Document:

Exhibit 10.7

 

Portions herein identified by **** have been omitted pursuant
to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. A complete copy of
this document has been filed separately with the Securities and Exchange Commission.

 

ORIGINAL THREE OF FIVE

EQUIPMENT LEASING AGREEMENT

 

THIS AGREEMENT between POWERDYNE INTERNATIONAL, INC.,
together with its successors and assigns, if any, (sometimes hereafter referred to as "PDI" or "LESSOR")
a corporation organized and existing under the laws of the State of Delaware and having a principal place of business at Jefferson
Place, 100 Jefferson Boulevard, Suite 200, Warwick, Rhode Island 02888, U.S.A. and FARMACIA BRISAS DEL MAR, INC. together
with its successors and assigns, if any, (sometimes hereafter referred to as "BRISAS" or "LESSEE")
a CORPORATION organized and existing under the laws of the Territory of Puerto Rico and having a principal office at 901 Calle
2, Luquillo, Puerto Rico 00773-2463. Both PDI and BRISAS may sometimes be individually referred to as "Party"
or, collectively, as "Parties".

 

This Agreement contains the terms that apply to the lease of electrical
power generation equipment by PDI for use by BRISAS or LESSEE. Additional terms that apply to the leasing of the
said Equipment (term, billing rate, options, etc.) may be contained herein or on a separate schedule ("Schedule")
which shall be attached hereto and incorporated herein by reference or which may be attached hereto hereafter. This Agreement
is executed in quintuplicate numbered originals which shall be distributed as follows: two to LESSEE and three to PDI.

 

WITNESSETH WHEREAS, LESSEE wishes to lease PDI Power Solution
Equipment (as described more fully on Schedule, attached);

 

WHEREAS, PDI is able to supply such equipment to BRISAS
or LESSEE; NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and in any Ancillary Agreements
("Schedules" which are or may hereafter be attached hereto and incorporated by reference or which may be referenced only
and incorporated herein by such but which shall constitute a part hereof), and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, intending to be legally bound and to bind their respective successors and assigns,
the Parties do hereby mutually agree as follows:

 

1. DEFINITIONS:

(a) Equipment: the Powerdyne Power Solution (sometime "PDI
Power Solution" (as is described in Schedule A, attached).

(b) Rental term: The te1m as is provided in paragraph 2 hereof.

(c) Rental: Rent for the use of the Equipment as is provided in
paragraph 2 hereof.

(d) Agreement refers to this Agreement during its term and any extensions
thereto.

 

2. TERM, RATE, PAYMENT AND CREDITS:

(a) The term of this Agreement shall be a period of Five (5) years
beginning on the date that the Equipment is declared to have been commissioned by PDI unless otherwise specified in the
Schedule. The word "term" shall include such initial and any renewal term hereof.

(b) LESSEE shall pay to PDI at its address stated
above (or such other address as it may direct in writing- including wiring instructions), monthly (beginning on the first business
day of the month next succeeding the date of this Agreement and on the first business day of each successive month) the GREATER
of

1) ****

2) ****

Payments shall be in the amount set forth and due as stated in the
applicable Schedule. If any advance deposit (as stated in the Schedule) is payable, it shall be due when

the BRISAS or LESSEE executes this Agreement.

(c) Except as may be otherwise provided herein, the equipment rental
payment shall begin on the date when the Powerdyne Power Solution is commissioned, as determined by PDI in its sole discretion.

 

3. LESSEE RESPONSIBILITIES:

(a) LESSEE shall provide space for the PDI Power Solution
Equipment to be located in a location mutually acceptable to the Parties. This location shall be referred to

hereafter as "pad" or "the pad". This Pad shall
be leased by PDI from the LESSEE for a rental fee of $1.00 USD for the term of the lease.

(b) Access to the pad shall be unrestricted to PDI personnel
regardless of the time of day or night and work or maintenance of the unit may take place regardless of any operations taking place
by the LESSEE and persons in PDI's employ shall be unrestricted to enter upon the pad for any purpose, however, any entry
or attempt to enter the PDI Power Solution’s Equipment container by the LESSEE its agents, servants or employees (except
in the event of emergency or public safety) shall immediately void all warranties express or implied from PDI. PDI may access
the Equipment at any time without either notice or permission from LESSEE. PDI shall provide

LESSEE with reasonable notice of such access (which does
not need to be in writing) during normal business hours after such access.

