##### 



EXHIBIT 4.8 Metal Storm Limited (acn 064 270 006) (Company) Jim MacDonald (Employee) EMPLOYMENT AGREEMENT                   Employment Agreement Page
1 of 8




---



##### 



EMPLOYMENT AGREEMENT AGREEMENTdated 10 September 2004. BETWEENMETAL STORM LIMITED(ACN 064 270 006) of 345 Queen Street, Brisbane, Queensland, 4001 (Company) ANDJim
MacDonaldof 9 Cedar Street, Greenslopes, Queensland, 4120 (Employee) IT IS AGREED  1.
    COMMENCEMENT OF EMPLOYMENT1.1
    The Employee shall commence employment as specified in Item A of the Schedule.1.2
    An initial probationary period of three (3) months shall apply effective from commencement of
the Employees employment. The main purpose of this probationary period is to give both the
Employee and Employer an opportunity to establish the Employees suitability for the position.
Should either party decide to terminate this agreement at the end of the three (3) month
probationary period, there will be no legal recourse from either party. If either party
chooses to terminate the employment during the probationary period either party will be
required to give the other party one (1) months notice in writing. The Employer may elect to
make a payment in lieu of notice for termination under this provision.2.
    DUTIES2.1
    The Employee must perform all the functions of the position set out in Item B of the Schedule
and such other duties as may be determined by the Company from time to time.2.2
    The Employee must carry out the Employees duties as the Company may from time to time
reasonably direct to a standard the Company may reasonably require.3.
    REMUNERATION3.1
    The Company must pay to the Employee the Remuneration package specified in Item C of the
Schedule to this Agreement, the components of which may be varied from time to time by mutual
agreement.3.2
    The Employee is not entitled to payment of overtime.3.3
    The Employees Remuneration package will be reviewed by 31 December 2005 and thereafter at
the conclusion of each calendar year.3.4
    From 1 January 2005 the Employee will be eligible to receive Share Options as specified in
Item D of the Schedule to this Agreement.       Employment Agreement Page 2 of 8




---



##### 



4.
    ANNUAL LEAVE4.1
    The Employee is entitled to be paid annual leave of 4 weeks pursuant to the Industrial
Relations Act 1999.4.2
    Annual leave is to be taken within 12 months of it accruing.4.3
    The Employee is not entitled to leave loading.4.4
    The Company may request the Employee to take accrued annual leave on 14 days written notice
to the Employee.5.
    SICK LEAVE5.1
    The Employee is entitled to paid sick leave of 8 working days for each 12 months of service.5.2
    Any sick leave accrued but not taken in one year may be taken in another year.5.3
    The Employee may use up to 5 days of sick leave to care for and support members of the
Employees immediate family or members of the Employees household when they are ill.5.4
    When the absence due to sickness (including that specified in 5.3) exceeds 2 days, the
Employee must provide a doctors certificate or other evidence of the need for sick leave.6.
    GENERAL OBLIGATIONS6.1
    The Employee must:  (a)
    devote the whole of the Employees time during usual business hours to the
Companys business except where otherwise approved in advance; and(b)
    diligently and faithfully devote himself to the business of the Company.  7.
    TERMINATION OF EMPLOYMENT7.1
    The employment is terminated automatically on the Employees death or Significant Disability.7.2
    The term Significant Injury means any injury or illness which would preclude the Employee
from performing the inherent requirements of the Employees job and,  (a)
    if the illness or injury arises out of a work-related activity, at least 6
months has elapsed since the Employee first became ill or incapacitated;(b)
    in any other case, the Employee has been absent for a period of more than 3
months in any period of 12 consecutive months.  7.3
    The employment may be terminated immediately by the Company if the Employee:  (a)
    is guilty of any criminal or indictable offence or of any dishonesty in
relation to the affairs of the Company;(b)
    is guilty of any serious breach of faith, or serious neglect or default or
wilful disregard of directions or serious professional misconduct or gross misconduct;           Employment Agreement Page 3 of 8




---



##### 



(c)
    is precluded or suspended from acting in the role of a Director pursuant to
Corporations Law.  7.4
    The Company may at any time terminate employment (other than for reasons described in clauses
7.1 and 7.3) on 90 days notice or payment in lieu or part thereof if termination occurs within
12 months of the completion of the Probationary Period, thereafter on 30 days notice or
payment in lieu or part thereof.8.
    COMPLIANCE WITH OBLIGATIONS ON TERMINATION8.1
    The Company will pay the Employee all statutory and contractual entitlements accrued to the
date of termination.8.2
    The Employee agrees that any amounts owing to the Company may be deducted from any
entitlements to be paid under clause 8.1.8.3
    Termination of the employment does not relieve the Employee from payment in full of all sums
then owing to the Company or which may become owing in respect of any period prior to
termination and is without prejudice to the rights of the Company to sue for antecedent breach
by the Employee of the terms and conditions of this agreement.9.
    DUTY TO DELIVER UP9.1
    The Employee must:  (a)
    whenever requested by the Company;(b)
    without demand as soon as no longer needed; and(c)
    immediately on termination deliver up to the Company all papers, writings, disks, access keys (including computer and
other information technology access codes and passwords) and any other material which are in
the possession or custody or under the control of the Employee relating in whole or in part
to the affairs of the Company or its business.  10.
    INTELLECTUAL PROPERTY10.1
    The Employee assigns to the Company:  (a)
    all inventions, discoveries and novel designs, whether or not registrable as
designs under the Designs Act 1906, patents under the Patents Act 1990and trademarks
under the Trade Marks Act 1995; and(b)
    the entire copyright in all works, including but not limited to all literary
and other works as defined in the Copyright Act 1968; created by the Employee as a result of and/or in the course of employment, either solely or
jointly with others.  10.2
    The assignment under clause 10.1 does not restrict the Employees right to utilise the
general expertise and knowledge accumulated by the Employee in the performance of services
under this agreement, and the Employee is entitled to use routine procedures developed by the
Employee in the performance of those services, but the Employee may not,               Employment Agreement Page 4 of 8




