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                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT


THIS AGREEMENT (The "Agreement") is made, entered into and executed as of this
1st day of January, 1999, by and between Simon Yates (hereinafter referred to as
the "Executive"), and Blue Wave Systems, a Delaware corporation (herein referred
to as the "Employer").

WITNESSETH

WHEREAS, Employer desires to employ Executive as President and Chief Executive
Officer;

WHEREAS, Executive desires to accept such employment on the terms and conditions
herein set forth;

NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Employer and Executive agree as follows:

                                    ARTICLE I
                                    AGREEMENT

                                   Employment
                                   ----------

1.01  Subject to the terms and conditions of this Agreement, Employer agrees to
            employ Executive as President and Chief Executive Officer, and
            Executive hereby accepts such employment with Employer.

                                      Term
                                      ----

1.02  The initial term ("Initial Term") of Executive's employment hereunder
            shall commence on April 30, 1998 (hereunder referred to as the
            "Effective Date") and shall continue thereafter through April 30,
            2002, unless earlier terminated as provided herein.

                                   ARTICLE II
                               TITLE AND AUTHORITY
                               -------------------

                                     General
                                     -------

2.01  Executive shall render such services as are normally delegated to the
            position for which Executive is being hired. In performing such
            duties hereunder, shall give employer the benefit of his special
            knowledge, skills, contacts and business experience and shall devote
            substantially all of his business time, attention, ability and
            energy to the business of the Employer. Executive may not serve as a
            Director of other companies without the prior approval of the Board
            of Directors.


                                   ARTICLE III
                                  COMPENSATION
                                  ------------

                                     General
                                     -------

3.01  As compensation for services rendered under this Agreement, Executive
            shall be entitled to receive from Employer the Base Salary, Short
            Term Incentive Bonus, Stock Options and other Benefits, described
            hereinafter.

                                       1
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                                   Base Salary
                                   -----------

3.02  Executive shall receive an aggregate Base Salary at the rate of $12,500
            Dollars (per month), to be paid in accordance with the employer's
            general salary policy in effect from time to time. Said Base Salary
            shall be adjusted annually on the anniversary date of the Effective
            Date of this Agreement in a percentage not less than the average
            annual increase for like positions as reported in the Annual
            Compensation Survey of the American Electronics Association (AEA),
            or similar survey.

                           Short Term Incentive Bonus
                           --------------------------

3.03  Employer and Executive shall agree, on an annual basis, on a Short-Term
            Incentive Bonus ("Bonus") plan for Executive. The intent of the
            parties is that the Bonus Plan will result in total cash
            compensation, including Base Salary and Bonus, which is consistent
            with compensation practices of similar companies with similar
            performance.

      Employer and Executive agree that the Bonus Plan will be tied to survey
            data published by the American Electronics Association (AEA), which
            provides survey information regarding the performance of companies
            based on various measures, for example but not limited to, return on
            assets or return on capital, as well as survey information regarding
            executive compensation practices. Employer and Executive will agree
            each year on the method of measuring Employer's performance which
            will be used in the Bonus Plan for that year. For example, if
            Employee and Executive agree in a given year that return on assets
            will be the appropriate measure of Employer's performance for that
            year, and if the AEA survey indicates that Employer's return on
            assets would fall in the 50th percentile of companies similar to
            Employer, then the Bonus Plan would result in total compensation to
            President and Chief Executive Officer that would at least equal that
            of the total compensation of executives who rank in the 50th
            percentile of total compensation for similar companies according to
            the AEA survey.

      As such compensation survey data records actual compensation practices in
            prior years and will be used to establish compensation for the
            Executive in future years, survey data will be adjusted for
            inflation in executive cash compensation over time. This survey data
            will be based upon current information no more than six (6) months
            to one year aged.

      The Employer and Executive shall agree on a Bonus Plan by the first Board
            Meeting following the end of the prior Financial Year of the
            Company. In the absence of an agreed upon Bonus Plan, the annual
            Bonus shall be equal to 5% of the Net Income Before Interest and
            Taxes.

      Said Bonus shall be paid to Executive within sixty (60) days of the end of
            the Financial Year of the Company.

      Executive and Employer agree that the basis of future Bonuses may be
            altered by the mutual consent of both parties.

                                 Other Benefits
                                 --------------

3.04  Employer shall provide Executive with Medical Insurance, Dental Insurance,
            Life Insurance and other such benefits that are the same or
            substantially similar to, coverage provided from time to time to
            other Officers of Employer. Executive shall be allowed twenty-five
            (25) business days of vacation per calendar year.

