**EXHIBIT
      10.17**


**AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT**





**THIS
      AMENDED AND RESTATED EMPLOYMENT AGREEMENT** (the
      “ **Agreement** ”),
      dated April
      6,
      2007





**By
      and Between:**





**COATES
      INTERNATIONAL, LTD.** ,
      a
      Delaware corporation (the “ **Company** ”
or
      the
“ **Employer** ”),





**AND**





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





**WHEREAS** ,
      the
      Company and the Executive signed on October 23, 2006 (the “ **Effective
      Date** ”),
      an
      employment agreement (the “ **Original
      Employment Agreement** ”);
      and





**WHEREAS** ,
      the
      parties wish to amend and restate the terms of the Original Employment
      Agreement.





**NOW
      THEREFORE THIS AGREEMENT WITNESSETH THAT** in
      consideration of the premises and the mutual covenants, agreements,
      representations and warranties contained herein, and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      Executive and the Company hereby agree as follows:





Upon
      the
      effectiveness of this Agreement, the Original Employment Agreement shall become
      null and void and of no further effect.





**ARTICLE
      1**




**EMPLOYMENT**




1.1  Employer
      hereby hires the Executive as a President Technology Division of the Company
      and
      Executive hereby affirms and accepts such position and employment by Employer
      for the Term (as defined in Article 3 below), upon the terms and conditions
      set
      forth herein.





1.2  The
      Employer shall utilize its best efforts to cause its Board of Directors to
      appoint the Executive as a member of the Employer’s Board of Directors
      throughout the Term.




**ARTICLE
      2**




**DUTIES**




During
      the Term, Executive shall serve Employer faithfully, diligently and to the
      best
      of his ability, under the direction and supervision of the Board of Directors
      of
      Employer (“ **Board
      of Directors** ”)
      and
      the Company’s Chief Executive Officer and shall use his best efforts to promote
      the interests and goodwill of Employer and any affiliates, successors, assigns,
      parent corporations, subsidiaries, and/or future purchasers of Employer.
      Executive shall render such services during the Term at Employer’s principal
      place of business or at such other place of business as may be determined by
      the
      Board of Directors, as Employer may from time to time reasonably require of
      him,
      and shall devote all of his business time to the performance thereof. Executive
      shall have those duties and powers as generally pertain to each of the offices
      of which he holds, as the case may be, subject to the control of the Board
      of
      Directors. Employer and Executive also agree that Executive shall serve as
      a
      member of the Employer’s Board of Directors during the Term.









**ARTICLE
      3**




**TERM**




3.1  The
      term
      of this Agreement (the “ **Term** ”)
      has
      commenced on the Effective Date, and will continue thereafter for a term of
      five
      (5) years, as may be extended or earlier terminated pursuant to the terms and
      conditions of this Agreement. The Term is renewable upon the agreement of the
      parties hereto.





**ARTICLE
      4**




**GOVERNANCE
      AND COMPENSATION**





**4.1**  **Governance.** During
      the Term, Executive agrees to vote all shares of the Company’s Common Stock
      owned by him or as to which he had voting power to elect to the Company’s Board
      of directors at least two directors who qualify as “independent directors” under
      the rules of the Securities Exchange Commission and NASDAQ.





**4.2**  **Salary
      and Equity Compensation**





(a)  In
      consideration of Executive’s services to Employer, Employer shall pay to
      Executive an annual salary (the “ **Salary** ”)
      of Two
      Hundred Fifty Thousand Dollars ($250,000.00), payable in equal installments
      at
      the end of each regular payroll accounting period as established by Employer,
      or
      in such other installments upon which the parties hereto shall mutually agree,
      and in accordance with Employer’s usual payroll procedures, but no less
      frequently than monthly. Notwithstanding the above, the salary shall be
      established at Seventy Nine Thousand Eight Hundred Ninety Eight Dollars
      ($79,898), until the point in time that Employer’s projected available working
      capital is sufficient to fund (x) the Company’s operations, and; (y) payment of
      the total amount of salary payments provided for in the Executive Employment
      Agreements as determined in the sole discretion of the Company’s Board of
      Directors (the “ **Full
      Payment Date** ”).
      For
      purposes of this provision, the term “Executive Employment Agreements” shall be
      the employment agreements in effect, as amended by and between the Employer
      and
      each of the following executives: George J. Coates and Gregory
      Coates.





