EXHIBIT 10.17

         Employment Agreement - Mark D. Goldsmith and Coates Motorcycle
                     Company, Ltd., Dated February 15, 2005

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of the 15th day
of February, 2005 (the "Effective Date")

BY AND BETWEEN:

            COATES  MOTORCYCLE  COMPANY,   LTD.,  a  Delaware  corporation  (the
            "Company" or the "Employer"),

            AND

            MARK D.  GOLDSMITH,  an  individual  having an  address at 34 Luchon
            Street Lido Beach, New York 11561 ("Executive")

WHEREAS,  Executive  has agreed to serve as (i)  President  and Chief  Executive
Officer and (ii) as Interim  Chief  Financial  Officer of the  Company,  and the
Company and the Company have agreed to hire  Executive as such,  pursuant to the
terms and conditions of this Agreement.

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

ARTICLE 1
EMPLOYMENT

Employer hereby hires the Executive as the President,  Chief  Executive  Officer
and as interim  Chief  Financial  Officer of the  Company and  Executive  hereby
affirms and accepts  such  employment  by Employer for the "Term" (as defined in
Article 3 below), upon the terms and conditions set forth herein.

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 Boards of
Directors of Employer  ("Boards of Directors") 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  Boards  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 Boards 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 in connection with the Executive's positions of
President and Chief  Executive  Officer and as interim Chief  Financial  Officer
shall  commence on the date hereof and continue  thereafter  for a term of three
(3) 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.
<PAGE>

ARTICLE 4
COMPENSATION

SALARY

4.1 (a) In  consideration  of Executive's  services to both  Employer,  Employer
shall pay to Executive  an annual  salary (the  "Salary")  of One Hundred  Fifty
Thousand Dollars ($150,000.00), payable in equal installments at the end of such
regular payroll  accounting  periods as are 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.

         (b)  In  addition  to his  Salary,  the  Employer  shall  issue  to the
Executive a stock grant in the amount of 200,000  shares upon the  execution and
delivery of this Agreement, subject, however, to the Company's right to redeem a
certain  amount of such shares in the event this  Agreement is terminated by the
Executive  without  "Good  Reason",  as defined  below,  or by the Employer with
"cause",  also as defined below, as follows:  (i) if any such termination occurs
during  the first  year of the Term,  all  200,000  shares  shall be  subject to
redemption  by the  Employer;  (ii) if any such  termination  occurs  during the
second year of the Term,  100,000  shares shall be subject to  redemption,  and;
(iii) if any such termination  occurs during the third year of the Term,  50,000
shares shall be subject to  redemption.  The Company shall exercise its right to
redeem the shares eligible for redemption by written notice to the Executive and
for all purposes under this Section 4.1(b) the Employer's redemption price shall
be $.01 per share.  In  addition,  the  Employer  shall  issue to the  Executive
incentive stock options to purchase 100,000 shares of the Employer's  restricted
common stock vesting one third each upon the first, second and third anniversary
dates of this Agreement (the "Stock Options").  The restricted common shares and
the Stock Options  issuable to Executive  under the terms of this Section 4.1(b)
may be issued out of the Employer's stock incentive plan.

         (c) Executive hereby  acknowledges  that the restrictive  common shares
and the Stock Option issuable to him under this Section 4.1 shall be "restricted
securities"  as such  term is  defined  under  Rule 144  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.

 BENEFITS

4.2 During the Term,  Executive  shall be entitled to participate in all medical
and other Executive benefit plans,  including vacation,  sick leave,  retirement
accounts and other Executive  benefits  provided by Employer to any of the other
senior  officers of the Employer on terms and  conditions no less favorable than
those offered to such senior officers.  Such  participation  shall be subject to
the terms of the applicable plan documents and Employer's  generally  applicable
policies.

EXPENSE REIMBURSEMENT

4.3 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 expenses related to the Employer's
business in accordance with Employer's  then customary  policies,  provided that
such expenses are adequately documented.

