Document:

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                                                                    Exhibit 10.4

                           LOAN AND SECURITY AGREEMENT

         THIS AGREEMENT ("Agreement") made this _____ day of March, 2000,
between , a Florida corporation, with its chief executive office and principal
place of business at , (hereinafter "Dealer"), and AFFORDABLE DEALER SERVICES,
INC., a Florida corporation, with an office and place of business at 2650
McCormick Drive, Suite 185, Clearwater, Florida 33759 (hereinafter "Lender").

         Lender and Dealer have entered into certain financial transactions,
pursuant to which Lender has made loans and advances to Dealer. As of March 3,
2000, Dealer is indebted to Lender as follows:

         Balance owing on current floor plan debt:

         Balance owing on out-of-trust transactions:

         Dealer hereby acknowledges that the above sums are due and owing to
Lender without any defenses, setoffs or counterclaims of any kind whatsoever.

         Dealer and Lender agree that this Loan and Security Agreement is a
redocumentation of the existing loans between them, and does not in any way
extinguish the amounts due and owing from Dealer to Lender.

         Whereas, Dealer engages in the business of purchasing used cars,
trucks, trailers and other motor vehicles (hereinafter called "Vehicles") for
the purpose of resale, and Dealer wants Lender to finance Dealer's purchase of
such Vehicles.

         Now, therefore, it is agreed as follows:

         1. Advances. Lender may from time to time advance, in its sole and
absolute discretion, sums of money on behalf of Dealer to sellers and
wholesalers (including sellers at auction) of Vehicles for the purpose of
enabling Dealer to purchase Vehicles, provided, however, that Lender may, with
or without cause, refuse to advance any such sum of money; and provided further,
that any such advance for Vehicles shall not exceed the lesser of black book
rough value or purchase price paid by the Dealer. Lender may also make advances
directly to Dealer. Lender shall make advances only against passenger cars and
light passenger trucks. No advances will be made against commercial vehicles.

         In each case when Lender advances funds, prior to such advance Dealer
shall sign a statement of the transaction (all hereinafter called "Statement")
and immediately return the same to Lender. In the event the Statement is
returned via facsimile, the original statement shall be sent to Lender via first
class mail within one (1) business day.

         Unless Lender designates another form of document, Dealer will execute
in favor of Lender trust receipts in such form and substance as Lender may
require for the amount of credit extended with respect to each Vehicle, and
Dealer will execute such additional documents as Lender may request to confirm
or perfect Lender's title or security interest in the Vehicles, including,
without limitation, completing and executing all such documents necessary to
record Lender's lien on Vehicles with appropriate state authorities. Dealer
hereby irrevocably appoints Lender its attorney-in-fact, coupled with an
interest, to execute Dealer's name on all such documents necessary to record
Lender's lien on Vehicles with appropriate state authorities, and on any UCC
Financing Statements. In addition, Dealer shall execute and deliver the Power of
Attorney set forth on Schedule "B" hereof. Execution of any instrument for the

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amount of credit extended shall be deemed evidence of Dealer's obligation and
not payment therefor. Dealer authorizes Lender or any of its officers or
employees to execute such documents on behalf of Dealer and to supply any
omitted information and correct patent errors in any documents executed by or on
behalf of Dealer. Dealer agrees to hold all Vehicles and proceeds thereof in
trust until complete payment of the indebtedness to Lender respecting such
Vehicles, and Lender's title, lien or security interest shall not be impaired by
any payment to the seller or anyone else, in whole or in part, by Dealer, either
of the invoice price or of the amount of Dealer's obligation to Lender, or
Dealer's failure or refusal to account to Lender for proceeds. It is agreed that
upon purchase of a Vehicle by Dealer, Dealer shall deliver the original
certificate of title and all other title documents to the Lender, and Lender
will release such documents to the Dealer upon payment in full of the advance
made by the Lender to the Dealer for the Vehicle which is described in such
certificate of title. The Dealer covenants and agrees that during the term of
this Agreement it will not, without the Lender's prior written consent, apply
for a replacement certificate of title for any Vehicle. Dealer shall provide
Lender with a set of keys for each Vehicle.

