COATES INTERNATIONAL LTD \DE\ (Form: 8-K, Received: 04/11/2008 17:01:12)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): April 11, 2008

COATES INTERNATIONAL, LTD.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-33155	22-2925432
(Commission File Number)	(IRS Employer Identification No.)

Highway 34 & Ridgewood Road

Wall Township, New Jersey 07719

(Address of principal executive offices)

(732) 449-7717

(Registrant's Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

FORWARD LOOKING STATEMENTS

This Form 8-K and other reports filed by Registrant from time to time with the Securities and Exchange Commission (collectively the "Filings") contain or may contain forward looking statements and information that are based upon beliefs of, and information currently available to, Registrant's management as well as estimates and assumptions made by Registrant's management. When used in the filings the words "anticipate", "believe", "estimate", "expect", "future", "intend", "plan" or the negative of these terms and similar expressions as they relate to Registrant or Registrant's management identify forward looking statements. Such statements reflect the current view of Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to Registrant's industry, Registrant's operations and results of operations and any businesses that may be acquired by Registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although Registrant believes that the expectations reflected in the forward looking statements are reasonable, Registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

In April 2008, the Registrant entered into a conditional second license agreement with Well to Wire Energy, Inc. ("WWE") for the territory of the United States (the “US License”). The US License provides for a license fee of $50 million and annual minimum purchases of Coates CSRV Systems as a condition of exclusivity. The US license has been deposited in to an escrow account and the grant under the license is not effective until the conditions for release from escrow are satisfied.

The escrow agreement was established to provide a more secure mechanism for the Registrant to collect payments due under both the prior Canadian licensing and research and development agreements and the initial monies due under the new $50 million US License (the “Escrow Agreement”). The Escrow Agreement provides that the US License shall be held until WWE remits payment of the initial monies due thereunder (the “Release Payment”). While the US License is held in escrow there shall not be any grant of license to WWE. The initial monies due under the US License consist of an initial down payment of $1 million and an additional $8.5 million in payment of the balance of the monies due to the Registrant in connection with the license for the territory of Canada, including the Canadian license agreement and the research and development agreement (the “Canadian Agreements”). WWE is expected to make non-refundable periodic payments to the Company in unspecified amounts as partial payments of the Release Payment until the Release Payment has been paid in full. Upon full satisfaction of the Release Payment, WWE would be granted a license for the territory of the United States under the US License agreement.

WWE is a privately held company and its ability to make the license payments due to the Registrant and to honor the minimum purchase requirements under the licenses is dependent on the success of its continued efforts to raise new equity capital. Thus far, WWE has made nonrefundable payments to the Registrant totaling $1.5 million in prior years and $375,000 in 2008. To the extent that WWE is not successful or experiences delays in raising such additional new equity capital, the Registrant's cash flow, results of operations and financial position could be adversely affected.

Under the Escrow Agreement, WWE is required to remit the full amount of the Release Payment by June 30, 2008 (the “Payment Period”). Should WWE be unable to make the Release Payment within the Payment Period, the Canadian license agreement shall automatically become non-exclusive. However, provided that WWE shall have paid at least $500,000 on account of the Release Payment, the Payment Period shall be extended until September 30, 2008 (the “Extended Payment Period”). Should WWE be able to make the entire Release Payment within the Extended Release Period, the exclusivity of the Canadian license agreement shall be reinstated.

The failure of WWE to make the entire Release Payment within the Payment Period or within the Extended Payment Period should it be extended, shall constitute a breach of the Escrow Agreement, the Canadian license agreement and the US License. In such event, the Registrant would be entitled to (i) retain any and all monies received from WWE and (ii) immediately, without notice to WWE, cancel the Escrow Agreement, the Canadian license agreement and the US License without providing WWE any right of redemption or reinstatement.

The US License would, if WWE is able to satisfy the Escrow Agreement release provisions, grant to WWE the right to use, sell and lease Licensed Products, manufactured by the Registrant as the power source for the generation of electrical energy for the oil and gas industry and from landfills. Licensed Products consist of the CSRV Valve Systems, CSRV Valve Seals, CSRV Rotary Valve Spheres, CSRV Valve Components and CSRV Engines for the Oil and Gas Industry and Landfills.

The manufacture of any Licensed Products by WWE is prohibited. WWE is required to procure all internal combustion engines incorporating the CSRV Valve System from the Company or its designee. The license granted to WWE is exclusive within the Territory, provided that WWE satisfies the minimum annual purchase commitment of 120 internal combustion engines incorporating the CSRV Valve System, the Coates Engines and all component parts. The agreement also grants WWE a right of first refusal in the event that the Company negotiates an offer with another third party for a worldwide license to use the Licensed Product.

After payment of the Release Payment required under the Escrow Agreement, the remaining unpaid balance of the US License fee of $49 million is payable in quarterly installments commencing 180 days from the earlier to occur of (i) the date the third prototype engine provided for in the Canadian Agreements is collected by WWE, or (ii) April 30, 2008. The amount of the quarterly installment payments shall be equal to 5% of WWE’s net profits over the next five years; however, in any event, the entire balance of the licensing fee must be paid in full on or before February 12, 2012.

Acceleration of the balance of the licensing fee payments shall be required in the event that WWE completes a stock offering or private placement offering. The entire unpaid balance of the licensing fee shall become due and payable if WWE raises $100 million or more from such offering. If WWE raises $25 million or less from any such offering, then WWE must pay us 20% of the amount raised towards the licensing fee.

Pricing of the Licensed Products shall be set forth in a separate agreement to be executed between the parties. The Company is solely responsible for protecting the Patent Rights, as defined, in connection with the Licensed Products at its own cost and expense. The term of the agreement shall expire upon the expiration of the last to expire of the patents comprising the Patent Rights.

ITEM 9.01.

FINANCIAL STATEMENTS AND EXHIBITS.

(a)

Financial statements of business acquired:

None

(b)

Exhibits

Exhibit No.	Description
10.1	License Agreement between the Company and Well to Wire Energy, Inc. as of January 29, 2008 and executed on April 7, 2008
10.2	Escrow Agreement between the Company and Well to Wire Energy, Inc. dated April 11, 2008
99.1	Press Release

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	COATES INTERNATIONAL, LTD.

April 11, 2008	By:	/s/ George J. Coates
		George J. Coates
		President and Chief Executive Officer

Exhibit 10.1

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (“Agreement”), dated as of this 29 th day of January, 2008 by and between COATES INTERNATIONAL, LTD ., having its principal place of business at Route #34 and Ridgewood Road, Wall Township, New Jersey 07719 (hereinafter referred to as Licensor) and WELL TO WIRE ENERGY INC ., having its principal place of business at Suite 17, 1700 Varsity Estate Drive, NW, Calgary, Alberta, Canada T3B2W9 (hereinafter referred to as Licensee).