(c) Measuring devices (including electric usage meters) are part
of the PDI Power Solution Equipment. The measuring devices shall be presumed to be accurate and shall be the sole measure of electricity
used by LESSEE.

(d) The LESSEE will keep the Equipment completely accessible
and unencumbered at the Equipment Location (specified in the applicable Schedule).

(e) The LESSEE's obligations and PDI's rights and
privileges as contained in this paragraph shall survive the expiration or other termination of this Agreement.

 

    	 

    	 

    

4. USE AND OPERATION:

(a) LESSEE agrees that the Equipment will be used for the
benefit of the LESSEE solely in the conduct of its business and in compliance with all applicable laws, ordinances, regulations,
tariffs and insurance policies and the LESSEE shall not discontinue use of the Equipment.

(b) LESSEE will not move any Equipment from the location
specified on the Schedule.

(c) The LESSEE will keep the Equipment free and clear of
all liens and encumbrances other than those which may result from PDI's acts.

(e) The LESSEE shall lawfully enjoy the peaceful and enjoyable
use and enjoyment of the Equipment (subject to the provisions of this Agreement) during the term of this

Agreement without interference by PDI, so long as the LESSEE
is in full compliance with the terms of the Agreement.

 

5. OPERATIONS AND MAINTENANCE:

(a) If any alterations or modifications to the Equipment are required
to comply with any applicable law, rule or regulation during the term of this Agreement, then such alterations shall be performed
by PDI or its agents, servants, contractors or employees and shall not be made by LESSEE Any plates, tags or other
identifying labels placed on the Equipment, showing ownership thereof by PDI, shall not be removed by LESSEE, or
by any other person and, if removed, may be reaffixed by PDI, at LESSEE's sole expense. If the Equipment is defaced by graffiti
or otherwise, during the term hereof or any extensions thereof, then such defacement may be repaired by PDI, at LESSEE's sole
expense.

(b) LESSEE will not attach or install anything on the Equipment.
The LESSEE will not attach or install any Equipment on the pad or to or in any other personal or real property adjacent
to the pad without PDI's prior written consent.

(c) PDI shall have the sole right to remove, replace or substitute
any of the Equipment provided under this Agreement. Replacement or substitution of Equipment components shall take place only during
shut-down periods for necessary and scheduled maintenance. Scheduled maintenance shut-downs shall occur monthly at such other time
that is mutually convenient for the Parties. The LESSEE shall be notified in advance of any shut-downs.

 

6. RETURN OF EQUIPMENT:

(a) At the expiration or termination of this Agreement or any Schedule,
PDI's Equipment shall be decommissioned. If required, the units of Equipment shall be uninstalled, disassembled and crated
if necessary by an authorized manufacturer’s representative or such other service person as is reasonably satisfactory to
PDI. PDI shall remove all equipment at its sole expense.

(b) All waste material and fluids must be removed from the Equipment
and disposed of by PDI in accordance with then current waste disposal laws at PDI's expense.

(c) Until the LESSEE has fully complied with the requirements
of Section 6(a) above, the LESSEE's payment obligation and all other obligations under this Agreement shall continue from
month-to-month notwithstanding any expiration or termination of the lease term. PDI may terminate the LESSEE's right
to use the Equipment upon ten (10) days' notice to LESSEE.

(d) LESSEE shall make the Powerdyne Power Solution System
Equipment available for on-site operational inspections by potential purchasers or successors to the LESSEE throughout the
term of this Agreement. PDI shall provide the LESSEE with reasonable written notice prior to any inspection. The LESSEE
shall provide reasonable and available personnel, power and other requirements necessary to demonstrate electrical and heat collection
systems for the unit.