(b)  In
      addition to the Salary, Employer shall issue to Executive a Stock Option to
      purchase 500,000 shares of the Employer’s common stock, at an exercise price
      equal to Employer’s common stock fair market value as of the date of issuance,
      as determined by the independent members of the Board (the “ **Stock
      Option** ”).
      The
      Stock Option shall vest (i.e., become exercisable) in three equal installments,
      as follows: One third of the Stock Options shall vest on April
      30,
      2007 and the balance in two equal installments on October 23, 2008 and
      2009. Executive must be continuously a full-time employee of the Company through
      the
      time he exercises part or all of the Stock Option, except, however, in the
      event
      this Agreement is terminated by the Executive for a Good Reason, as defined
      in
      Article 10.1 and 10.2 below, or by the Employer without Cause, in which cases
      the Stock Option shall immediately and fully vest upon such termination provided
      further that the events surrounding any such termination have not been the
      subject of any claim, proceeding or lawsuit by either the Executive or the
      Company in which further case the Stock Option shall only vest upon final
      adjudication, determining that such termination was a valid termination by
      the
      Executive for Good Reason or by the Employer without Cause. The Stock Option
      shall be deemed a non-qualified stock option (i.e., not an ISO). The Stock
      Option will be issued out of the Employer’s stock incentive plan, and subject to
      such incentive plan.




2




(c)  Executive
      hereby acknowledges that the Stock Option and the shares issuable upon the
      exercise thereof shall be “restricted securities” as such term is defined under
      Rule 144, unless and until an effective registration covering these shares
      takes
      place, **** promulgated
      under the Securities Act of 1933, as amended (the “ **1933
      Act** ”);
      that
      the Executive hereby represents that he shall accept such compensation and
      has
      no present intent to distribute or transfer such securities; that such
      securities shall bear the appropriate restrictive legend providing that they
      may
      not be transferred except pursuant to the registration requirements of the
      1933
      Act or pursuant to exemptions therefrom, and; the Executive further acknowledges
      that he may be required to hold such securities for an indeterminable amount
      of
      time.





(d)  Executive
      shall not be entitled to any other compensation from the Company unless
      unanimously approved by the independent directors of the Board.




**4.3**  **Benefits**





Upon
      the
      Full Payment Date, and thereafter during the Term, Executive shall be entitled
      to participate in all medical, dental, life insurance and other executive
      benefit plans, including vacation, sick leave, retirement accounts and other
      executive benefits provided by Employer. **** Such
      participation shall be subject to the terms of the applicable plan documents
      and
      Employer’s generally applicable policies. In addition, upon the Full Payment
      Date Employer shall pay the premiums for: (A) Executive’s disability insurance;
      and (B) life insurance in the amount of $2,000,000, but only to the extent
      that
      the cost thereof is determined to be reasonable by the independent directors
      of
      the Board. The beneficiary of the life insurance policy shall be Executive’s
      spouse, and if he has no spouse as directed by Executive. Executive also agrees
      to cooperate with the Company in obtaining for the benefit of the Company “key
      man” life insurance on Executive’s life in the amount of at least $2,000,000.
      The amount of such insurance shall be approved by the independent directors
      of
      the Board.





**4.4**  **Expense
      Reimbursement**





Employer
      shall reimburse Executive for reasonable and necessary expenses incurred by
      him
      on behalf of Employer in the performance of his duties hereunder during the
      Term, including any and all travel and entertainment expenses related to the
      Employer’s business in accordance with Employer's then customary policies,
      provided that such expenses are adequately documented.