BONUS

4.4 In addition to the compensation  payable under Section 4.1,  Executive shall
be entitled to receive an annual bonus,  the amount of which shall be determined
by the Employer's Board of Directors ("Bonus").  Each year's Bonus shall be paid
to the Executive within 110 days of the Employer's calendar year end.
<PAGE>

OTHER COMPENSATION

4.5 Employer shall provide  Executive with a leased automobile for his exclusive
use throughout the term of this Agreement, including costs for maintenance.

ARTICLE 5
OTHER EMPLOYMENT

During the Term of this Agreement,  Executive shall devote  substantially 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. Except as provided below, Employer
shall be entitled  to all  benefits,  profits or other  issues  arising  from or
incidental to all work,  services and advice performed or provided by Executive.
Nothing in this  Agreement  shall preclude  Executive  from devoting  reasonable
periods required for:

         (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 written consent of Employer;

         (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 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
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 Security
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: (i) information obtained
or which  became  known to  Executive  other  than  through  his  employment  by
Employer; (ii) information in the public domain at the time of the disclosure of
such information by Executive; (iii) information that Executive can document was
independently developed by Executive;  and (iv) information that is disclosed by
Executive with the prior written consent of Employer.

DOCUMENTS

6.2 Executive  further  agrees that all  documents  and  materials  furnished to
Executive  by Employer and relating to the  Employer's  business or  prospective
business are and shall  remain the  exclusive  property of  Employer.  Executive
shall  deliver all such  documents  and  materials,  uncopied,  to Employer upon
demand therefore and in any event upon expiration or earlier termination of this
Agreement.  Any payment of sums due and owing to Executive by Employer upon such
expiration or earlier  termination  shall be conditioned upon returning all such
documents and materials, and Executive expressly authorizes Employer to withhold
any payments due and owing pending return of such documents and materials.
<PAGE>

INVENTIONS

6.3 All ideas,  inventions,  and other developments or improvements conceived or
reduced to practice by Executive,  alone or with others, during the Term of this
Agreement, whether or not during working hours, that are within the scope of the
business of Employer or that relate to or result from any of Employer's  work or
projects or the  services  provided by  Executive  to Employer  pursuant to this
Agreement,  shall be the  exclusive  property of Employer.  Executive  agrees to
assist Employer,  at Employer's expense, to obtain patents and copyrights on any
such ideas, inventions,  writings, and other developments, and agrees to execute
all  documents  necessary to obtain such patents and  copyrights  in the name of
Employer.

DISCLOSURE

6.4 During the Term, Executive will promptly disclose to the Boards 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

(A) Except as expressly  permitted  in Article 5 above,  during the Term of this
Agreement,  Executive  shall  not  engage  in any of the  following  competitive
activities:  (a)  engaging  directly or  indirectly  in any business or activity
substantially  similar to any business or activity engaged in (or proposed to be
engaged in) by Employer;  (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,  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,
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.

(B) 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 this
Agreement is terminated.  In addition, during the two-year period following such
expiration or earlier 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.

ARTICLE 8
SURVIVAL

Executive  agrees  that the  provisions  of  Articles  6, 7 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
Employer  shall be entitled to an  injunction,  restraining  order or such other
equitable  relief (without the requirement to post bond) as a court of competent
jurisdiction  may deem  necessary  or  appropriate  to restrain  Executive  from
committing  any violation of the covenants and  obligations  referred to in this
Article 9. 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
<PAGE>

10.1  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;

      (ii) any material  failure to timely grant, or timely honor, any equity or
      long-term incentive award;

      (iii) failure to pay or provide required compensation and benefits;

      The written notice given  hereunder by Executive to Employer shall specify
      in  reasonable  detail  the cause 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 for
cause  at any  time  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 or  embezzlement;  (b) the refusal by  Executive  to
perform his material duties and obligations  hereunder;  (c) Executive's willful
or intentional  misconduct in the performance of his duties and obligations;  or
(d) 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 Parent.  The written  notice given  hereunder by Employer to
Executive  shall specify in  reasonable  detail the cause for  termination.  For
purposes  of this  Agreement,  "family"  shall mean  Executive's  spouse  and/or
children.  In the case of a termination for the causes  described in (a) and (d)
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  the  breach  or other  event  giving  rise to the
termination.