BACKGROUND

WHEREAS, Licensor owns and/or has the right to license certain Patent Rights and Technical Information (as hereinafter defined) relating to Licensed Products (as hereinafter defined) used in the design and construction of internal combustion engines employing spherical rotary valves (the “Coates’ Spherical Rotary Valve System”);

WHEREAS, Licensor desires to grant to Licensee certain rights under such Patent Rights and Technical Information to use the Licensed Product in the Territory (as hereinafter defined).

WHEREAS, Licensee desires the right to use the Licensed Product in the Territory in accordance with the terms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the agreements and covenants, and other good and valuable consideration, and the mutual promises of the performance of the undertakings herein, it is agreed by and between the parties hereto as follows:

ARTICLE 1 – DEFINITIONS

In this Agreement, including the recitals:

1.1 “CSRV Valve System ” shall mean a cylinder head or heads for an internal combustion engine manufactured in accordance with the Patent Rights and/or Technical Information of the Coates’ Spherical Rotary Valve System.

1.2 “ CSRV Valve Seal ” shall mean a valve seal for use with a CSRV Rotary Valve Sphere in the Coates Spherical Rotary Valve System.

1.3 “ CSRV Rotary Valve Sphere ” shall mean a spherical rotary valve used in the CSRV Valve System in accordance with the Technical Specifications.

1.4 “ CSRV Components ” shall mean the parts that when assembled comprise the Licensed Product.

1.5 “Coates CSRV Engine for Oil and Gas Industry and Landfills ” shall mean a device consisting of an Engine linked to an electric generator for direct use in all applications including the pumping and the compression of oil or gas, and the generation of electric power and engines powered by gas or other fuels including, but not limited to, gas produced by or from a landfill in that industry.

1.6 “ Dollars” and “$” shall mean the official currency of the Government of the United States of America in readily available funds.

1.7 “ Engine” or “Engines ” shall mean all internal combustion engine(s) employing the Coates Spherical Rotary Valve System.

1.8 “ Field of Use ” shall mean the use of the Coates CSRV Engine System as the power source for the generation of electrical energy for the oil and gas industry and from landfills.

1.9 “Coates Engine ” shall mean an internal combustion engine that employs or is comprised by one or more Coates patented components which produces kinetic energy or electric power.

1.10 “Improvement ” shall mean any improvement, change or modification to the Engines, generators, Coates Co-Generation System, the CSRV System, the CSRV Valve Seal, CSRV Components and/or CSRV Rotary Valve System, which may be developed, created or acquired by either party to this Agreement, but only to the extent that the same comes within the scope of one or more claims under the Patent Rights.

1.11 “ Licensed Product ” shall mean any component of an internal combustion engine that incorporates the Patent Rights and/or Technical Information in its design and manufacture incorporating the components identified in Sections 1.1, 1.2, 1.3, 1.4 and 1.5.

1.12 “Licensee ” shall mean the Licensee as specified on the title page of this Agreement.

1.13 “Licensor” shall mean Licensor as specified on the title page of this Agreement.

1.14 “Patent Rights ” shall mean the patents and patent applications, as listed in Appendix 1.14, and all patents which may be issued pursuant to such patent applications, together with any continuations or continuations-in-part thereof, and all patents issuing thereon or therefrom including reissues, patents of addition and any registration or configuration patents corresponding thereto.

1.15 “ Regulatory Approval ” shall mean, with respect to the United States of America, all governmental approvals necessary for Licensee to use the Licensed Product in that country.

1.16 “ Regulatory Authority ” shall mean, with respect to the United States of America the governmental authority responsible for granting Regulatory Approval.

1.17 “ Technical Information ” shall mean all information imparted by Licensor to Licensee, together with all proprietary information, trade secrets, skills and experience, recorded and unrecorded, accumulated from time to time and during the term of this Agreement, relating to a Licensed Product and all designs, drawings, specifications and the like, owned by Licensor, insofar as the same relate to a Licensed Product.

1.18 “ Technical Specifications ” shall mean the specifications and performance parameters developed by Licensor for the Licensed Product.

1.19 “ Territory” shall mean the United States of America.

ARTICLE II – LICENSE GRANTED

2.1	LICENSE GRANTED TO LICENSEE

Subject to the terms and conditions set forth herein, the Licensor hereby grants an exclusive license to use, sell and lease Licensed Products, manufactured by Licensor or sold and supplied exclusively by Licensor to Licensee, falling within the scope of the Patent Rights and/or Technical Information, within the Territory and with respect to the Field of Use. The Licensee shall be prohibited from manufacturing the Coates CSRV Engine Systems or the components thereof for any use. As a condition for this License, the Licensee must purchase internal combustion engines incorporating the CSRV Valve System, the Coates Engines and all component parts from the Licensor or its designee and from no other person or entity. The Licensee must purchase at least one hundred and twenty (120) internal combustion engines incorporating the CSRV Valve System, the Coates Engines and all component parts from the Licensor during each calendar year during the term of the License; if Licensee does not do so, the License granted pursuant to this Agreement shall automatically become non-exclusive.

2.2	LIMITATION OF LICENSE GRANTED

Licensee shall have the right to sell, use and lease, the Licensed Product or components of the Licensed Product, and/or Technical Information for itself and its customers.

2.3	IMPROVEMENTS

If Licensee has heretofore brought about or shall hereafter during the term of this Agreement or within two (2) years after the expiration of this Agreement bring about any Improvement on the licensed product, Licensee shall promptly disclose such Improvement to Licensor. If such Improvement is approved for a patent, Licensor shall have the first option within the time prescribed by law to file a patent application thereon in Licensor’s name. The expense of filing, securing and maintaining patent protection on such Improvements shall be borne by Licensor and the Licensee will have a royalty free license to use each such Improvement. If Licensor shall elect not to file any such patent application, then Licensee shall have the option to do so in its own name and at its own expense.

If Licensee obtains a patent for an Improvement, Licensee shall grant and hereby grants to Licensor an exclusive, royalty-free license together with the right to grant sublicenses to other licensees under each of said patent applications and any patents issuing as set forth in this Section.

2.4	PATENT MARKINGS

Licensee shall not alter, remove, obscure or cover patent markings or any other writing or printed words identifying Licensor as owner of the pertinent patents and/or patent applications.

2.5	FIRST REFUSAL

If Licensor or the Coates Trust, in its sole discretion, decides to offer for sale a worldwide license to use the Licensed Product and the Licensor negotiates an offer from a third party to purchase such right, before executing a license agreement with that third party, Licensor and the Coates Trust shall first offer to Licensee that right to the license upon terms no less favorable than the Licensor was willing to accept from that third party for use in the oil and , gas , and industry and in relation to landfills. The Licensee shall have ninety (90) days from receipt of written notice from the Licensor to exercise that right in writing and to agree to indemnify and hold harmless the Licensor from, and against, any and all losses, liabilities, damages and costs (including attorney’s fees) incurred by Licensor as a result of the Licensor foregoing the licensing relationship with that third party.

