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                                                                   EXHIBIT 10(W)
                          EMPLOYMENT AGREEMENT BETWEEN
                       CATUITY INC. & ALFRED H. RACINE III



    This Employment Agreement is made and entered into as of September 23, 2004
between Catuity, Inc. (the "Company"), a Delaware corporation, and Alfred Henry
Racine, III (the "Executive").

         1. EMPLOYMENT. Company hereby employs Executive, and Executive hereby
accepts employment with Company, on the terms and conditions hereinafter set
forth.

         2. TERM. The term of this Agreement will commence on the date of this
Agreement and end on the first anniversary thereof, unless further extended or
terminated as hereinafter set forth. Commencing on the first anniversary and on
each anniversary date thereafter, the term of Executive's employment may be
extended for one (1) additional year by the mutual written agreement of the
parties.

         3. DUTIES AND RESPONSIBILITIES. Executive shall serve with the duties
of President and Chief Executive Officer of Company (or in such other position
as may be mutually agreed upon by Executive and the Board) and shall have such
responsibilities, duties and authority as may be assigned to him by the Board.
Executive shall devote substantially all of his working time and effort to the
business and affairs of Company, except that he may as hereinafter provided
serve as a member of the board of directors of other companies, charities, civic
organizations and professional organizations.

         4. SERVICE ON BOARD OF DIRECTORS. During the term of this Agreement,
Executive shall serve, if and when elected, and re-elected, as a member of the
Board of Company or of any of its subsidiaries, affiliates or divisions, and as
an officer of any subsidiary, affiliate or division, if elected. When this
Agreement terminates, Executive will, if requested by the Board of Company,
tender his resignation from any and all such Board positions.

         5. OUTSIDE ACTIVITIES. During the term of this Agreement, Executive may
devote reasonable periods of time to serve as a member of the board of directors
or of a committee of any organization involving no conflict of interest with
Company, and he may engage in charitable, civic and community activities and
manage his personal investments, including his controlling interest in Original
Ink LLC, whose assets include Altamont Partners; provided that such activities
do not materially interfere with the regular performance of his duties and
responsibilities under this Agreement.

         6. PLACE OF EMPLOYMENT. Executive shall have his office in, and perform
his duties in, the metropolitan Charlottesville, Virginia area and shall not be
required to move from the metropolitan Charlottesville, Virginia area; provided
that, he shall from time to time be required to travel when necessary in
carrying out Company's business. Executive acknowledges that Company's current
main offices and employees are located in Sydney, Australia and Detroit,
Michigan, and that accordingly significant and regular travel will be required
to dispatch his normal duties.

         7. REIMBURSEMENT OF EXPENSES AND FURNISHING OF SERVICES TO EXECUTIVE.
During the term of this Agreement, Executive shall be entitled to, including but
without limitation, an office at the company's corporate headquarters, as well
as reimbursement, upon proper accounting, of reasonable expenses and
disbursements incurred by him in the course of his duties. All expense
reimbursements will be subject to compliance with IRS regulations so as to be
deductible as ordinary and necessary business expenses, and to compliance with
Company's normal policies and practices.

         8. BASE SALARY COMPENSATION. During the term of Executive's employment,
he shall be paid a minimum base salary of Two Hundred Fifty-Thousand dollars
($250,000) per year. The Board may increase Executive's salary from time to time
in its discretion, and if so increased, such salary shall not be decreased
thereafter during the term of this Agreement.

         9. OTHER BENEFITS. Executive shall be entitled to participate in all
bonus or incentive plans and stock purchase plans in such manner as such plans
apply to officers and senior executives of the Company generally, and in all
employee benefit, including disability insurance coverage, and fringe benefit
plans currently maintained, or hereafter adopted, by Company, as such plans may
be amended or (or terminated) from time to time in accordance with their terms,
in the same manner as such plans apply to officers and senior executives of
Company of comparable or lesser position generally.

                  In addition, Executive shall be entitled to three (3) weeks of
personal time off, to be used at his discretion but scheduled in consultation
with the Board so as to accommodate Company's business

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interests, during each 12-month period hereof.

                  If Executive does not participate in any Company-sponsored
medical insurance programs, Company shall reimburse Executive monthly for the
premiums paid by Executive to maintain an individual policy of medical insurance
covering Executive and his dependents, currently in the amount of Four Hundred
and Four Dollars ($404) monthly. Further, the Company agrees to pay for any
increases in the cost of the premiums for as long as the total average monthly
costs do not exceed One Thousand Dollars ($1,000.00).

                  Company shall reimburse Executive for his legal fees incurred
in the drafting and negotiation of this Employment Agreement. Executive believes
that those fees shall be approximately $15,000.