**4.5**   **Performance
      Bonus**




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





**4.6**  **Other
      Compensation**




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




3




**ARTICLE
      5**




**OTHER
      EMPLOYMENT**




During
      the Term, Executive shall devote all of his business and professional time
      and
      effort attention, knowledge, and skill to the management, supervision and
      direction of Employer’s business and affairs as Executive’s highest professional
      priority. Employer shall be entitled to all benefits, profits or other
      remuneration arising from or incidental to all work, services and advice
      performed or provided by Executive. Nothing
      in this Agreement shall preclude Executive from:





(a)
            serving
                as a director or member of a committee of any organization or corporation
                involving no conflict of interest with the interests of Employer,
                provided
                that Executive must obtain the prior written approval of the independent
                members of the Board;





(b)
            serving
                as a consultant in his area of expertise (in areas other than in
                connection with the business of Employer), to government, industrial,
                and
                academic panels provided that only de minimis time shall be devoted
                thereto and Executive must obtain the prior written approval of the
                independent members of the Board of Employer and where it does not
                conflict with the interests of Employer;
                and





(c)
            managing
                his personal investments or engaging in any other non-competing business;
                provided that such activities do not materially interfere with the
                regular
                performance of his duties and responsibilities under this
                Agreement.





**ARTICLE
      6**




**CONFIDENTIAL
      INFORMATION/INVENTIONS**




**Confidential
      Information**





6.1
            Executive
                shall not, in any manner, for any reasons, either directly or indirectly,
                divulge or communicate to any person, firm or corporation, any
                confidential information concerning any matters not generally known
                in the
                internal combustion engine industry (the “**Engine
                Industry**”)
                or otherwise made public by Employer which affects or relates to
                Employer’s business, finances, marketing and/or operations, research,
                development, inventions, products, designs, plans, procedures, or
                other
                data (collectively, “**Confidential
                Information**”)
                except in the ordinary course of business or as required by applicable
                law. Without regard to whether any item of Confidential Information
                is
                deemed or considered confidential, material, or important, the parties
                hereto stipulate that as between them, to the extent such item is
                not
                generally known in the Engine Industry, such item is important, material,
                and confidential and affects the successful conduct of Employer’s business
                and goodwill, and that any breach of the terms of this Section 6.1
                shall
                be a material and incurable breach of this Agreement. Confidential
                Information shall not include: information in the public domain other
                than
                because of a breach of this
                Agreement.




4


**Documents**





6.2
            Executive
                further agrees that all documents and materials furnished to Executive
                by
                Employer and relating to Employer’s business or prospective business are
                and shall remain the exclusive property of Employer. Executive shall
                deliver all such documents and materials, and all copies thereof
                and
                extracts therefrom, to Employer upon demand therefor and in any event
                upon
                expiration or earlier termination of this Agreement.




**Inventions
      and Intellectual Property**





6.3  Inventions
      and Intellectual Property. The Company’s rights in patents, ideas, inventions,
      and other intellectual property rights, including with respect to the CSRV
      engine only, shall be as set forth in the License Agreement executed by the
      parties on April 6, 2007, as such agreement may be amended (the “License
      Agreement”). The Company shall have no rights to any intellectual property
      developed by Executive that (i) do not relate to the CRSV System
      technology.





**Disclosure**





6.4  During
      the Term, Executive will promptly disclose to the Board of Directors full
      information concerning any interest, direct or indirect, of Executive (as owner,
      shareholder, partner, lender or other investor, director, officer, executive,
      consultant or otherwise) or any member of his immediate family in any business
      that is reasonably known to Executive to purchase or otherwise obtain services
      or products from, or to sell or otherwise provide services or products to,
      Employer or any of their suppliers or customers.