 

7. DEFAULT AND REMEDIES:

(a) PDI may declare this Agreement in default if:

(i) LESSEE breaches its obligation to payment due hereunder
or under any Schedule hereto or any other sum when due and fails to cure the breach within ten (10) days;

(ii) LESSEE breaches any of its other obligations and fails
to cure that breach within thirty (30) days after written notice from PDI;

(iii) any representation or warranty made by LESSEE in connection
with this Agreement which is false or misleading in any material respect;

(iv) LESSEE or any guarantor or other obligor for the LESSEE's
obligations hereunder ("Guarantor") becomes insolvent or ceases to do business as a going concern;

(v) any Equipment is used illegally or in such a manner as to cause
unreasonable risk of harm as may be deemed by PDI in its sole discretion;

(vi) if LESSEE or any Guarantor is a natural person, any
death or incompetency of LESSEE or such Guarantor;

(vii) a petition is filed by or against LESSEE or any Guarantor
under any bankruptcy or insolvency laws and (in the event of an involuntary petition) the petition is not dismissed within forty-five
(45) days of the filing date;

(viii)
any Guarantor revokes or attempts to revoke its guaranty or fails to observe or perform any covenant, condition or agreement to
be performed under any guaranty or other related document to which it is a party; or

(ix) LESSEE defaults under any other material obligation
for making the payments due under this agreement in a timely fashion. The default declaration shall apply to all Schedules unless
specifically accepted by PDI.

(b) The foregoing remedies are cumulative, and any or all thereof
may be exercised instead of or in addition to each other or any remedies at law, in equity, or under statute. The LESSEE shall
pay PDI's actual attorney's fees and costs incurred in connection with the enforcement, assertion, defense or preservation
of PDI's rights and remedies under this Agreement, or if prohibited by law, such lesser sum as may be permitted. Waiver of any
default shall not be a waiver of any other or subsequent default.

    	 

    	 

    

 

8. ASSIGNMENT OF EQUIPMENT:

LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, ENCUMBER OR SUBLET ANY
EQUIPMENT OR THE INTEREST OF LESSEE IN THE EQUIPMENTWITHOUT THE PRIORWRITTEN CONSENT OF PDI.

PDI may, without LESSEE's consent, assign this Agreement,
any Schedule or the right to enter into a Schedule. LESSEE agrees that if it receives written notice of an assignment from
PDI, that LESSEE will make all payments and all other amounts payable under any assigned Schedule to such assignee
or as instructed by PDI.

 

The LESSEE also agrees to confirm in writing receipt of the
notice of assignment as may be reasonably requested by assignee.

LESSEE hereby waives and agrees not to assert against any
such assignee any defense, set-off, recoupment, claim or counterclaim which LESSEE has or may at any time have against PDI
for any reason whatsoever.

 

9. INDEMNIFICATION:

(a) LESSEE hereby agrees to indemnify PDI, its agents,
employees, successors and assigns from and against any and all losses, damages, penalties, injuries, claims, actions and suits,
including legal expenses, of whatsoever kind and nature arising out of or relating to the Equipment or this Agreement, except to
the extent the losses, damages, penalties, injuries, claims, actions, suits or expenses result from PDI's gross negligence
or willful misconduct ("Claims"). This indemnity shall include, but is not limited to PDI's strict liability
in Tort and any claims arising out of:

(i) the selection, manufacture, purchase, acceptance or rejection
of Equipment, the ownership of Equipment during the term of this Agreement, and the delivery, lease, possession, maintenance, uses,
condition, return or operation of Equipment (including, without limitation, latent, patent and other defects, whether or not discoverable
by PDI or LESSEE and any claim for patent, trademark or copyright infringement or environmental damage) or

(ii)
the condition of Equipment sold or disposed of after use by BRISAS or LESSEE or employees of BRISAS or LESSEE. BRISAS
or LESSEE shall, upon request, defend any actions based on, or arising out of, any of the foregoing.

 

10. REPRESENTATIONS AND WARRANTIES OF LESSEE:

LESSEE makes each of the following representations and warranties
to PDI on the date hereof and on the date of execution of each Schedule, amendment, renewal or addition hereto.

(a) LESSEE is a privately owned corporation and has adequate
power, authority and capacity to enter into, and perform under, this Agreement and all related documents (together, the "Documents").
LESSEE is duly qualified to do business wherever necessary to carry on its present business and operations, including the jurisdiction(s)
where the Equipment is or is to be located.