SEVERANCE

10.4 Upon a termination  of this  Agreement  without Good Reason by Executive or
with cause by Employer  FOLLOWING THE FIRST YEAR OF THE TERM OF THIS  AGREEMENT,
Employer shall pay to Executive one year's compensation determined in accordance
with Section 4.1, subject to the provision of Section 6.2. Upon a termination of
this  Agreement  with Good Reason by  Executive  or without  cause by  Employer,
Employer shall pay to Executive all accrued and unpaid  compensation and expense
reimbursement,  as of the date of such termination and 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 4.1 of this  Agreement from the date of such
termination  until  the  end of the  Term of this  Agreement  (prorated  for any
partial month),  together with a prorated amount any bonus payable under Section
4.4.

TERMINATION UPON DEATH
<PAGE>

10.5 If Executive dies during the Term of this  Agreement,  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 of this Agreement,  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 the purposes of this Agreement,  "Disability"  means Executive's  inability,
with reasonable  accommodation,  to substantially  perform  Executive's  duties,
services and obligations  under this Agreement due to physical or mental illness
or other  disability  for a  continuous,  uninterrupted  period  of  sixty  (60)
calendar days or ninety (90) days during any twelve month period.  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.

ARTICLE 11
PERSONNEL POLICIES, CONDITIONS, AND BENEFITS

Except as otherwise provided herein,  Executive's employment shall be subject to
the  personnel  policies and benefit  plans which apply  generally to Employer's
Executives as the same may be interpreted, adopted, revised or deleted from time
to time, during the Term of this Agreement,  by Employer in its sole discretion.
During the Term hereof, 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.  Executive  shall take such  vacation at a time  approved in
advance  by the Board of  Directors  of  Employer,  which  approval  will not be
unreasonably  withheld but will take into account the staffing  requirements  of
Employer   and   the   need   for  the   timely   performance   of   Executive's
responsibilities.

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 obligation under this Agreement, nor failure of such party to
act quickly with regard thereto,  shall be considered to be a waiver of any such
obligation, or of any future breach.

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 The parties hereto irrevocably submit to the exclusive  jurisdiction of any
federal or state court  located  within the State of New Jersey over any dispute
arising out of or relating to this Agreement and each party  irrevocably  agrees
that all  claims in respect of such  dispute or any suit,  action or  proceeding
related  thereto may be heard and determined in such courts.  The parties hereby
irrevocably  waive,  to the fullest  extent  permitted  by  applicable  law, any
objection  which  they may now or  hereafter  have to the laying of venue of any
such dispute, suit, action or proceeding brought in such court or any defense of
inconvenient  forum for the  maintenance  of any such dispute,  suit,  action or
proceeding.  Each of the  parties  hereby  agrees  that a  judgment  in any such
dispute,  suit,  action or proceeding may be enforced in other  jurisdictions by
suit on the  judgment or in any other  manner  provided by law.  This  Agreement
shall be governed by and construed in  accordance  with the laws of the State of
New Jersey, without regard to any conflict of laws principles.
<PAGE>

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.

SEVERABILITY

13.5 In the event a court of competent  jurisdiction  determines  that a term or
provisions   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.

INDEPENDENT LEGAL ADVICE

13.7  Employer  has obtained  legal advice  concerning  this  Agreement  and has
requested that Executive  obtain  independent  legal advice with respect to same
before  executing  this  Agreement.  Executive,  in  executing  this  Agreement,
represents  and  warranties  to  Employer  that he has been so advised to obtain
independent  legal advice,  and that prior to the execution of this Agreement he
has so obtained  independent legal advice, or has, in his discretion,  knowingly
and willingly elected not to do so.

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  effective as of the
day and year first above written. COATES MOTORCYCLE COMPANY, LTD.

                               By:  /s/ Jeffrey L. England
                                   -----------------------------------------
                                   Jeffrey L. England, On Behalf of
                                   the Board of Directors

                                   /s/ Mark D. Goldsmith
                                   ------------------------------------------
                                   Mark D. Goldsmith

EMPLOY AGR GOLDSMITH CMC-ORIGINAL - Feb 2005