**ARTICLE
      7**




**COVENANT
      NOT TO COMPETE**




7.1
      No
      Competitive Activities. **** Except
      as
      expressly permitted in Article 5 above, during the Term, Executive shall not
      engage in any activities that are competitive with the actual or prospective
      business of the Company including without limitation: (a) engaging directly
      or
      indirectly in any business substantially similar to any business or activity
      engaged in (or proposed to be engaged in) by Employer, including and not limited
      to business that relates to internal combustion engines; (b) engaging directly
      or indirectly in any business or activity competitive with any business or
      activity engaged in (or proposed to be engaged in) by Employer; (c) soliciting
      or taking away any executive, employee, agent, representative, contractor,
      supplier, vendor, customer, franchisee, lender or investor of Employer, or
      attempting to so solicit or take away; (d) interfering with any contractual
      or
      other relationship between Employer and any executive, employee, agent,
      representative, contractor, supplier, vendor, customer, franchisee, lender
      or
      investor; or (e) using, for the benefit of any person or entity other than
      Employer any Confidential Information of Employer.




7.2
      Results of Termination. **** In
      the
      event that the employment of Executive is terminated for Cause, or if Executive
      terminates his employment with Company without Good Reason, then the foregoing
      covenant prohibiting competitive activities shall survive the termination of
      this Agreement and shall extend, and shall remain enforceable against Executive,
      for the period of two (2) years following the date of termination of employment.
      In addition, during the two-year period following such termination, neither
      Executive nor Employer shall make or permit the making of any negative statement
      of any kind concerning Employer or their affiliates, or their directors,
      officers or agents or Executive.




5




**ARTICLE
      8**




**SURVIVAL**




Except
      as
      otherwise provided, Executive agrees that the provisions of Articles 6, 7,
      8 and
      9 shall survive expiration or earlier termination of this Agreement for any
      reasons whether voluntary or involuntary, with or without Cause, and shall
      remain in full force and effect thereafter.




**ARTICLE
      9**




**INJUNCTIVE
      RELIEF**




Executive
      acknowledges and agrees that the covenants and obligations of Executive set
      forth in Articles 6 and 7 with respect to non-competition, non-solicitation,
      confidentiality and Employer’s property relate to special, unique and
      extraordinary matters and that a violation of any of the terms of such covenants
      and obligations will cause Employer irreparable injury for which adequate
      remedies are not available at law. Therefore, Executive agrees that if Executive
      breaches this Agreement than Employer shall be entitled to apply for an
      injunction, restraining order or such other equitable relief as a court of
      competent jurisdiction as limited by Section 13.3 may deem necessary or
      appropriate to restrain Executive from committing any violation of the covenants
      and obligations referred to in this Article 9. Executive shall have the right
      to
      appeal from such injunction or order and to seek reconsideration, These
      injunctive remedies are cumulative and in addition to any other rights and
      remedies Employer may have at law or in equity.





**ARTICLE
      10**




**TERMINATION**




**Termination
      by Executive**





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





Executive
      may terminate this Agreement for Good Reason at any time upon 30 days’ written
      notice to Employer, provided the Good Reason has not been cured within such
      period of time.





**Good
      Reason**





10.2
            In
                this Agreement, “Good Reason” means, without Executive’s prior written
                consent, the occurrence of any of the following events, unless Employer
                shall have fully cured all grounds for such termination within thirty
                (30)
                days after Executive gives notice
                thereof:





(i)  any
      reduction in his then-current Salary or benefits, other than in connection
      a
      percentage pay cut that is applicable to all senior executives and which is
      the
      same percentage for all such persons or in connection with a general reduction
      in benefits;





(ii)
            any
                material failure to timely grant, or timely honor, the Stock Option
                set
                forth in Article 4.2;





(iii)
            failure
                to pay or provide required
                expenses;






6




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





The
      written notice given for Good Reason by Executive to Employer shall specify
      in
      reasonable detail the reason for termination, and such termination notice shall
      not be effective until thirty (30) days after Employer’s receipt of such notice,
      during which time Employer shall have the right to respond to Executive’s notice
      and cure the breach or other event giving rise to the termination.