         Dealer is authorized to use five percent (5%) of the Vehicles on its
sales floor for use as demonstration vehicles (the "Demos"). A curtailment
against such Demos in the amount of not less than ten percent (10%) will be
established by the Lender upon the Dealer designating, in writing to the Lender,
that a vehicle has been designated as a Demo, and such curtailment amount may be
increased based upon the mileage used on such Demos.

         2. Repayment Terms. Dealer shall pay to the order of Lender the
aggregate amount of advances by Lender on behalf of Dealer, together with
interest thereon, as follows:

         (a) Dealer shall pay interest on all amounts outstanding for the period
during which they are outstanding, computed upon the average daily balance.
Interest will be charged at the fixed rate of eighteen percent (18%) per annum.

         If Dealer has not repaid in full the original amount advanced with
respect to any Vehicle prior to the expiration of the following periods of time,
then Dealer shall pay a curtailment of ten percent (10%) of the original amount
of each advance for each period of thirty (30) days, or portion thereof, from
the date of the advance.

         Lender shall submit a statement to Dealer once each month setting forth
the interest due for the previous month, and payment shall be due within ten
(10) days after receipt thereof.

         Lender has the right to waive any particular curtailment due, but no
such waiver shall be interpreted as a waiver of any other curtailments.

         Notwithstanding anything contained in this Agreement to the contrary,
the unpaid balance of each advance shall be paid in full UPON DEMAND and if not
sooner demanded, within thirty (30) days from the date of advance.

         In the event that any payment is not made within ten (10) days of the
due date of such payment, the Lender shall charge Dealer a fee equal to five
percent (5%) of the amount of such payment to reimburse Lender for the
additional expense involved in handling such late payment.

         Upon and after the occurrence of an Event of Default and during the
continuation thereof, all obligations owed by Dealer to Lender shall, at the
election of Lender, without constituting a waiver of any such Event of Default,
bear interest at the maximum rate of interest allowable under applicable law.
All interest chargeable under this Agreement shall be computed on the basis of a
three hundred sixty (360) day year for actual days elapsed.

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         For the purpose of this Agreement, the term "Obligations" means any and
all loans, advances, debts, liabilities (including, without limitation, any and
all amounts charged to Dealer's account pursuant to any agreement authorizing
Lender to charge Dealer's account), obligations, lease payments, guarantees,
covenants and duties owing by Dealer to Lender of any kind and description
(whether advanced pursuant to or evidenced by this Agreement, any of the other
loan documents between Dealer and Lender (collectively, the "Loan Documents"),
or any other instrument, or by any other agreement between Lender and Dealer and
whether or not for the payment of money), whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising, and
including, without limitation, any debt, liability or obligation owing from
Dealer to others which Lender may have obtained by assignment or otherwise, and
further including, without limitation, all interest not paid when due and all
fees and expenses of Lender which Dealer is required to pay or reimburse by this
Agreement, by law, or otherwise.

         In no event shall the amount of interest due or payment in the nature
of interest payable hereunder exceed the maximum rate of interest allowed by
applicable law, as amended from time to time, and in the event any such payment
is paid by Dealer or received by Lender, then such excess sum shall be credited
as a payment of principal, unless Dealer shall notify Lender, in writing, that
Dealer elects to have such excess sum returned to it forthwith.

         3. Fees. Dealer shall pay Lender such fees and expenses set forth on
Schedule "A" hereof. Lender shall submit a statement to Dealer once each month
setting forth the fees due for the previous month, and payment shall be due
within ten (10) days after receipt thereof. All such fees shall constitute
Obligations hereunder.