ARTICLE III – TECHNICAL COOPERATION AND APPROVALS

3.1	TECHNICAL COOPERATION

Upon request by Licensee, Licensor shall furnish to Licensee technical assistance. Such technical assistance will be provided under the terms of a separate engineering contract.

3.2	REGULATORY APPROVALS

For the full term of this Agreement, Licensee assumes complete responsibility, at Licensee’s sole cost and expense, for obtaining Regulatory Approval, where required, from each Regulatory Authority, for the use of Licensed Products.

Licensor agrees to provide Licensee with all reasonable assistance and cooperation in the preparation and submission of any application for Regulatory Approval.

ARTICLE IV – CONFIDENTIAL INFORMATION

4.1	Licensee shall use all Technical Information and Technical Specifications obtained heretofore or hereafter from Licensor for the sole purpose of using Licensed Product under this Agreement.

4.2

Licensee shall hold in confidence any and all Technical Information and Technical Specifications disclosed, directly or indirectly, to Licensee by Licensor under this Agreement except that such obligation does not extend to: (a) Technical Information and Technical Specifications which at the time of disclosure are in the public domain; (b) Technical Information and Technical Specifications which after disclosure is published or otherwise becomes part of the public domain through no fault of the Licensee (but only after, and only to the extent that, it is published or otherwise becomes part of the public domain); (c) Technical Information which Licensee can prove was in its possession (as evidenced by Licensee’s written records) at the time of the disclosure and was not acquired, directly or indirectly from Licensor or from a third party under an obligation of confidence; and (d) Technical Information and Technical Specifications which Licensee can prove was received by it (as evidenced by Licensee’s written records) after the time of disclosure hereunder from a third party who did not require Licensee to hold it in confidence and who did not acquire it, directly or indirectly, from Licensor under an obligation of confidence.

4.3	Licensee shall, upon request by Licensor, obtain from its officers, employees, agents and other persons having access to Confidential Information, a duly binding agreement to maintain such information in confidence, each such agreement must be in a form reasonably acceptable to Licensor.

ARTICLE V – PAYMENTS

5.1	LICENSING FEE

In consideration of the rights granted hereunder, Licensee shall pay the Licensor a Licensing Fee of Fifty Million Dollars ($50,000,000.00) in accordance with the following payment schedule:

(a)	A Non-Refundable Deposit of $1,000,000.00 on execution of this Agreement.
(b)	Any and all previous License payments owed to Coates International, Ltd., including the costs of research and development (“R&D”) shall be paid in full, as a precondition to the execution of this Agreement.
(c)	The balance of the Licensing Fee, after credit for the non-refundable deposit, of $49,000,000.00 (the “Balance”) shall be payable on a quarter yearly basis in an amount equal to five percent (5%) of the Licensee’s net profits over the next five (5) years, with the first such quarter yearly payment being due and payable 180 days from the delivery date referred to in 5.3B below. If Licensee does a stock offering or private placement of $100,000,000.00 or more, Licensee must pay Licensor the Licensing Fee in full. If Licensee does an offering less than $25,000,000.00, Licensor will be paid 20% of the said offering, as a partial payment on the License. The Balance must be paid in full on or before February 28, 2012.
(d)	Licensee must pay all costs of Prototype, R&D and the Canadian License balance owed to Coates and amounting to a total of $9,500,000.00 USD as a precondition to the execution of this Agreement.

5.2

ROYALTIES

Under the terms of this License, wherein Licensee is licensed to use, sell and lease the Licensed Product set forth herein, Licensee shall pay as royalties to Licensor 2.5% of the modified net profit (defined as sales less cost of sales plus $400,000), which the Licensee derives from all sources which use the Licensed Product including all use of the Licensed Product by Licensee or its subsidiaries or affiliates.

5.3	ENGINE AND COMPONENT PAYMENT

(a)

Licensee shall buy all systems, engines and components referenced in 1.1, 1.2, 1.3, 1.4 and 1.5including the engine referenced in Section 5.3B, from Licensor or from a licensee duly licensed by Licensor to manufacture engines, systems and components. Prices to Licensee shall be mutually agreed upon by Licensor and Licensee and set forth in a separate agreement.

(b)	The third prototype will be collected by Licensee at its earliest convenience, and at its sole expense, but no later than April 30, 2008.

ARTICLE VI – PATENT ENFORCEMENT

6.1

shall immediately inform Licensor of any actual or potential infringement of the Patent Rights by Licensee or any third party which may come to Licensee’s attention. It shall be the responsibility of Licensor at its own expense and solely at Licensor’s discretion (which it shall not be obligated to exercise) to terminate any such potential actual infringement of any of the Patent Rights. If Licensor shall elect not to pursue such third party, Licensee, may at its sole cost and expense, and with Licensor’s approval, take such action to terminate such infringement and Licensor agrees to cooperate with Licensee.

ARTICLE VII – REPRESENTATIONS

7.1	Licensor represents and warrants as follows:

(a)

All Technical Information delivered prior to the date of execution hereof has been, and all Technical Information delivered hereafter will be, to the best of Licensor’s knowledge, substantially accurate and complete with respect to material matters.

(b)	Licensor is the rightful owner of the Patent Rights and has the exclusive right to license all of the Patent Rights.

(c)

Licensor has the power and authority to execute, deliver and perform its obligations under this Agreement, and neither the execution nor delivery of this Agreement nor the performance of its obligations hereunder will constitute a breach of the terms or provisions of any contract or agreement to which it is a party.

(d)	Licensor is a duly organized, validly existing corporation of the State of Delaware and the corporate charter of the Licensor has never been revoked or suspended.

7.2	Licensee represents and warrants as follows:

(a)	Licensee is a duly organized, validly existing corporation in the Country of Canada and the corporate charter of the Licensee has never been revoked or suspended.

(b)

Licensee has the power and authority to execute, deliver and perform its obligations under this Agreement, and neither the execution nor delivery of this Agreement and the performance of its obligations hereunder will constitute a breach of the terms or provisions of any contract or agreement to which it is a party.

(c)	Licensee has the financial capability to pay the consideration that is required by Article V.

7.3	OBLIGATIONS OF LICENSEE – Licensee will use its best efforts to:

(a)	Execute all such tasks as may be necessary to bring about the speedy use of Licensed Products consistent with good business practice and the terms of this Agreement; and

(b)	Ensure that all steps within its power are undertaken with all reasonable speed to ensure that Licensed Products comply with relevant governmental regulations in the Field of Use in the Territory.

