Association in New York City, New York,
and  judgment  upon the  award  rendered  may be  entered  in any  court  having
jurisdiction  thereof.  The  Client  shall be  responsible  for any  legal  fees
incurred  by  Consultant  in the  event of an  arbitration  that is  decided  in
Consultant's favor.

<PAGE>

      IN WITNESS  WHEREOF,  the parties have executed this Agreement on the date
hereinabove written.

         By:  /s/ Peter P. Green III
              -------------------------------------------
              Peter P. Green III - Managing Director
              Chapman, Spira & Carson LLC

         By:  /s/ George J. Coates
              -------------------------------------------
              George J. Coates - CEO
              Coates Motorcycle Company, Ltd.

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