(b) This Agreement has been duly authorized, executed and delivered
by the LESSEE through its officers, agents or employees, duly authorized, and constitutes a valid, legal and binding agreement,
enforceable in accordance with its terms, except to the extent that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws.

(c) No approval, consent or withholding of objections is required
from any governmental authority or entity with respect to the entry into or performance by LESSEE of the Agreement except
such as has already been obtained.

(d) The entry into and performance by LESSEE of the Agreement
will not:

(i) violate any judgment, order, law or regulation applicable to
LESSEE or any provision of LESSEE's organizational documents; or

(ii) result in any breach of, constitute a default under or result
in the creation of any lien, charge, security interest or other encumbrance upon any Equipment pursuant to any indenture, mortgage,
deed of trust, bank loan or credit agreement or other instrument (other than this Agreement) to which LESSEE is a party
and

(iii) upon PDI's request, LESSEE will provide an opinion
letter from its Counsel certifying to the foregoing.

(e) There are no suits or proceedings pending or threatened in any
court or before any commission, board or other administrative agency against or affecting LESSEE, which if decided against
LESSEE will have a material adverse effect on the ability of LESSEE to fulfill its obligations under this Agreement.
LESSEE will provide an opinion letter from its Counsel certifying to the foregoing.

(f) The Equipment is and will remain tangible property of PDI.

(g) Each financial statement of LESSEE's financial condition
delivered to PDI will be prepared in accordance with generally accepted accounting principles consistently

applied. Since the date of the most recent financial statement provided,
there has been not been any materially adverse change.

(h)
The LESSEE's exact legal name is as set forth in the first sentence of this Agreement and LESSEE is and will be
at all times validly existing and in good standing under the laws of the State, Province, Territory or other legal political subdivision
of its incorporation or organization (specified in the first sentence of this Agreement).

(i) The Equipment will at all times be used for commercial or business
purposes only.

(j) The LESSEE is and will remain in full compliance with
all laws and regulations applicable to it including, without limitation, (i) ensuring that no person who owns a controlling interest
in or otherwise controls LESSEE is or shall be listed on the Specially Designated Nationals and Blocked Person List maintained
by the Office of Foreign Assets Control ("OFAC"), Department of the Treasury, and/or any other similar lists maintained
by OFAC pursuant to any authorizing statute, Executive Order or regulation or a person designated under Section 1(b), (c) or (d)
of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar Executive Orders, and
(ii) compliance with all applicable Bank Secrecy Act ("BSA") laws, regulations and government guidance on BSA
compliance and on the prevention and detection of money laundering violations.

 

11. PRE-DISPUTE ARBITRATION AGREEMENT:

(a) This agreement contains a pre-dispute arbitration clause. By
signing this Agreement, the parties agree as follows:

(1) All parties to this agreement are giving up the right to sue
each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which
a claim is filed.

(2) Arbitration awards are generally final and binding; a party's
ability to have a court reverse or modify an arbitration award is very limited.

(3) The ability of the parties to obtain documents, witness statements
and other discovery is may be more limited in arbitration than in court proceedings.

    	 

    	 

    

 

(4) The arbitrators do not have to explain the reason(s) for their
award unless, in an eligible case, a joint request for an explained decision has been submitted by all parties to the panel or
otherwise in compliance with the applicable arbitration rules of the forum.

(5) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the energy or equipment leasing industry.

(6) The rules of some arbitration forums may impose time limits
for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.

(7) The rules of the arbitration forum in which the claim is filed,
and any amendments thereto, shall be incorporated into this agreement.

(b) Any controversy or claim arising out of or relating to this
contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association, sitting
in Providence, Rhode Island, United States of America, in accordance with its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

(c) It is understood and agreed that if an error
or omission is made by PDI, hereunder, which results in the LESSEE bringing a claim for damages against PDI that
PDI's liability to the LESSEE shall be limited to an amount equal to charges paid by LESSEE for Equipment
rental hereunder.

 

12. MISCELLANEOUS:

(a) Notwithstanding any other provision herein to the contrary,
LESSEE may, without reason or cause, declare this Agreement to be terminated on the second anniversary of its execution.
Such declaration shall be made in writing, sent to PDI, by both certified mail, return receipt requested, postage prepaid
and by electronic mail (e-mail) which shall be transmitted contemporaneous with the postal mailing; both to be RECEIVED
by PDI, no later than two (2) calendar months prior to the said second anniversary hereof.