**Termination
      by Employer**





10.3  Employer
      may terminate its employment of Executive under this Agreement only with Cause
      and only by written notice to Executive. For purposes of this Agreement, the
      term Cause for termination by Employer shall be (a) a conviction of or plea
      of
      guilty or *nolo
      contendere* by
      Executive to a felony, or any crime involving fraud, securities laws violations,
      embezzlement or moral turpitude; (b) the refusal by Executive to perform his
      material duties and obligations hereunder or to follow the proper instructions
      of the Board of Directors after a
      written warning with respect thereto ;
      (c)
      Executive’s willful or intentional misconduct in the performance of his duties
      and obligations; or (d) conduct that is known or that should have been known
      by
      Executive to be detrimental to the best interests of the Company, as determined
      by the independent members of the Board; (e) if Executive or any member of
      his
      family makes any personal profit arising out of or in connection with a
      transaction to which Employer is a party or with which it is associated without
      making disclosure to and obtaining the prior written consent of the independent
      members of the Board; or (f) the entry by the Securities and Exchange Commission
      or a self-regulatory organization of a consent decree relating to a securities
      law violation by Executive. The written notice given hereunder by Employer
      to
      Executive shall specify that it is with Cause shall specify in reasonable detail
      the cause for termination. For purposes of this Agreement, “family” shall mean
”immediate family” as defined in the rules of the Securities and Exchange
      Commission. In the case of a termination for the causes described in (a), (d)
      and (e) above, such termination shall be effective upon receipt of the written
      notice. In the case of the causes described in (b) and (c) above, such
      termination notice shall not be effective until thirty (30) days after
      Executive’s receipt of such notice, during which time Executive shall have the
      right to respond to Employer’s notice and cure (if curable) the breach or other
      event giving rise to the termination.





**Severance**





10.4  Upon
      a
      termination of this Agreement with Good Reason by Executive, Employer shall
      pay
      to Executive all accrued and unpaid compensation and expense reimbursement,
      as
      of the date of such termination and, in the case such termination takes place
      after the Full Payment Date, also the “Severance Payment.” The Severance Payment
      shall be payable in a lump sum, subject to Employer’s statutory and customary
      withholdings. The Severance Payment shall be paid by Employer within thirty
      (30)
      business days of the expiration of any applicable cure period. The Severance
      Payment shall equal the total amount of the Salary payable to Executive under
      Section 4.2 of this Agreement for a period of two years .





**Termination
      Upon Death**





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





**Termination
      Upon Disability**





10.6  If,
      during the Term, Executive suffers and continues to suffer from a “Disability”
(as defined below), then Employer may terminate this Agreement by delivering
      to
      Executive ten (10) calendar days’ prior written notice of termination based on
      such Disability, setting forth with specificity the nature of such Disability
      and the determination of Disability by Employer. For purposes hereof,
“ **Disability** ”
means
      “permanent and total disability” as defined in Section 22(e)(3) of the Internal
      Revenue Code. Upon any such termination for Disability, Executive shall be
      entitled to receive any earned but unpaid compensation or expense reimbursement
      due hereunder through the date of termination and, in the case such termination
      takes place after the Full Payment Date, also the Severance Payment.




7




**ARTICLE
      11**




**PERSONNEL
      POLICIES, CONDITIONS, AND BENEFITS**







During
      the Term, Executive shall be entitled to vacation during each year of the Term
      at the rate of four (4) weeks per year. Within 30 days after the end of each
      year of the Term, Employer shall elect to (a) carry over and allow Executive
      the
      right to use any accrued and unused vacation of Executive, or (ii) pay Executive
      for such vacation in a lump sum in accordance with its standard payroll
      practices.