                         1999 Short term Incentive Bonus
                         -------------------------------

3.05  Based on the financial performance of Employer during FY 1999, Employer
            shall pay to Executive a FY99 on target Bonus of $15,000 for the
            period January 1, 1999 to June 30, 1999.

                                       2
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                                   ARTICLE IV
                                   TERMINATION

                                     General
                                     -------

4.01  Employer and Executive shall have the right to terminate the employment of
            Executive as set forth in this Article IV.

                        Inability of Executive to Perform
                        ---------------------------------

4.02  If Executive shall become unable to carry out and perform fully his duties
            hereunder, and such inability shall continue for a period of ninety
            (90) consecutive days, the Board of Directors may, at any time
            thereafter, by giving Executive written notice of such termination,
            fully and finally terminate this Agreement. Termination under this
            Section 4.02 shall become effective as of the date provided in such
            notice. Upon such termination, Executive shall receive only such
            amounts as are earned under and due to him under this Agreement.
            including any unpaid Base Salary and a prorate share of any Bonus
            earned as a result of his activities prior to termination, and
            thereafter no further consideration or compensation shall be owed by
            Employer to Executive. Since the Bonus for the current Company
            Financial Fiscal Year can not be calculated until the end of the
            Company Financial Fiscal Year, the prorata Bonus shall be paid out
            at the end of the Company Financial Fiscal Year at the same time it
            would have been paid had Executive remained employed through the end
            of the Company Financial Fiscal Year. The Company will pay
            reasonable relocation expenses to the UK, if at time of termination,
            the executive has not received a visa entitling him to permanent
            residency in the USA. The remedy described in this paragraph shall
            be in addition to, and not to the exclusion of, the other remedies
            of termination rights set forth in this Agreement.

                               Death of Executive
                               ------------------

4.03  The employment of Executive shall automatically terminate upon the death
            of Executive. Upon such termination, Executives estate shall receive
            only such amounts as are earned under and due to him under this
            Agreement including any unpaid Base Salary and a prorata share of
            any Bonus earned as a result of his activities prior to termination
            plus any Life Insurance benefits, and thereafter no further
            consideration or compensation shall be owed by Employer to Executive
            or to his estate. Since the Bonus for the current Company Financial
            Fiscal Year can not be calculated until the end of the Company
            Financial Fiscal Year, the prorata Bonus shall be paid out at the
            end of the Company Financial Fiscal Year at the same time it would
            have been paid had Executive remained employed through the end of
            the Company Financial Fiscal Year. The Company will pay reasonable
            relocation expenses to the UK, if at time of termination, the
            executive has not received a visa entitling him to permanent
            residency in the USA.

                                       3
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                              Termination for Cause
                              ---------------------

4.04  In addition to any other remedies that Employer may have at law or in
            equity, the Board of Directors may immediately terminate Executive's
            employment under this Agreement by giving Executive written notice
            of such termination upon occurrence of any of the following events:

A.    Failure of Executive to present for work or duties set forth herein for
            three (3) or more consecutive business days, except during
            vacations, periods of illness or other personal emergencies without
            giving notice to Employer and receiving approval of Employer of such
            absence, which approval shall not be unreasonably withheld.

B.    Executive's conviction of a felony offense or commission by Executive of
            any act materially damaging to the reputation of Employer.

C.    Dishonesty, fraud, unlawful discrimination or theft on the part of
            Executive.

D.    Executive's using any confidential or proprietary information of the
            employer, or divulging any such information to third parties in a
            manner clearly opposed to the best interests of Employer.

E.    Executive has materially breached any of the terms, provisions, covenants
            or representations set forth in this Agreement.

      Upon termination for any of the reasons described above, Executive shall
            receive only such amounts as are earned under and due to him under
            this Agreement including any unpaid Base Salary earned as a result
            of his activities prior to termination, and thereafter no further
            consideration or compensation shall be owed by Employer to
            Executive. In particular, Executive shall not be entitled to any
            severance or benefits of any sort, nor any Bonus. Employer may
            deduct from Executive's paycheck any unauthorized expenses, charges
            or misappropriations for which Employer may be responsible as result
            of Executive's conduct.

      Before Employer may terminate this Agreement under Subparagraphs 4.04 E or
            F, Employer must give Executive thirty (30) days written notice of
            the specific acts or omissions complained of and must allow
            Executive to cure engaging in such conduct during the thirty day
            notice period. Employer and Executive specifically agree that
            failure to meet performance expectations shall not be grounds for
            termination under this paragraph.