(b) The Equipment shall remain PDI's property and LESSEE
shall only have the right to use the Equipment during the term hereof. Any cancellation or termination by PDI of this
Agreement, any Schedule, supplement or amendment hereto, shall not release LESSEE from any then outstanding obligations to PDI
hereunder. All Equipment shall at all times remain personal property of PDI even though it may be attached to real property.
The Equipment shall not become part of any other property by reason of any installation in, or attachment to, other real or personal
property.

(c) All notices required to be given hereunder shall be deemed adequately
given if sent by overnight delivery service, by registered or certified mail (postage prepaid) or by email to the addressee at
its address stated herein, or at such other place as such addressee may have specified in writing. This Agreement and any Schedule
and Annexes thereto constitute the entire agreement of the parties with respect to the subject matter hereof.

(d) NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER
OF ANY OF ITS PROVISIONS OR CONDITIONS SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES
HERETO.

(e) All notices to LESSEE shall be sent to it at: and to
PDI at:

 

	FARMACIA BRISAS DEL MAR, INC

901 Calle 2

Loquillo, Puerto Rico 00773-2463

 

and by email to: fmb_inc@hotmail.com

 

 

 

	POWERDYNE INTERNATIONAL, INC.

Jefferson Place

100 Jefferson Blvd., Suite 200

Warwick, RI 02888

 

and by email to: lmadison@powedyne.com

 

 

(f)
If LESSEE does not comply with any provision of this Agreement, PDI shall have the right, but shall not be obligated,
to effect such compliance, in whole or in part. All reasonable amounts spent and obligations incurred or assumed by PDI in
effecting such compliance shall constitute an additional payment due to PDI. The LESSEE shall pay the additional
payment within five (5) calendar days after the date PDI sends written notice to LESSEE requesting payment. PDI's
effecting such compliance shall not be a waiver of LESSEE's default.

(g) Any payment or other amount not paid to PDI when due
shall bear interest, from the due date until paid, at the lesser of eighteen (18%) percent per annum or the maximum rate allowed
by law. Any provisions in this Agreement and any Schedule that are in conflict with any statute, law or applicable rule shall be
deemed omitted, modified or altered to conform thereto. Notwithstanding anything to the contrary contained in this Agreement or
any Schedule, in no event shall this Agreement or any Schedule require the payment or permit the collection of amounts in excess
of the maximum permitted by applicable law.

(h) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF RHODE ISLAND
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
REGARDLESS OF THE LOCATION OF THE EQUIPMENT AND THE PARTIES HERETO SUBMIT THEMSELVES TO THE JURISDICTION OF SUCH FORUM STATE.

(i) A copy of this Agreement, in translation, may be attached hereto
as an Exhibit. If so, it is provided for guidance and as an aid only and is NOT the Agreement. The Agreement is understood to be
the English original which shall have the parties' signatures. Any translation of this Agreement shall NOT be considered in the
construction of this original Agreement.

 

13. CANCELLATION:

(a) This agreement is subject to the term identified in Section
2(a) and can only be terminated for non-performance by PDI (except as provided in Section 12(a)). Termination by LESSEE shall be
made only upon payment by to PDI of all monies due for the remainder of the term of the initial Agreement or the remainder of the
term under additional agreement renewals.

(b) Any cancellation or termination by PDI, pursuant to the provisions
of this Agreement, any Schedule, supplement or amendment hereto, of the use of any Equipment hereunder, shall not release LESSEE
from any then outstanding obligations to PDI hereunder.

    	 

    	 

    

 

(c) To the extent that any Schedule would constitute chattel paper,
as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction, no security interest therein
may be created through the transfer or possession of this Agreement in and of itself without the transfer or possession of the
original Schedule executed pursuant to this Agreement and incorporating this Agreement by reference; and no security interest in
this Agreement and Schedule may be created by the transfer or possession of any counterpart of the Schedule other than the original
thereof, which shall be identified as the document marked "Original" and all other counterparts shall be marked "Duplicate".