7.4	LIMITATION OF LICENSOR’S WARRANTIES

(a)

Nothing contained in this Agreement shall be construed as a warranty or representation by Licensor as to the validity or scope of any patent included in the Patent Rights. Furthermore, no warranty or representation is made by Licensor that the use by Licensee of Licensed Products will be free of infringement of any patent or other rights of persons not a party hereto. Licensor shall not be obliged to defend, indemnify or hold Licensee harmless against suit, claim, demand or action based on actual or alleged infringement of any patent or other rights belonging to a person or entity not a party to this Agreement. Any such suit claim, demand or action based on actual or alleged infringement by Licensee shall not relieve Licensee from the performance of its obligations hereunder.

(b)

Licensor makes no representations, extends no warranties of any kind, expressed or implied, and assumes no responsibility whatever with respect to the use by Licensee or its vendors of products incorporating, or made by use of, Licensed Products, Patent Rights and/or Technical Information furnished under this Agreement.

7.5

INDEMNIFICATION BY LICENSEE AND INSURANCE – Licensee shall indemnify and hold Licensor harmless from and against any and all expenses including costs and attorney’s fees, claims, demands, liabilities or money judgments for death or bodily injury arising from the use of the Licensed Product by Licensee and shall defend (including paying all legal fees and expenses) Licensor against all such claims and actions. Licensee shall give Licensor notice as soon as practicable of any claim or action to which the foregoing provisions apply. Licensor shall have the right, but not the obligation, to participate in any compromise, settlement or defense of any such claim or action.

7.6	MUTUAL INDEMNITIES

Each of the parties hereto shall indemnify and save harmless the other of, from and against any losses, damages and costs (including legal fees and expenses) which the other may suffer or incur by reason of a breach of this Agreement.

7.7

INSURANCE

Licensee shall provide insurance coverage in the amount, from a carrier licensed to provide insurance in the State of New Jersey, which is also licensed to provide insurance in each state that comprises the Territory and with the coverage (including, but not limited to, general liability, all risk and products liability, together with an umbrella policy with a minimum of $10,000,000.00) that is acceptable to Licensor, naming Licensor as an insured party and providing that no such insurance coverage may be cancelled without first providing thirty (30) days advanced written notice to Licensor with the right of reinstatement or continuation. Within twenty (20) days of the date on which this Agreement is executed by the parties, and on each yearly anniversary date thereafter during the term of this Agreement, Licensee shall provide Licensor with a Certificate of Insurance evidencing the insurance coverage required by this Section 7.7.

ARTICLE VIII – DURATION AND TERMINATION

8.1	Subject to the provisions of Section 8.4 hereof, all rights and obligations under this Agreement shall expire upon the expiration of the last to expire of the patents that comprise the Patent Rights, any extensions thereof and any Improvement Patents added thereto.

8.2

If either Licensee or the Licensor commits a material breach of any provision of this Agreement, and such breach is not cured within thirty (30) days after the date on which notice of a breach is sent to the breaching party, the non-breaching party shall have the right to terminate this Agreement, except that if the breach is related to the failure of Licensee to pay any sum that is due to Licensor and such breach is not cured within thirty (30) days of the date on which payment was due, then Licensor shall have the right, without notice to Licensee, to terminate this Agreement.

8.3	This Agreement shall terminate effective immediately upon:

(a)

The filing by Licensee of an involuntary petition in bankruptcy, the entry of a decree or order by a court or agency or supervisory authority have jurisdiction in the premises for the appointment of a conservatory, receiver, trustee in bankruptcy or liquidation for Licensee in any insolvency, readjustment of debt, marshaling of assets and liabilities, bankruptcy or similar proceedings, or the winding up or liquidation of its affairs, and the continuance of any such petition, decree or order undismissed or unstated and in effect for a period of sixty (60) consecutive days; or

(b)

The consent by Licensee to the appointment of a conservator, receiver, trustee in bankruptcy or liquidation in any solvency, readjustment of debt, marshaling of assets and liabilities, bankruptcy or similar proceedings of or relating to Licensees, or relating to substantially all of its property, or if Licensee shall admit in writing, its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency, reorganization, or bankruptcy statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations.

8.4	Termination shall not release either Licensee or Licensor from any obligation arising prior to such termination or any requirement pursuant to Article IV and Sections 7.3, 7.5, 7.6, 7.7 and 17.2 of this Agreement.

8.5	In the event of any termination of this Agreement, other than because of Licensee’s default, Licensee shall be entitled to use Licensed Products for which commitments to customers have been made at the time of such termination

8.6

Any termination of this Agreement shall be without prejudice as to any obligation of either party to the other accruing prior to or at such termination. Applicable royalties shall be payable under Section 5.2 of Article V with respect to income from the use of all Licensed Products which were manufactured or were in the course of being manufactured prior to such termination or for which Licensee had accepted orders prior to such termination.

ARTICLE IX – WAIVER

9.1

No provision of this Agreement shall be deemed to have been modified by any act of either party, its agents or employees, or by the failure to object to any act of the other party which may be inconsistent herewith, or otherwise, except by a subsequent agreement in writing, signed by both parties. No waiver of a breach committed by either party in one instance shall constitute a waiver or a license to commit or continue breaches in other or like instances.

ARTICLE X – LIMITATIONS OF RIGHTS AND AUTHORITY

10.1	No right or title whatsoever in the Patent Rights or Technical Information is granted by Licensor to Licensee, or shall be taken or assumed by Licensee, except as is specifically set forth or granted in this Agreement.

10.2	Neither party shall in any respect whatsoever be taken to be the partner, agent or representative of the other party and neither party shall have any authority to assume any obligation for the other party or to commit or bind the other party in any way.

10.3

Neither party shall at any time heretofore or hereafter publicly state or imply that the terms and conditions specified herein, or that the relationships between Licensor and Licensee, are in any way different from those specifically set forth in this Agreement. If requested by one party, the other party shall promptly supply copies of all public statements and of all promotional material relating to this Agreement and to Licensed Products.

ARTICLE XI – FORCE MAJEURE

11.1

A party shall not be liable for failure to perform or delay in performing obligations set forth in this Agreement and Licensor shall not be deemed in breach of its obligations, if, to the extent and for so long as such failure or delay or breach is due to natural disaster or any cause reasonably beyond the control of that party. If a party desires to invoke this Article it shall notify the other promptly of such desire and shall use reasonable efforts to resume performance of its obligations as soon as is reasonably possible. However, if performance by a party becomes impossible for more than twelve (12) consecutive months by reason thereof, this Agreement may be terminated upon either party giving thirty (30) days’ written notice.