         4. Grant of Security Interest. To secure prompt payment and the
performance of all Obligations, now or hereafter due from Dealer to Lender,
Dealer grants to Lender a first priority security interest in the following
property now owned or hereafter acquired by the Dealer, wherever located (herein
referred to as "Collateral"):

         (a) All inventory of new and used cars, trucks, trailers, motor
vehicles and all other vehicles, and all parts, accessories and furnishings used
in connection therewith, including all goods hereafter added to or acquired in
replacement of the foregoing goods; and

         (b) All goods, including all machinery, equipment, tools, parts, and
appliances; cars, trucks, trailers, and other vehicles; and office furniture and
fixtures; and

         (c) All accounts receivable, chattel paper, security agreements,
instruments, contract rights, policies and certificates of insurance, documents
and general intangibles, including all monies and credits now due or to become
due to Dealer from, and all claims against, manufacturers or distributors of
inventory or other lending institutions; and

         (d) The proceeds and products of the foregoing, including, without
limitation, all insurance proceeds.

         5. Dealer's Covenants.

         (a) Dealer shall keep the Collateral at , , or at such other place as
Lender may approve in writing. All locations for the storage, maintenance or
repair of Collateral, and all dealership locations of the Dealer are to be
approved in advance in writing by the Lender.

         (b) Dealer shall not, except as permitted under Paragraph 8, sell,
transfer, lease, mortgage or otherwise dispose of the Collateral, or any part
thereof, or any interest therein, or remove the Collateral

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from such premises or attempt any such sale, transfer, lease, mortgage, removal
or other disposition of the Collateral without the prior written consent of
Lender.

         (c) Dealer shall comply with and not permit any violation of all
applicable laws, ordinances, regulations and orders of all public authorities
relating to the Collateral.

         (d) Dealer shall keep and maintain the Collateral in good repair, and
safe condition, not alter or substantially modify the Collateral, nor conceal
the Collateral, nor permit any lien or encumbrance at any time to accrue
thereon.

         (e) Dealer shall at all times maintain in good standing all licenses
and permits required in connection with the conduct of its business.

         (f) Dealer will deliver within ten (10) days of the end of each month,
management prepared financial statements. Within sixty (60) days of the end of
each of Dealer's fiscal years, and more frequently if requested by Lender,
Dealer will deliver to Lender a financial statement, including a profit and loss
statement and a balance sheet, prepared and audited by an independent certified
public accountant acceptable to Lender. All such financial statements shall
demonstrate the Dealer's financial soundness and profitability.

         (g) Dealer shall give no less than thirty (30) days prior written
notice of any change in its name, capital structure or ownership.

         (h) Lender shall have the right, from time to time, to review, inspect
and examine the Dealer's books and records, business locations and Collateral,
and Dealer shall provide full access to its books and records and facilities to
the Lender and its representatives and agents. The cost of all such examinations
and inspections shall be borne by the Dealer, and shall constitute Obligations
hereunder, and shall be payable as provided in Section 3.

         (i) Dealer shall at all times be in full compliance with all applicable
federal, state and local laws and regulations regarding the resale of
automobiles.

         (j) Dealer is, and shall at all times during the term of this Agreement
be, a motor vehicle dealer licensed by the State of Florida, in compliance with
all requirements of Federal and Florida Law, including, without limitation, the
provisions of Florida Statutes Chapter 320, et seq. Attached hereto as Schedule
"C" is a copy of Dealer's motor vehicle dealer license. Upon renewal of the
license, Dealer shall immediately forward a copy of the new license to Lender.
In the event that Dealer's license is not renewed, Dealer will immediately
notify Lender.

         6. Representations and Warranties. Dealer represents and warrants at
the present time and, at the time of each advance by Lender to Dealer, that:

         (a) Dealer has full title to the Collateral.

         (b) Dealer has full right and power to grant the security interest
granted herein to Lender.

         (c) The Collateral is and shall remain free and clear of all liens,
claims and encumbrances whatsoever, except for the security interest granted
herein.

         (d) No financing statement executed by Dealer covering the Collateral,
other than a financing statement relating hereto, is on file in any public
office.