 

IN WITNESS WHEREOF, BRISAS or LESSEE and PDI have caused this Agreement
to be executed by their duly authorized representatives in quintuplicate originals on the 11th day of March 2015.

 

POWERDYNE INTERNATIONAL INC. FARMACIA BRISAS DEL MAR, INC

James O'Rourke

its Chief Executive Officer duly authorized,

its President and Owner duly authorized

 

SCHEDULES

As per Attachment

1) List of Equipment in Powerdyne Power Solution:

2) Billing Rates:

A. ****

B. ****

C. PDI reserves the right to adjust the rates accordingly to reflect
any and all changes in local and federal taxes.

3) Term:

This agreement shall begin on the day of the commissioning of the
Equipment which shall be evidenced by a subsequent Statement of Commissioning provided by PDI and delivered to BRISAS
and shall continue for a period of five (5) years thereafter (except as may otherwise be provided in Section 12(a) hereof or
otherwise).EXHIBIT
10.30

 

THIS
NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)

 

US
$33,000.00 

 

COATES
INTERNATIONAL, LTD.

10%
CONVERTIBLE REDEEMABLE NOTE

DUE
FEBRUARY 12, 2017

 

FOR
VALUE RECEIVED, Coates International, Ltd. (the “Company”) promises to pay to the order of APG CAPITAL HOLDINGS, LLC
and its authorized successors and Permitted Assigns, defined below, ("Holder"), the aggregate principal face
amount of Thirty Three Thousand Dollars exactly (U.S. $33,000.00) on February 12, 2017 ("Maturity Date") and
to pay interest on the principal amount outstanding hereunder at the rate of 10% per annum commencing on February 12, 2016. The
interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration
and transfers of this Note. The principal of, and interest on, this Note are payable at 300 Cadman Plaza West, 12th Floor, Brooklyn,
NY 11201, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof
from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the
Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer
addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer
shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this
Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined
below) pursuant to paragraph 4(b) herein. Permitted Assigns means any Holder assignment, transfer or sale of all or a portion
of this Note accompanied by an Opinion of Counsel as provided for in Section 2(f) of the Securities Purchase Agreement.

 

     

     

    

 

This
Note is subject to the following additional provisions:

 

1.      This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith. To the extent that Holder subsequently transfers,
assigns, sells or exchanges any of the multiple lesser denomination notes, Holder acknowledges that it will provide the Company
with Opinions of Counsel as provided for in Section 2(f) of the Securities Purchase Agreement.

 

2.      The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

3.      This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act"),
applicable state securities laws and Sections 2(f) and 5(f) of the Securities Purchase Agreement. Any attempted transfer to a
non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company
and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner
hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected
or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section
4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prequalified prospective transferee of this Note,
also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion")
in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion
shall be the Conversion Date. All notices of conversion will be accompanied by an Opinion of Counsel.

 

4.      (a)      The
Holder of this Note is entitled, at its option, at any time commencing on or after the six month anniversary of the date of payment
of the purchase price of this note to the Company by the Holder, to convert all or any amount of the principal face amount of
this Note then outstanding into shares of the Company's common stock (the "Common Stock") at a price ("Conversion
Price") for each share of Common Stock equal to 62% of the lowest trading price of the Common Stock
as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon
which the Common Stock may be traded in the future ("Exchange"), for the twenty-five
prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice
of Conversion is delivered together with an Opinion of Counsel, by fax or other electronic method of communication to the Company
after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares
have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated
by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice
of Conversion. Accrued, but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions
of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the
extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all
steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The
Company agrees to honor all conversions submitted pending this increase. In the event the Company experiences a DTC “Chill”
on its shares, the conversion price shall be decreased to 52% instead of 62% while that “Chill” is in effect.
In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common
Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the
Company.

 

    	 	2	 

     

    

 

(b)      Interest
on any unpaid principal balance of this Note shall be paid at the rate of 10% per annum. Interest shall be paid by the Company
in Common Stock ("Interest Shares"). Holder may, at any time commencing on or after the six month anniversary of the
date of payment of the purchase price of this note to the Company by the Holder, send in a Notice of Conversion to the Company
for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall
be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

 

(c)      During
the first 6 months this Note is in effect, the Company may redeem this Note by paying to the Holder an amount equal to 150% of
the face amount plus any accrued interest. This Note may not be prepaid after the 6 month anniversary. The redemption must be
closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and
the Company may not redeem this Note.