ARTICLE VII – INJUNCTIVE RELIEF FOR BREACH:

SEVERABILITY AND ENFORCEABILITY

12.1

The parties agree that a party may not be adequately compensated by damages at law for a breach or threatened breach by the other party of any of the provisions of this Agreement, and that the other party shall be entitled to injunctive relief and specific performance in connection therewith in addition to all other remedies.

12.2

Each of the covenants contained in this Agreement shall be construed as separate covenants, and if any court shall finally determine that any such covenants are too broad as to the area, activity, or time set forth therein, said area, activity or time shall be deemed reduced to whatever extent the court deems reasonable and such covenants shall be enforced as to such reduced area, activity or time, without limiting the scope or enforceability of the remaining provisions of those sections.

12.3

If any provision of this Agreement is declared invalid by a court of last resort or by any court from the decision of which an appeal is not taken within the time provided by law, then and in such an event, this Agreement will be deemed to have been terminated only as to the portion thereof which relates to the provision invalidated by that judicial decision, but this Agreement, in all other respects, will remain in force.

12.4	It is specifically agreed that no provision that in any manner violates the anti-trust laws of the United States of America as now or hereafter enacted or construed, is intended to be or will be considered to be incorporated into this Agreement or will be binding upon the parties.

ARTICLE XIII – LIMITATIONS OF ASSIGNMENT OF LICENSEE

13.1	The rights, duties and privileges of the parties hereunder shall not be transferred or assigned, either in whole or in part by Licensee.

ARTICLE XIV – GOVERNING LAW

14.1

This Agreement shall be governed by and construed and enforced in accordance with the laws of the United States of America as to patents only and in all other respects with the laws of the State of New Jersey. Each party hereby submits to the jurisdiction of the state or federal courts in the State of New Jersey in the event of any claims arising under this Agreement.

ARTICLE XV – ENTIRE AGREEMENT

15.1

This Agreement sets forth the entire agreement and understanding by and between Licensor and Licensee as to the subject matter hereof and it supersedes all documents, verbal consents and understandings made before the execution of this Agreement and none of the terms of this Agreement shall be amended or modified except in a written document signed by Licensor and Licensee.

15.2	In the event of an inconsistency between any of the terms of this Agreement and any translation thereof into another language, the English language version shall control.

15.3	Should any portion of this Agreement be declared null and void, the remainder of this Agreement shall remain in full force and effect.

ARTICLE XVI – NOTICES

16.1	Any notice, consent or approval required under this Agreement shall be in English and in writing, and shall be delivered to the following addresses (a) personally by hand, (b) by certified mail, postage prepaid, with return receipt requested, or (c) by telefax, confirmed by certified mail.

If to the Licensor:

Coates International, Ltd.

2100 Highway 34 & Ridgewood Road

Wall Township, NJ 07719-9738

Att: George J. Coates

With a copy to:

William J. Wolf, Esq.

Bathgate, Wegener & Wolf, P.C.

One Airport Road

Lakewood, NJ 08701

If to Licensee:

WELL to WIRE Energy Inc.

Suite 17, 1700 Varsity Estate Drive, NW

Calgary, Alberta, Canada T3B 2W9

All notices shall be deemed effective upon the date delivered. If either party desires to change the address to which notice is sent to such party, it shall so notify the other party in writing in accordance with the foregoing.

ARTICLE XVII - MISCELLANEOUS

17.1	HEADINGS AND REFERENCES

Headings in this Agreement are included herein for ease of reference only and have no legal effect. References herein to Sections or Attachments are to Sections and Attachments to this Agreement, unless expressly stated otherwise.

17.2	RESTRICTION ON DISCLOSURE OF TERMS AND PROVISIONS

(a)

This Agreement shall be distributed solely to: (i) those personnel of Licensor and Licensee who shall have a need to know its contents; (ii) those persons whose knowledge of its contents will facilitate performance of the obligations of the parties under this Agreement, (iii) those persons, if any, whose knowledge of its contents is essential in order to permit Licensee or Licensor to place or maintain or secure benefits under policies of insurance; or (iv) as may be required by law, regulation or judicial order.

(b)

In the event disclosure is required by law, regulation or judicial order, the disclosing party shall request that any disclosure be kept secret and shall attempt to minimize disclosure of the financial terms of this Agreement. Any party may publicly announce the existence of this Agreement, the manner in which the parties shall operate, and the areas of responsibility of each party. Except as legally required, no party may disclose the amount of payments or royalty rates without the consent of the other party. The parties will consult with each other prior to any press release relating to this Agreement.

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed as of the date first above written in duplicate by their duly-authorized representatives.

ATTEST:	COATES INTERNATIONAL, LTD.

	By:	/s/ George J. Coates
		GEORGE J. COATES
		President

ATTEST:	WELL TO WIRE ENERGY INC.

	By:	/s/ Bryan Campbell
		BRYAN CAMPBELL
		President

Exhibit 10.2

ESCROW AGREEMENT

THIS AGREEMENT made this 11th day of April 2008 (“Escrow Agreement”) by and among Coates International, Ltd., a Delaware corporation (“CIL”) having an office located at 2100 Highway 34 and Ridgewood Road, Wall Township, New Jersey, and Well to Wire Energy, Inc. (“W2W”) , having its office located at Suite 17, 1700 Varsity Estates Drive NW, Calgary, Alberta, Canada, T3B 2W9 and Bathgate, Wegener and Wolf, P.C. (“Escrow Agent” or “BWW”).

WHEREAS , CIL is in the business of designing and manufacturing engines.

WHEREAS , CIL is the owner of various patents for engine technology (“Patents”).

WHEREAS , the Patents encompass the spherical rotary valve assembly as well as other related components including the valve seal, the exhaust system and the cooling system, and the engine designs themselves, which together have various applications including the use of these designs and patents for the production of engines fueled by natural gas to be used for the generation of electricity.

WHEREAS , W2W is the licensee and CIL is the licensor under a license agreement relating to Canada (“Canadian License Agreement”).

WHEREAS , W2W desires to purchase another license from CIL to enable W2W, under certain specified circumstances, to use the engine technology associated with the Patents in the United States of America as set forth in the License Agreement attached hereto as Exhibit A (the “U.S. License Agreement”).

WHEREAS , CIL wishes to enter into the U.S. License Agreement with W2W.

WHEREAS , W2W wishes to enter into the U.S. License Agreement with CIL.

WHEREAS , both CIL and W2W agree that the U.S. License Agreement shall remain in escrow and, although executed, shall not be released to W2W until it has fulfilled the terms set forth herein.

NOW, THEREFORE , in consideration of the promises contained herein, the parties agree as follows:

LICENSE IN ESCROW

1.	The U.S. License Agreement that has been signed by CIL and W2W shall be delivered in escrow to Bathgate, Wegener and Wolf, P.C. (“Escrow Agent” and/or “BWW”) and shall be released to W2W upon payment of the monies specified herein.