**ARTICLE
      12**




**INDEMNIFICATION**




Employer
      shall indemnify and defend the Executive to the fullest extent permitted by
      the
      laws of the State of Delaware and the Executive shall be entitled to the
      protection of any insurance policies the Employer shall maintain generally
      for
      the benefit of its directors and officers, against all losses, claims, damages,
      costs, charges, expenses, liabilities, judgments, or settlement amounts
      whatsoever incurred or sustained by him in connection with any action, suit,
      or
      proceeding to which he may be made a party by reason of his being or having
      been
      an officer of the Employer (“D&O Policies”). The Board of Directors of the
      Employer and the Chief Executive Officer shall consult the Executive as to
      the
      terms and extent of coverage under any D&O policies in force. It is
      understood and agreed however, that the Employer will only indemnify the
      Executive for those matters that are within the scope of the Executive’s
      employment with the Employer and not conducted in bad faith, intentionally
      or
      with gross negligence. The Executive agrees to immediately notify the Employer,
      in writing, in the event he becomes aware that he (or the Employer), is a party
      to any action, suit or proceeding. The Executive further agrees not to enter
      into any settlement agreements concerning any action, suit or proceeding without
      the express written consent of the Employer.




**ARTICLE
      12**




**BENEFICIARIES
      OF AGREEMENT**




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




**ARTICLE
      13**




**GENERAL
      PROVISIONS**




**No
      Waiver**





13.1  No
      failure by either party to declare a default based on any breach by the other
      party of any provisions of this Agreement, nor failure of such party to act
      quickly with regard thereto, shall be considered to be a waiver of any such
      breach , or of any future breach.




8




**Modification**





13.2  No
      waiver
      or modification of this Agreement or of any covenant, condition, or limitation
      herein contained shall be valid unless in writing and duly executed by the
      parties to be charged therewith.





**Submission
      to Jurisdiction; Consent to Service of Process.**





13.3  Submission
      to Jurisdiction; Consent to Service of Process. This Agreement shall be governed
      in all respects, by the laws of the State of New Jersey, including validity,
      interpretation and effect, without regard to principles of conflicts of law.
      The
      parties hereto irrevocably and unconditionally consent to submit to the
      exclusive jurisdiction of the state and federal courts in the State of New
      Jersey for any lawsuits, actions or other proceedings arising out of or related
      to this Agreement and agree not to commence any lawsuit, action or other
      proceeding except in such courts. The parties hereto further agree that service
      of process, summons, notice or document by mail to their addresses set forth
      above shall be effective service of process for any lawsuit, action or other
      proceeding brought against them in any such court. The parties hereto
      irrevocably and unconditionally waive any objection to the laying of venue
      of
      any lawsuit, action or other proceeding arising out of or related to this
      Agreement in such courts, and hereby further irrevocably and unconditionally
      waive and agree not to plead or claim in any such court that any such lawsuit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum.




**Entire
      Agreement**





13.4  This
      Agreement embodies the whole agreement between the parties hereto regarding
      the
      subject matter hereof and there are no inducements, promises, terms, conditions,
      or obligations made or entered into by Employer or Executive other than
      contained herein and except for the License Agreement. In particular, this
      Agreement restates and amends the Original Employment Agreement, and the parties
      confirm that they have no claims or demands from each other, regarding payments
      or other rights or liabilities, except as set forth in this
      Agreement.





**Severability**





13.5  In
      the
      event a court of competent jurisdiction determines that a term or provision
      contained in this Agreement is overly broad in scope, time, geographical
      location or otherwise, the parties hereto authorize such Court to modify and
      reduce any such term or provision deemed overly broad in scope, time, geographic
      location or otherwise so that it complies with then applicable law. ****





**Headings**





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




9




**Independent
      Legal Advice**





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





**No
      Assignment**





13.8  No
      party
      may pledge or encumber its respective interests in this Agreement nor assign
      any
      of its  rights
      or
      duties under this Agreement without the prior written consent of the other
      party.








**IN
      WITNESS WHEREOF** the
      parties have executed this Agreement as of the day and year first above
      written.




**COATES
              INTERNATIONAL, LTD.**
            
            
            **EXECUTIVE**By:
            /s/ Barry
              C.
              Kaye
            
            
            /s/ Gregory
              CoatesBarry
                C. Kaye
              Chief
                Financial Officer
            
            
            Gregory
                Coates




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