 

(d)      Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series
of related transactions, (ii) a reclassification, capital reorganization (excluding an increase in authorized capital) or other
change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or
(iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of
items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request
of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with
the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion
Price.

 

(e)      In case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection
with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of
this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number
of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon
exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing
provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other
than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good
faith.

 

    	 	3	 

     

    

 

5.      No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6.      The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice
of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7.      The
Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the
Holder in collecting any amount due under this Note.

 

8.      If
one or more of the following described "Events of Default" shall occur:

 

(a)    The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or

 

(b)    Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or

 

(c)    The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or

 

(d)    The
Company shall (1) become insolvent (which does not include a “going concern opinion); (2) admit in writing its inability
to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its
dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part
of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against
it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

 

(e)    A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without
its consent and shall not be discharged within sixty (60) days after such appointment; or

 

(f)    Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of the Company; or

 

    	 	4	 

     

    

 

(g)      One
or more money judgments, writs or warrants of attachment, or similar process, in excess of one hundred thousand dollars ($100,000)
in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or

 

(h)      Defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or

 

(i)      The
Company shall have its Common Stock delisted from an exchange (including the OTC Markets exchange) or, if the Common Stock trades
on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934
act reports with the SEC;

 

(j)      Intentional
Deleted;

 

(k)     The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business
days of its receipt of a properly executed Notice of Conversion which includes an acceptable Opinion of Counsel expressing an
opinion which supports the removal of a restrictive legend; or

 

(l)      The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.

 

(m)     The
Company shall be delinquent in its periodic report filings with the Securities and Exchange Commission; or

 

(n)      The Company shall cause to lose the “bid” price for its stock in a market (including the OTCQB marketplace or
other exchange).

 

Then,
or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option
of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per
annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In
the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th
day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case
of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at
maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or
is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price
during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency
period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per
share.

 

    	 	5	 

     

    

 

If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

Make-Whole
for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the
conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder
incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable
to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:

 

Failure
to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]

 

The
Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day
from the time of the Holder’s written notice to the Company.

 

9.      In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired
thereby.

 

10.    Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.

 

11.    The
Company represents that it is not a “shell” issuer and that if it previously has been a “shell” issuer
that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a “shell
issuer.

 

12.    The
Company shall internally reserve 100,000,000 shares of its Common Stock for conversions under this Note (the “Share Reserve”).
Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer
agent costs associated with issuing and delivering the share certificates to Holder. If such amounts are to be paid by the Holder,
it may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount
of shares required if the note would be fully converted.  The Holder may reasonably request increases from time to time to
reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder
in connection with its conversions.

 

    	 	6	 

     

    

 

13.      The
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

 

14.      This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and
the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of
New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.

 

IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.

 

Dated:
November 12, 2016

 

	 	COATES
    INTERNATIONAL, LTD.
	 	 	 
	 	By:	/s/
    Barry C. Kaye
	 	 	Barry
    C. Kaye
	 	 	Chief
    Financial Officer

 

    	 	7	 

     

    

 

EXHIBIT
A

 

NOTICE
OF CONVERSION

 

(To
be Executed by the Registered Holder in order to Convert the Note)

 

The
undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Coates
International, Ltd. (“Shares”) according to the conditions set forth in such Note, as of the date written below.

 

If
Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.

 

Date
of Conversion: ______________________________________________________________

Applicable
Conversion Price: _______________________________________________________

Signature:
______________________________________________________________________

[Print
Name of Holder and Title of Signer]

Address:
__________________________________________________________________

 

 __________________________________________________________________

 

SSN
or EIN: ______________________

Shares
are to be registered in the following name: ________________________

 

Name:
______________________________________________________________

Address:
____________________________________________________________

Tel:
_______________________

Fax:
______________________

SSN
or EIN: ________________

 

Shares
are to be sent or delivered to the following account:

 

Account
Name: _________________________________________________________

Address:
_______________________________________________________________

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