RELEASE PAYMENT

In order for the U.S. License Agreement to be released from escrow W2W must pay to CIL $9,500,000.00 (“Release Payment”) by June 30, 2008 (“Payment Period”). The Release Payment consists of the following components: (a) $8,500,000.00 owed by W2W to CIL as partial payment for the Canadian License Agreement and (b) $1,000,000.00 as the initial payment required by the U.S. License Agreement. It is contemplated by CIL and W2W that during the Payment Period money in unspecified amounts will be delivered to CIL periodically as partial payment of the Release Payment until the Release Payment has been paid in full. All money paid by W2W under this paragraph shall be nonrefundable when received by CIL.

The failure of W2W to pay the Release Payment to CIL within the Payment Period shall cause the Canadian License Agreement to automatically be amended, without the necessity of any further writing signed by the parties, so that it shall be non-exclusive, subject to reinstatement as an exclusive license pursuant to paragraph 4.

Provided that W2W shall have paid $500,000.00 on account of the Release Payment to CIL within the Payment Period, W2W shall have until September 30, 2008 (“Extended Payment Period”), to pay the balance of the Release Payment. If W2W pays the entire Release Payment to CIL within the Extended Payment Period the exclusivity of the Canadian License Agreement shall be reinstated.

The failure of W2W to pay the Release Payment to CIL within the Payment Period or, if extended by paragraph 4, within the Extended Payment Period, shall constitute a breach of this Escrow Agreement, the Canadian License Agreement and the U.S. License Agreement and shall entitle CIL to retain all money paid by W2W pursuant to Paragraph 2 and paragraph 3 of this Escrow Agreement and immediately, without notice to W2W, to cancel this Escrow Agreement, the Canadian License Agreement and the U.S. License Agreement without W2W having any right of redemption or reinstatement.

6.	All amounts payable under this Escrow Agreement shall be paid in U.S. Dollars in immediately available federal funds.

7.	All payments under this Escrow Agreement shall be remitted to CIL at its offices located at 2100 Highway 34 and Ridgewood Road, Wall Township, New Jersey.

NO LICENSE

W2W acknowledges and agrees that the execution of this Escrow Agreement by CIL shall not grant a license to W2W and that only the subsequent release of the U.S. License Agreement from Escrow upon the payment in full of the Release Payment by W2W shall result in a license being granted to W2W pursuant to the terms of the U.S. License Agreement.

WAIVER

No provision of this Escrow Agreement shall be deemed to have been modified by any act of CIL, its agents or employees, or by the failure of CIL to object to any act of W2W which may be inconsistent herewith, or otherwise, except by a subsequent agreement in writing signed by both parties. No waiver of a breach committed by either party in one instance shall constitute a waiver or a license to commit or continue breaches in other or like instances.

LIMITATIONS OF RIGHTS AND AUTHORITY

10.

No right or title whatsoever in the patent rights, licensed products, Technical Specifications or Technical Information (as defined in the U.S. License Agreement) is granted by CIL to W2W under this Escrow Agreement, or shall be taken or assumed by W2W, except as is specifically set forth or granted in the U.S. License Agreement and no such rights are granted by this Escrow Agreement.

11.	Neither party shall in any respect whatsoever be taken to be the partner, agent or representative of the other party and neither party shall have any authority to assume any obligation for the other party or to commit the other party in any way.

12.

Neither party shall at any time heretofore or hereafter publicly state nor imply that the terms and conditions specified herein, or the relationships between CIL and W2W, are in any way different from those specifically set forth in this Escrow Agreement or in the Canadian License Agreement. If requested by one party, the other party shall promptly supply the first party with copies of all public statements and of all promotional material relating to this Agreement, the Canadian License Agreement or the U.S. License Agreement.

INJUNCTIVE RELIEF FOR BREACH,

SEVERABILITY AND ENFORCEABLITY

13.

W2W agrees that CIL may not be adequately compensated by damages at law for a breach or threatened breach by W2W of any of the provisions of this Escrow Agreement, and that CIL shall be entitled to injunctive relief and specific performance in connection therewith, in addition to all other remedies.

14.

Each of the covenants contained in this Escrow Agreement shall be construed as separate covenants and if any court of last resort shall determine that any such covenant is too abroad that covenant shall be deemed reduced to whatever extent the court deems reasonable and such covenant shall be enforced without limiting the scope or enforceability of the remaining provisions of those sections.

15.

If any provision of this Escrow Agreement is declared invalid by a court of last resort or by any court form the decision of which an appeal is not taken within the time provided by law, then, and in such an event, this Escrow Agreement will be deemed to have been terminated only as to the portion thereof which relates to the provision invalidated by that judicial decision, but this Agreement, in all other respects, will remain in force.

16.

It is specifically agreed that no provision of this Escrow Agreement shall be in any manner violative of the laws of the United Sates of America or other governmental authority within the United States of America and each such law is intended to be, and will be considered to be, incorporated into this Escrow Agreement and will be binding upon the parties.

LIMITATION OF ASSIGNMENT BY W2W

17.	The rights, duties and privileges of W2W hereunder shall not be transferred or assigned by it, either in part or in whole, without the prior written consent of CIL, which may be denied, withheld or conditioned by CIL in its sole discretion.

GOVERNING LAW

18.

This Escrow Agreement shall be governed by, construed and enforced in accordance with the laws of the Sate of New Jersey and each party herby submits to the exclusive jurisdiction of any state or federal court located in the State of New Jersey in the event of any claims arising under this Escrow Agreement.

ENTIRE AGREEMENT

19.

This Escrow Agreement sets forth the entire agreement and understanding by and between CIL and W2W as to the subject matter hereof and has priority over all documents, verbal consents and understandings made before the execution of this Escrow Agreement, and none of the terms of this Escrow Agreement shall be amended or modified except in a written document signed by CIL and W2W.

20.	In the event of any inconsistency between any of the terms of this Escrow Agreement and any translation thereof into another language, the English language version shall control.

NOTICES

21.

Any notice, consent or approval required under this Escrow Agreement shall be in English and in writing, and shall be delivered to the following addresses (a) personally by hand, (b) by certified mail, postage prepaid, with return receipt requested, (c) by overnight delivery service, or (d) by telefax, confirmed by such certified mail:

If to CIL:	Coates International, Ltd.
	Highway 34 & Ridgewood Road
	Wall Township, NJ 07719-9738
	Telephone: (732) 449-7717
	Telefax: (732) 449-7736

If W2W:	Well To Wire Energy, Inc.
	Suite 17
	1700 Varsity Estates Drive NW
	Calgary
	Alberta, Canada, T3B 2W9
	Telephone: (403) 288-3647
	Telefax:(403) 286-3696

If BWW	Bathgate, Wegener and Wolf, P.C.
	1 Airport Road
	Lakewood, NJ 08701
	Telephone: (732) 363-0666
	Telefax: (732) 3639864

All notices shall be deemed effective upon the date delivered if by hand or overnight delivery service and three days after being mailed. If either party desires to change the address to which notice is sent to such party, it shall so notify the other party in writing in accordance with the foregoing.