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         7. Taxes; Insurance. Dealer shall pay all taxes (other than income
taxes) and assessments at any time levied on the Collateral as and when the same
become due and payable and shall keep the Collateral insured against such risks
and in such amounts as Lender may from time to time require and with such
insurers as Lender may from time to time approve. Such policies shall show
Lender as a loss payee as its interest may appear, and policies will be
delivered to Lender together with appropriate evidence that the premium therefor
has been paid. If Dealer fails to pay such premiums, Lender may pay them, and
the amounts so advanced shall be Obligations secured hereunder. Attached hereto
as Schedule "D" is a certificate of insurance showing the current coverages in
effect and naming Lender as loss payee and additional insured. Upon renewal of
the insurance, Dealer shall immediately forward a copy of the new certificate of
Insurance to Lender. In the event that Dealer's insurance is not renewed, Dealer
will immediately notify Lender. In addition, Dealer shall pay all documentary
stamp taxes in connection with the execution of this Agreement and any advances
made hereunder.

         8. Sales of Inventory. Unless and until an Event of Default shall have
occurred, Dealer may sell its inventory (as described in Paragraph 4) to buyers
in the regular course of Dealer's business, but nothing herein shall be deemed
to waive or release any interest Lender may have hereunder or under any other
agreement in any proceeds of such inventory, including any accounts receivable,
chattel paper, security agreements, instruments, contract rights, documents and
general intangibles. Upon any sale of such inventory, Dealer shall forthwith pay
over to Lender an amount equal to the unpaid balance of the amount advanced with
respect to the item of inventory sold; provided however, that if Dealer is in
default, Dealer shall pay over forthwith the entire proceeds of such sale, in
kind, but a Dealer in default shall not be authorized to sell such inventory
without prior separate consent of Lender. Lender shall have the right to inspect
any or all Collateral at all times.

         9. Events of Default. The following are events of default
(collectively, "Events of Default") hereunder:

         (a) Default in the payment of the indebtedness or in the performance of
any obligations of Dealer hereunder or otherwise;

         (b) Any warranty, representation or statement made by Dealer in
connection with this Agreement or otherwise is false or has been breached in any
material respect;

         (c) Loss, theft, damage, destruction, sale (except as permitted in
Paragraph 8) or encumbrance of the Collateral, or the making of any levy,
seizure or attachment thereon;

         (d) Inability of Dealer to pay debts as they mature, insolvency,
appointment of a receiver for Dealer, assignment for the benefit of creditors by
Dealer, commencement of any proceeding under any bankruptcy or insolvency law by
or against Dealer, or any order of attachment, execution, sequestration or other
order in the nature of a writ is levied on the Collateral;

         (e) Death of the Dealer, if the Dealer be a natural person, or of any
partner of the Dealer which is a partnership; or

         (f) Dissolution, merger or consolidation, or transfer of any
substantial part of the property of any Dealer which is a corporation or a
partnership; or

         (g) If any guarantor of the Obligations of Dealer to Lender terminates
its guaranty, defaults in the payment or performance of any obligations of
guarantor owing to Lender, or becomes the subject of an insolvency proceeding.

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         10. Remedies. Whenever a default shall occur, or at any time thereafter
(such a default not having previously been cured), Lender at its option and
without demand or notice of any kind, may declare the indebtedness to be
immediately due and payable, and may cease making advances hereunder. Upon
default, Lender shall have the remedies of a secured party under the Uniform
Commercial Code with respect to the Collateral and all other security pursuant
to any other agreements between Lender and Dealer. In addition, Lender may take
possession of the Collateral and such other security by any means not involving
a breach of the peace and to sell the same, and for such purpose, Lender may
enter upon the premises on which the Collateral or other security shall be
situated and remove the same to such other place as Lender shall determine.
Dealer shall, upon Lender's demand, make the Collateral or other security
available to Lender at a place to be designated by Lender which is reasonably
convenient to both parties. If any notice is required by law, such notice shall
be deemed reasonably and properly given if mailed, postage prepaid, to the
address of Dealer at least five (5) days before the event with respect to which
notice is required.