         Termination by Employer Without Good Cause or Poor Performance
         --------------------------------------------------------------

4.05  The Board of Directors may terminate Executive's employment under this
            Agreement without any cause whatsoever by giving written notice of
            such termination to Executive, specifically including termination
            for poor performance. Upon such notice of termination Employer shall
            pay Executive a total of current annual salary in twelve (12) equal
            monthly installments, with the first installment to be paid no later
            than 30 days after the effective date of termination.

                            Termination by Executive
                            ------------------------

4.06  Executive may, with or without cause, terminate his employment under this
            Agreement by giving Employer at least ninety (90) days notice of
            such termination. Upon such termination, Executive shall receive
            only such amounts as owed to him under this Agreement as a result of
            his activities prior to the termination date. Upon receipt of such
            notice, Employer may elect to terminate Executive's employment at
            any time upon the payment of the prorata Base Salary through the end
            of the ninety day notice period.

                                       4
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      In the event Executive gives such notice prior to the end of any Financial
            Year of the Company no Bonus shall be earned for that Financial Year
            of the Company. In the event Executive gives such notice after the
            end of Financial Year of the Company but prior to the payment of any
            earned Bonus said Bonus shall continue to be due and payable on the
            required payment date.

4.07  Executive agrees that after employment with the Employer terminates, he
            will not directly or indirectly use or disclose to any person or
            business entity any financial information involving Blue Wave
            Systems or proprietary information involving its products,
            manufacturing processes, marketing, sales, and operations. Executive
            agrees that all financial information involving Blue Wave Systems
            and information involving Blue Wave Systems products, manufacturing
            processes, marketing, sales, and operations are the exclusive
            property of Blue Wave Systems and that he shall not retain any
            records, materials or other documents involving the above designated
            matters.

4.08  Executive agrees that during the one-year period following the termination
            of his employment by Blue Wave Systems, he will not, directly or
            indirectly, either as an employee, employer, consultant, agent,
            principal, partner, stockholder, corporate officer, director, or in
            any other individual or representative capacity, engage or
            participate in any business or activity that is of the type
            conducted, authorized, offered, or provided by Blue Wave Systems.
            Further, during this same period Executive agrees that he will not,
            directly or indirectly, recruit or hire or attempt to recruit or
            hire any person who is employed by Blue Wave Systems during the
            twelve-month period subsequent to the termination of his employment.
            During this same period, Executive agrees that he shall not contact,
            directly or indirectly, any vendor or customer of Blue Wave Systems
            for the purpose of encouraging the vendor or customer to alter in
            any way its business relationship with Blue Wave Systems. Executive
            represents to Blue Wave Systems that the enforcement of the
            restrictions contained in this paragraph will not be unduly
            burdensome to him because, among other things, Executive will
            receive the Severance Payment referenced herein and, in order to
            induce Blue Wave Systems to enter into this Agreement, Executive
            further represents and acknowledges that he will be willing and able
            to work and earn a livelihood not prohibited by this paragraph.



                         Multiple Causes of Termination
                         ------------------------------

      If Executive's employment is terminated in a fashion that would qualify
            him for severance payments and benefits under more than one
            provision of this Agreement, Executive will be entitled to select
            among the severance packages for which he qualifies, at his sole
            option, the severance package that he will accept. In no event shall
            Executive be entitled to receive more than one of the severance
            packages described herein.


                                    ARTICLE V
                              EXPENSE REIMBURSEMENT
                              ---------------------

                                     General
                                     -------

5.01  Executive is authorized to incur reasonable business expenses in promoting
            the business of Employer, including expenditures and travel in
            accordance with Employer's standard procedures in effect from time
            to time.

                                       5
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                                   ARTICLE VI
                                 MISCELLANEIOUS
                                 --------------

                                     Notices
                                     -------

6.01  Any notices to be given hereunder by either party to the other may be
            effected either by personal delivery or by mail, registered or
            certified, postage prepaid with return receipt requested. Mailed
            notices shall be addressed to the parties at the following
            addresses:

      If to Employer:   Blue Wave Systems Inc.
      2410 Luna Road
      Carrollton, TX 75006

      If to Executive:  Simon Yates
      1307 Red Maple
      Carrollton, TX 75006


      Any party may change his or its address by written notice in accordance
            with this section. Notices delivered personally shall be deemed
            communicated as of the actual receipt, mailed notices shall be
            deemed communicated as of three (3) days after proper mailing.