MISCELLANEOUS

22.	Headings and References . Headings in this Escrow Agreement are included herein for ease of reference only and have no legal effect. References herein to Sections or Attachments are to Sections and Attachments to this Escrow Agreement, unless expressly stated otherwise.

23.	Restriction on Disclosure of Terms and Provisions .

a.	This Escrow Agreement shall be distributed solely to:

i.	those personnel of CIL and W2W who shall have a need to know its contents;

ii.	those persons whose knowledge of its contents will facilitate performance of the obligations of the parties under this Escrow Agreement;

iii.	those persons, if any, whose knowledge of its contents is essential in order to permit W2W or CIL to place or maintain or secure benefits under policies of insurance; or

iv.	as may be required by law, regulation or judicial order.

In the event disclosure is required by law, regulation or judicial order, the disclosing party shall request that any disclosure be kept secret and shall attempt to minimize disclosure of the financial terms of this Escrow Agreement. Any party may publicly announce the existence of this Escrow Agreement, the manner in which the parties shall operate, and the areas of responsibility of each party. Except as legally required, no party may disclose the financial terms of this Escrow Agreement, the Canadian License Agreement or the U.S. License Agreement without the consent of the other party. The parties will consult with each other prior to any press release relating to this Escrow Agreement.

24.	Definitions . Any word not specifically defined herein shall have the meaning ascribed to it in the U.S. License Agreement.

25.	Binding Effect . This Escrow Agreement shall accrue to the benefit of, and shall be binding upon, the parties hereto and their respective successors and assigns.

NO LIMIT ON LIABILITY

26.	This Escrow Agreement does not limit the obligation of W2W under either the Canadian License Agreement or the U.S. License Agreement; instead, W2W shall be required to comply with each of the provisions of each of those agreements and this Escrow Agreement.

ROLE OF ESCROW AGENT

27.

Upon receipt of a written demand for the U.S. License Agreement made by W2W pursuant to this Escrow Agreement, the Escrow Agent shall promptly mail a copy thereof (by registered or certified mail, return receipt requested) to CIL which shall have the right to object to the release of the U.S. License Agreement, by delivery to the Escrow Agent of written notice of objection within ten (10) days after the date of the Escrow Agent’s mailing of such notion to CIL, but not thereafter. Upon receipt of such notice of objection, the Escrow Agent shall promptly mail a copy thereof (by registered or certified mail, return receipt requested) to W2W.

28.

In the event that (a) the Escrow Agent shall have received a notice of objection as provided for in paragraph 27 above within the time therein prescribed, or (b) any disagreement or dispute shall arise between or among any of the parties thereto resulting in adverse claims and demands being made for the U.S. License Agreement, whether or not litigation has been instituted, then, in any such event, at the Escrow Agent’s option, (i) the Escrow Agent may refuse to comply with any claims or demands on it and continue to hold the U.S. License Agreement until the Escrow Agent receives written notice signed by W2W and CIL, directing the release of the U.S. License Agreement, in which case the Escrow Agent may then release the U.S. License Agreement in accordance with said direction, and the Escrow Agent shall not be or become liable in any way or to any person for its refusal to comply with such claims or demand; or (ii) in the event the Escrow Agent shall receive a written notice advising that litigation over the release of the U.S. License Agreement has been commenced, the Escrow Agent may deposit the U.S. License Agreement with the clerk of the court in which said litigation is pending , or (iii) the Escrow Agent may (but shall not be required to) take such affirmative steps as it may, at its option, elect in order to substitute another impartial party to hold the U.S. License Agreement or to deposit the U.S. License Agreement with a court of competent jurisdiction and /or to commence an action for interpleader, the costs thereof to be borne by whichever of W2W or CIL is deemed, by the court, to be entitled to the U.S. License Agreement and thereupon the Escrow Agent shall be released of any and all liability thereunder. W2W and CIL jointly and severally agree to reimburse the Escrow Agent for any and all expenses incurred by it in relation to its duties hereunder, including, but not limited too, attorneys fees (either paid to retained attorneys or amounts representing the fair value of legal services rendered to itself).

29.

It is expressly understood that the Escrow Agent acts hereunder as an accommodation to W2W and CIL and as a depository only and is not responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of any instrument deposited with it, or for the form or execution of such instruments or for the identity, authority or right of any person executing or depositing the same or for the terms and conditions of any instrument pursuant to which the Escrow Agent or the parties may act.

30.

The Escrow Agent shall not have any duties or responsibilities except those set forth herein and shall not incur any liability in acting upon any signature, notice, request, waiver, consent, receipt or other paper or document believed by the Escrow Agent to be genuine, and the Escrow Agent may assume that any person purporting to give it any notice on behalf of any party in accordance with the provisions hereof has been duly authorized to do so.

31.

The Escrow Agent may act or refrain from acting in respect of any matter referred to herein in full reliance upon and by and with the advice of counsel which may be selected by it (including any member of its firm) and shall be fully protected in so acting or refraining from acting upon the advice of such counsel.

32.

W2W and CIL hereby jointly and severally indemnify, and they shall defend and save the Escrow Agent harmless from any and all loss, damage, claims, liabilities, judgments, and other cost and expense of every kind and nature which may be incurred by the Escrow Agent by reason of its acceptance of its role as Escrow Agent, and its performance under this Escrow Agreement (including, without limitation, attorneys’ fees either paid to retained attorneys or amounts representing the fair value of legal services rendered to itself).

33.

The Escrow Agent shall not be responsible for any mistake of fact, error of judgment or any act or failure to act on its part except in the case of its own willful default or gross negligence. The Escrow Agent shall be automatically released form all responsibility and liability under this Escrow Agreement upon the Escrow Agent’s delivery or deposit of the U.S. License Agreement in accordance with the provisions of this Escrow Agreement.

34.

W2W agrees that if it shall, pursuant to paragraph 27 above, deliver to the Escrow agent a written demand for the U.S. License Agreement that, promptly after delivery such demand to the Escrow Agent, it shall deliver a copy of such demand to CIL, together with a statement of the facts and circumstances underlying the demand, provided, however, that nothing in this paragraph 34 shall have any effect whatsoever upon the Escrow Agent’s rights, duties and obligations under the preceding provisions of this Escrow Agreement.

35.