         In the event of any default, Dealer shall pay all costs incurred in
enforcing its rights hereunder, including those incurred in bankruptcy
proceedings, expense of locating the goods, expenses of any repairs to any
realty or other property to which any of the goods may be affixed or be a part,
and reasonable attorneys' fees and legal expenses. The security interest granted
herein shall be deemed to secure, in addition to all other sums of money, the
repayment of all such costs of collection and enforcement, all amounts expended
by Lender on behalf of Dealer, and all other amounts owing by Dealer to Lender.

         11. Termination. This Agreement shall have an initial term (the
"Initial Term") commencing on the date hereof through August 31, 2000, and shall
thereafter be automatically renewed (a "Renewal Term") for successive periods of
one hundred eighty (180) days unless terminated by either party as set forth
below. Notice of such termination shall be effectuated by the mailing of a
certified letter, return receipt requested, not less than thirty (30) days
immediately prior to the effective date of such termination, addressed to the
other party at the address set forth above.

         Notwithstanding such term, upon the occurrence of an Event of Default,
Lender may terminate this Agreement without notice. In addition, should either
Dealer or Lender become insolvent or be unable to meet its debts as they mature,
then the other party shall have the right to terminate this Agreement at any
time without notice. On the date of a termination by Dealer or Lender, all
obligations hereunder shall become immediately due and payable without notice or
demand and shall be paid to Lender in cash or by a wire transfer of immediately
available funds.

         No termination shall relieve Dealer from any obligation to Lender
arising out of Lender's advances or commitments made prior to the effective date
of termination.

         12. General. This Agreement supersedes all previous security agreements
and loan agreements between Dealer and Lender covering the same subject, and
shall govern Dealer's indebtedness to Lender now outstanding under such prior
agreement or hereafter incurred under this Agreement. Time shall be of the
essence hereof. Any delay on the part of Lender in the exercise of any right or
remedy shall not operate as a waiver thereof. The covenants and conditions of
this Agreement shall apply to and be binding upon the heirs, executors,
administrators, successors and assigns of Dealer and shall inure to the benefit
of Lender and its successors and assigns. This Agreement has been delivered in
the State of Florida and shall be construed in accordance with the laws thereof.

         Effective on even date, Dealer hereby releases, acquits and forever
discharges Lender and its parents, subsidiaries, affiliates, directors,
officers, employees, attorneys, agents, servants and representatives, as well as
the respective heirs, personal representatives, successors and assigns or any
and

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all of them (collectively, "the Released Lender Parties"), from any and all
claims, counterclaims, demands, debts, actions, causes of action, suits,
contracts, indebtedness, agreements, obligations, accounts, defenses, offsets
against the indebtedness and liabilities of any kind or character whatsoever,
known or unknown, suspected or unsuspected, in contract or in tort, in law or in
equity, including without limitation, such claims and defenses as fraud,
mistake, duress, misrepresentation, breach of contract, negligence, breach of
duty, tortious interference with advantageous relationships and usury which the
Dealer ever had, now has or hereafter might have against the Released Lender
Parties, jointly or severally, for or by reason of any matter, cause or thing
whatsoever occurring up to the date of execution hereof, including, without
limitation: (a) any loan or other business transactions between the Dealer and
the Lender, (b) any agreements or other documents between the Dealer and the
Lender, (c) any course of dealing between the Dealer and the Lender, and (d) any
matters that may arise which relate to, in whole or in part, directly or
indirectly: (i) the loan described in this Agreement (the "Loan"); (ii) the Loan
Documents; (iii) the Obligations; (iv) the Collateral; (v) or the administration
of the Loan. In addition, the Dealer agrees not to commence, join in, prosecute
or participate in any suit or other proceeding in a position which is adverse to
any of the Released Lender Parties arising directly or indirectly from any of
the foregoing matters. In the event that the Dealer has commenced a suit or
other proceeding against any of the Released Lender Parties, the Dealer agrees
to immediately withdraw such suit or other proceeding with prejudice.