---



##### 



subject to clause 10.3, make any reproduction or substantial reproduction of any of the
intellectual property assigned by clause 10.1 without the written licence of the Company.  10.3
    Where the Employee makes a design as a result of and in the course of the performance of the
Employees services, the design is owned by the Company.10.4
    Where the Employee makes any patentable process or article as a result of and in the course
of the performance of the Employees services, the patent is owned by the Company.11.
    FURTHER ASSURANCES AS TO INTELLECTUAL PROPERTY11.1
    The Employee must during and after the term of this agreement do all acts and things and sign
all documents which the Company may reasonably request to secure the Companys ownership of
rights in the intellectual property referred to in clause 10.12.
    RESTRAINT DURING EMPLOYMENT12.1
    Without the prior consent of the Company, the Employee must not during employment by the
Company:  (a)
    act as an officer or Employee of or as a consultant or adviser to any other
corporation, firm or person;(b)
    take up any other position with any other corporation, firm or person; or(c)
    hold any shares or securities which create or may create a conflict between the
interests of the Company and the interests of the Employee.  13.
    CONFIDENTIALITY13.1
    The Employee must not directly or indirectly make use of any intellectual property of the
Company except with the authority and for the benefit of the Company.13.2
    The Employee must not without the written consent of the Company publish or disclose any
information concerning the business, transactions, or affairs of the Company or of any related
body corporate of the Company within the meaning of the Corporations Lawunless such
publication or disclosure is made in the normal course of employment.13.3
    The information referred to in clause 13 includes information disclosed to the Company or the
Employee by any existing or potential customer, supplier, contractor, agent, licensor or
licensee of the Company.13.4
    The Employee must at the request of the Company sign a confidentiality agreement containing
provisions similar to the provisions in this clause 13 in favour of any person referred to in
clause 13.3.13.5
    The Employee acknowledges that:  (a)
    a breach of clause 13.1 or clause 13.2 of this agreement would be harmful to
the business of the Company;(b)
    monetary damages alone would not be a sufficient remedy for the breach; and      Employment Agreement Page 5 of 8




---



##### 



(c)
    in addition to any other remedy which may be available in law or equity, the
Company is entitled to interim, interlocutory and permanent injunctions or any of them
to prevent the breach.  14.
    FURTHER ASSURANCE14.1
    Each party must promptly at its own cost do all things (including executing all documents)
necessary or desirable to give full effect to this agreement.15.
    SEVERABILITY15.1
    If anything in this agreement is unenforceable, illegal or void then it is severed and the
rest of this agreement remains in force.16.
    ENTIRE UNDERSTANDING16.1
    This agreement:  (a)
    is the entire agreement and understanding between the parties on everything
connected with the subject matter of this agreement; and(b)
    supersedes any prior agreement or understanding on anything connected with that
subject matter.  16.2
    Each party has entered into this agreement without relying on any representation by any other
party or any person purporting to represent that party.17.
    VARIATION17.1
    An amendment or variation to this agreement is not effective unless it is in writing and
signed by the parties.18.
    WAIVER18.1
    A partys failure or delay to exercise a power or right does not operate as a waiver of that
power or right.18.2
    The exercise of a power or right does not preclude either its exercise in the future or the
exercise of any other power or right.18.3
    A waiver is not effective unless it is in writing.18.4
    Waiver of a power or right is effective only in respect of the specific instance to which it
relates and for the specific purpose for which it is given.19.
    GOVERNING LAW AND JURISDICTION19.1
    The law of Queensland governs this agreement.19.2
    The parties submit to the non-exclusive jurisdiction of the courts of Queensland and the
Federal Court of Australia.       Employment Agreement Page 6 of 8




---



##### 



EXECUTEDas an agreement in Queensland. (SIGNATURES)




---



##### 



THE SCHEDULE Item A:
    
    Commencement Date:
    
    4 October 2004Item B:
    
    Position:
    
    Chief Financial OfficerItem C:
    
    Remuneration:
    
    a) Initial Base Salary of $180,000 per annum.b) Employee may sacrifice a portion of Base Salary to
finance a novated Motor Vehicle lease.c) Performance Bonus as per Item Ed) Superannuation at 9% of Base Salary.e) Share Options as per Item D.Item D
    
    Share Options:
    
    a) ......TBA........ Share Options at $0.40 per share
granted quarterly in arrears over 2 years, exercisable
within 5 years of grant.Item E
    
    Performance Bonus:
    
    Up to 30% of Base Salary annually based on the Chief
Executive Officers evaluation of the Employees performance against KPIs defined as to
outcome and weighted as to the % each successful outcome will attract. KPIs will be set at
the commencement of employment and thereafter at the commencement of each calendar year.
 Employment Agreement Page
8 of 8