The Escrow Agent may resign upon thirty (30) days’ written notice to the parties to this Escrow Agreement. If a successor escrow agent is not appointed within a thirty (30) day period following such resignation by mutual written agreement of the parties, the Escrow Agent my petition a court of competent jurisdiction to name a successor. The costs and legal fees related to such action that are incurred by the Escrow Agent shall be paid by W2W and CIL on an equal basis.

36.	This Escrow Agreement shall terminate and the Escrow Agent shall be discharged of all responsibility hereunder at such time as the Escrow Agent shall have completed its duties hereunder or as otherwise provided herein.

37.

The escrow Agent or any member of its firm shall be permitted to act as counsel for CIL in any dispute or other matter between CIL and W2W including but not limited to any dispute as to the release of the U.S. License Agreement or otherwise whether or not the Escrow Agent is in possession of the U.S. License Agreement.

IN WITNESS WHEREOF , the parties hereto have caused this Escrow Agreement to be executed as of the date first above written above in duplicate by their duly authorized representatives.

ATTEST:	COATES INTERNATIONAL, LTD.

	By:	/s/ George J. Coates
		GEORGE J. COATES
		PRESIDENT, Secretary

ATTEST:	WELL TO WIRE ENERGY, INC.

	By:	/s/ Bryan Campbell
		BRYAN CAMPBELL
		PRESIDENT

ATTEST:	WELL TO WIRE ENERGY, INC.

	By:	/s/ Lee Perry
		LEE PERRY
		SVP
Business and Development

ATTEST:	ESCROW AGENT
	BATHGATE, WEGENER AND WOLF, P.C.

	By:	/s/ William J. Wolf, Esq
		WILLIAM J. WOLF, ESQ.

Exhibit 99.1

Press Release

Source: Coates International, Ltd.

Coates International, Ltd. Announces Second License and Escrow Agreement with Well to Wire Energy, Inc.

Friday, April 11, 2008 FOR IMMEDIATE RELEASE

WALL TOWNSHIP, N.J. -- Coates International, Ltd. (the “Company” or “Coates”) (OTCBB: COTE) - announced that the company has entered into a second license agreement with Well to Wire Energy, Inc. (“WWE”) for the territory of the United States (the “US License”). The US License provides for a license fee of $50 million and annual minimum purchases of Coates CSRV Systems as a condition of exclusivity. The US license has been deposited into an escrow account and the grant under the license is not effective until the conditions for release from escrow are satisfied.

The escrow agreement was established to provide a more secure mechanism for the Company to collect payments due under both the prior Canadian licensing and research and development agreements and the initial monies due under the new $50 million US License. The Escrow Agreement provides that the US License shall be held until WWE remits payment of the initial monies due thereunder (the “Release Payment”). While the US License is held in escrow there shall not be any grant of license to WWE. The initial monies due under the US License consist of a down payment of $1 million from WWE to the Company and an additional $8.5 million in payment of the balance of all of the monies due to the Company in connection with the license for the territory of Canada, including the Canadian license agreement and the research and development agreement (the “Canadian Agreements”). WWE is expected to make non-refundable periodic payments to the Company in unspecified amounts as partial payments of the Release Payment until such Release Payment has been paid in full. Upon full satisfaction of the Release Payment, the US License agreement would be released from escrow.

WWE is a privately held company and to date has previously made nonrefundable payments to us totaling $1,500,000 and has made an additional payment of $375,000 in April 2008. Therefore the total nonrefundable payments made by WWE to the Company to date is $1,875,000.

Under the Escrow Agreement, WWE is required to remit the full amount of the Release Payment by June 30, 2008 (the “Payment Period”). Should WWE be unable to make the Release Payment within the Payment Period, the Canadian license agreement shall automatically become non-exclusive. However, provided that WWE shall have paid at least $500,000 on account of the Release Payment, the Payment Period shall be extended until September 30, 2008 (the “Extended Release Period”). Should WWE be able to make the entire Release Payment within the Extended Release Period, the exclusivity of the Canadian license agreement would be reinstated.

The failure of WWE to make the entire Release Payment within the Release Period or within the Extended Release Period should it be extended, shall constitute a breach of the Escrow Agreement, the Canadian license agreement and the US License. In such event, the Company would be entitled to (i) retain any and all monies received from WWE and (ii) immediately, cancel the Escrow Agreement, the Canadian license agreement and the US License.

The US License would, if WWE is able to satisfy the Escrow Agreement release provisions, grant to WWE the right to use, sell and lease Licensed Products, as defined, as the power source for the generation of electrical energy for the oil and gas industry and from landfills.

WWE is required to procure all internal combustion engines incorporating the CSRV Valve System from the Company or its designee. The license granted to WWE is exclusive within the Territory, provided that WWE satisfies the minimum annual purchase commitment of 120 internal combustion engines incorporating the CSRV System, the Coates Engines and all component parts. The agreement also grants WWE a right of first refusal in the event that the Company negotiates an offer with another third party for a worldwide license to use the Licensed Product.

After payment of the Release Payment required under the Escrow Agreement, the remaining unpaid balance of the US License of $49,000,000 is payable in quarterly installments commencing 180 days from the closing date of the Escrow Agreement. The amount of the quarterly installment payments shall be equal to 5% of WWE’s net profits over the next five years; however, in any event, the entire balance of the licensing fee must be paid in full on or before February 12, 2012.

Acceleration of the balance of the licensing fee payments shall be required in the event that WWE completes a stock offering or private placement offering. The entire $49,000,000 unpaid balance of the licensing fee shall become due and payable if WWE raises $100 million or more from such offering. If WWE raises $25 million or less from any such offering, then WWE must pay the Company 20% of the amount raised towards the licensing fee.

Coates International, Ltd. is continuing talks with other companies that are interested in licensing its patented CSRV Technology for numerous other applications.

The Company is now in the planning stages of the production of its CSRV products.

About Coates International, Ltd.: Coates has recently completed final refinements to a patented spherical rotary valve CSRV Industrial Internal Combustion Engine developed over a period of more than 6 years and other CSRV applications over 10 years. The underlying CSRV technology was invented by George J. Coates and his son Gregory. The CSRV system is adaptable to combustion engines of many types. This technology is currently adapted to a number of practical applications including industrial generators powered by engines incorporating the CSRV technology and designed to run on flare-off gas from oil wells, landfill gas and raw natural gas. The company is actively engaged in planning for production and rollout of these engines.

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements and forecasts involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the near future. There are a number of factors that could cause actual results and developments to differ materially from forecasted results. These risks and uncertainties include market conditions, regulatory approvals, and other risks inherent in our operations. For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission. Our public filings with the SEC may be viewed and printed on the website maintained by the SEC at http://www.sec.gov .

CONTACT: Coates International, Ltd.

Susan Alpert, 732-449-7717

Fax: 732-449-0764

info@coatesengine.com