                      Inclusion of Entire Agreement Herein
                      ------------------------------------

6.02  This Agreement supersedes any and all other agreements either oral or in
            writing, between the parties hereto with respect to the employment
            of Executive by Employer and contains all of the covenants and
            agreements between the parties with respect to such employment in
            any manner whatsoever.


                             Law Governing Agreement
                             -----------------------

6.03  This Agreement shall be governed by and constructed in accordance with the
            laws of the State of Texas.

                            Attorney's Fees and Costs
                            -------------------------

6.04  If any action at law or in equity is necessary to enforce or interpret the
            terms of this Agreement, the prevailing party shall be entitled to
            reasonable attorney's fees, costs and necessary disbursements in
            addition to any other relief to which such party may be entitled.

                                     Waiver
                                     ------

6.05  No term or condition of this Agreement shall be deemed to have been waived
            nor shall there be any estoppel to enforce any of the terms or
            provisions of this Agreement except by written instrument of he
            party charged with such waiver or estoppel. Further, it is agreed
            that no waiver at any time of any of the terms or provisions of this
            Agreement shall be construed as a waiver at any of the other terms
            of provision of this Agreement and that a waiver at time of any of
            the terms or provisions of the Agreement shall be constructed as a
            waiver at any subsequent time of the same terms or provisions.

                                   Amendments
                                   ----------

6.06  Except as otherwise provided in Section 6.07, no amendment or modification
            of this Agreement shall be deemed effective unless and until
            executed in writing by all of the parties hereto.


                                       6
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                           Severability and Limitation
                           ---------------------------


6.07  All agreements and convenants contained herein are severable and, in the
            event any of them shall be held to be invalid by any competent
            court, this Agreement shall be interpreted as if such invalid
            agreements or covenants were not contained herein. Should any court
            or other legally constituted authority determined that for any such
            agreement or covenant to be modified to limit its duration or scope,
            the parties hereto shall consider such agreement or covenant to be
            amended or modified with respect to duration and scope so as to
            comply with the orders of any such court or other legally
            constituted authority, and as to all other portions of such
            agreement or covenants they shall remain in full force and effect as
            originally written.

                                    Headings
                                    --------

6.08  All heading set forth in this Agreement are intended for convenience only
            and shall not control or affect the meaning, construction or effect
            of this Agreement or of any of the provisions thereof.

                                   Assignment
                                   ----------

6.09  Executive agrees that his representations, warranties, covenants,
            promises and obligations contained herein may be assigned by
            Employer to any person, partnership, firm, association, corporation
            or other business entity to which Employer may transfer its business
            and assets or any portion thereof, but without prejudice to
            Executive's rights against Employer hereunder.

Executed as of this day year first above written.

                  EMPLOYER:
                  Blue Wave Systems:


                         By:
                            ----------------------------------
                         Its:  Director and Member, Compensation Committee



                  EXECUTIVE:
                           ----------------------------------------
                           Simon Yates

                                       7
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                             Arbitration Agreement
                             ---------------------

Executive and Employer agree to use binding arbitration for any dispute or
disagreement that Executive may have with Employer or that Employer may have
with Executive that arises in any way from Executive's employment or from
Executive's Employment Agreement, whether over hiring, termination, pay,
benefits, discrimination, or any other topic, and whether arising in contract,
tort, under statute or otherwise.  Employer and Executive understand that by
means of this Agreement, they are both substituting the binding arbitration
process for their rights to access a court and/or jury, and they further agree
that each party to this Agreement is entitled to rely on the existence of this
Agreement in all matters related to Executive's employment.  The parties agree
that the arbitration will be governed by the rules of the American Arbitration
Association except as otherwise set forth in this Agreement.  Employer and
Executive will agree upon an arbitrator to hear any dispute.  If they can not
agree, they will select the arbitrator pursuant to the rules of the American
Arbitration Association. The arbitrator may not grant any award or relief to
either Employer or Executive that exceeds, in amount or form, that allowed by
applicable law.  The prevailing party shall be entitled to reasonable attorney's
fees, cost, expert witness fees and necessary disbursements in addition to any
other relief to which such party may be entitled.  The arbitrator will hear each
side's arguments and will reach a decision that binds both parties.  Either
party may have that judgment entered on the arbitrator's award in any court of
competent jurisdiction and it will be binding, final and unappealable.
Arbitration shall occur in Dallas County, Texas unless otherwise agreed in
writing by the parties.



     EMPLOYER:

     Blue Wave Systems:

                    By:________________________________________
                    Its:  Director and Member, Compensation Committee

                    Date:______________________________________



     EXECUTIVE:

     _____________________________________
                    Simon Yates
                    Date:________________________________