         10. STOCK OPTIONS. Company agrees that it will grant to Executive an
option to purchase a number of shares equal to ten percent (10%) of the total of
currently issued and outstanding shares of common stock of the Company at a
exercise price equal to the average of the closing bid and asked prices as
reported on the NASDAQ Small Cap market of the stock on each of the ten (10)
trading days following the Effective Date of this Agreement (the "Options"). The
Options shall be confirmed in an Option Agreement in form substantially similar
to the form of stock option agreement attached hereto. This grant will be
expressly conditioned on obtaining stockholder approval of the grant, which the
Company will seek as soon as reasonably practicable but not later than the next
occurring regular annual meeting of stockholders (typically held in May). The
Options will have a term of five (5) years from the date of this Agreement, and
shall be exercisable in the following manner. Twenty Five percent (25%) of the
Options shall vest six (6) months after the Effective Date of the Agreement.
Fifteen percent (15%) of the Options shall vest one (1) year after the Effective
Date of the Agreement. The balance of the Options shall vest based upon the
following formula for increases in stock price. Twenty percent (20%) of the
remaining stock Options shall vest when the stock price increases ten percent
(10%) above the exercise price. Twenty percent (20%) of the remaining stock
Options shall vest when the stock price increases twenty percent (20%) above the
exercise price. The final twenty percent (20%) of the stock Options shall vest
when the stock price rises thirty percent (30%) above the exercise price. The
Options shall continue to vest and be exercisable after the Executive's
termination of employment for any reason, except for a "Termination for Cause"
as defined in the Option Agreement. The number of shares and the strike price
subject to such Options shall be adjusted in the event of stock dividends, stock
splits, or other changes in the capitalization of the Company. Termination of
Executive's employment merely because of expiration of this Employment Agreement
or any other reason other than a "Termination for Cause" shall not cause a
forfeiture of such options.

         11. TERMINATION BY EXECUTIVE. Executive may voluntarily terminate his
employment hereunder at any time, with or without cause or reason, on 30 days'
notice.

         12. NON DISPARAGEMENT OF EXECUTIVE. Company shall do nothing to
disparage Executive's reputation or good name during or after the term of this
Agreement.

         13. TERMINATION BY COMPANY. Company may terminate this Agreement and
the employment of Executive at any time, with or without cause or reason, on 30
days' notice.

         14. INDEMNIFICATION. In addition to any indemnification provided by the
By-Laws of Company or otherwise, Company shall indemnify and provide reasonable
advances for expenses to Executive, to the fullest extent permitted by the laws
of the State of Delaware, if Executive is made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that Executive is or was
an officer, director or employee of Company or any subsidiary or affiliate
thereof, in which capacity Executive is or was serving at Company's request,
against expenses, judgments, fines and amounts paid in settlement incurred by
him in connection with such action, suit or proceeding. Company shall exercise
its reasonable commercial efforts to maintain directors' and officers' insurance
coverage as well as all other appropriate malpractice and professional liability
coverage on behalf of Executive during the term of this Agreement at Company's
expense, in a manner and coverage substantially similar to the D&O insurance
currently in effect. Subject to requirements of any applicable insurance
coverage, Executive shall have the absolute





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right to engage counsel reasonably acceptable to Company and at legal rates
deemed reasonably acceptable to Company, for the above-referenced actions.
Executive shall give prompt notice to Company of any claims made against him for
which he will seek indemnification.

         15. PAYMENT OF BENEFIT ON DEATH OF EXECUTIVE. In the event of the death
of Executive, this Agreement shall terminate except as to the Options and the
various benefit plans which, by their terms, continue after his death or by
which his estate, heirs, surviving spouse, personal representative, devisees,
legatees and beneficiaries are paid benefits.

         16. AMENDMENT OR MODIFICATION WAIVER. No provision of this Agreement
may be amended, modified or waived, unless such amendment, modification or
waiver shall be authorized by the Board or any authorized committee of the
Board, and shall be agreed to in writing, signed by Executive and by an officer
of Company thereunto duly authorized. Except as otherwise specifically provided
in this Agreement, no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a subsequent breach of such
condition or provision or a waiver of a similar or dissimilar provision or
condition at the same or any prior or subsequent time.

         17. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent provided by law.

         18. SUCCESSORS. This Agreement shall be binding upon any successor of
Company and such successor shall be deemed substituted for Company under the
terms of this Agreement; but any such substitution shall not relieve Company of
any of its obligations hereunder. As used in this Agreement, the term
"successor" shall include any person, firm, corporation or like business entity
which at any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of Company. This Agreement may not
be otherwise assigned by Company without Executive's written consent.

         19. CONFIDENTIAL INFORMATION. Executive agrees not to disclose, either
while in Company's employ or at any time thereafter, to any person not employed
by Company or not engaged to render services to Company any confidential
agreement obtained by him while in the employ of Company, including, without
limitation, any of Company's inventions, processes, methods of distribution,
customers or trade secrets; provided, however, that this provision shall not
preclude Executive from use or disclosure of information known generally to the
public or of information not considered confidential by persons engaged in the
business conducted by Company or from disclosure required by law or court order.

         20. WITHHOLDING. Anything to the contrary notwithstanding, all payments
required to be made by Company hereunder to Executive or his estate or
beneficiary shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as Company may reasonably determine
it should withhold pursuant to any applicable law or regulation. In lieu of
withholding such amounts, Company may accept other provisions to the end that it
has sufficient funds to pay all taxes required by law to be withheld in respect
to any of such payments.

         21. NOTICES. For the purpose of this Agreement, notices, demands or
other communications provided for herein shall be in writing and shall be deemed
to have been duly given when delivered or (unless other specified) mailed by
United States Certified Mail, return receipt requested, postage prepaid,
addressed as follows:

                           to Executive:    Alfred Henry Racine III
                                            Eleven Altamont Circle
                                            Charlottesville, VA 22902-4606

                           to Company:      Catuity, Inc.








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                           2711 East Jefferson Avenue
                            Detroit, Michigan  48207

    or to such other address as any party may have furnished to the other in
    writing in accordance therewith, except that notices of change of address
    shall be effective only upon receipt.

         22. CONSTRUCTION WITH DELAWARE LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware.

         23. ENTIRE AGREEMENT OF PARTIES. This Agreement contains the entire
agreement of the parties and no party shall be liable and bound except as
provided herein, but this instrument does not replace, rescind or abrogate any
other agreement or plan between the parties which may now be or may hereinafter
become effective.

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