         13. JURY TRIAL. LENDER AND DEALER ACKNOWLEDGE THAT THE TRANSACTIONS AND
MATTERS SET FORTH IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ARE COMPLEX IN
NATURE AND THAT ANY LITIGATION ARISING THEREFROM WOULD BE MOST APPROPRIATELY,
ECONOMICALLY AND SPEEDILY RESOLVED BY A NON-JURY TRIAL. THE LENDER AND DEALER
THEREFOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THAT
THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION, DIRECTLY OR
INDIRECTLY, BASED ON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR THE LOANS AND FACILITIES CONTEMPLATED
HEREBY, OR IN ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
WRITTEN OR ORAL), OR ACTIONS OR OMISSIONS OF ANY PARTY TO THIS AGREEMENT. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR LENDER'S ENTERING INTO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. LENDER AND DEALER EACH WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OF THE LOAN DOCUMENTS.

         14. AUTOMATIC RELIEF FROM STAY. THE DEALER AGREES THAT IF ANY
PROCEEDING IS COMMENCED UNDER TITLE 11 OF THE UNITED STATES CODE RELATIVE TO IT,
LENDER SHALL BE AUTOMATICALLY ENTITLED TO IMMEDIATE RELIEF FROM STAY UNDER 11
U.S.C. 362 WITHOUT ESTABLISHING EQUITY OR NEED OR LACK OF NEED FOR THE PROPERTY
SECURING THE LOANS OR CAUSE OR LACK OF CAUSE, AND THE DEALER HEREBY CONSENTS TO
SUCH RELIEF, IT BEING EXPRESSLY ACKNOWLEDGED THAT THIS PROVISION WAS
SPECIFICALLY NEGOTIATED AND CONSTITUTES A MATERIAL INDUCEMENT TO LENDER ENTERING
INTO THIS AGREEMENT AND MAKING FINANCIAL AND OTHER ACCOMMODATIONS AND ADDITIONAL
ADVANCES CONTEMPLATED HEREIN.

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective on the date first set forth above.

 Witnesses:                                AFFORDABLE DEALER SERVICES, INC.,
                                           a Florida corporation

                                           By: /s/
--------------------------------               -----------------------------

--------------------------------

                                          , a Florida corporation

                                           By: /s/
--------------------------------               -----------------------------
                                                   President

--------------------------------

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                                  SCHEDULE "A"

         Schedule of Fees:

         Inspection/Auditing Fee: $54.00 per hour (Estimate)

         These fees cover the expenses incurred by the Lender from third parties
in connection with the monitoring and verification required in connection with
the Vehicles. These amounts are reimbursements for actual expenses that Lender
pays to third parties for providing the above services. In the event that Lender
is required to expense additional sums in excess of the amounts set forth above,
or in the event that the cost of such services to the Lender are increased, all
such sums shall be repaid by the Dealer, and shall constitute Obligations
hereunder.

         Audits will be conducted at a minimum of once a month. In the event of
the occurrence of an Event of Default, the frequency of audits will increase.

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                               PERSONAL GUARANTY

         For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned,       , does hereby personally
guaranty the full and timely performance by,           , a Florida Corporation,
of all obligations under the forgoing LOAN AND SECURITY AGREEMENT, by and
between First American Capital Trust and             , dated this ______ day of
____________, 2000, including but not necessarily limited to the full payment of
principal together with all interest to accrue on.

/s/                                          /s/
    -----------------------------------          -------------------------------
WITNESS:
         ------------------------------
TYPE OR PRINT NAME                           -----------------------------------
                                             TYPE OR PRINT NAME

/s/
    -----------------------------------
WITNESS:
         ------------------------------
TYPE OR PRINT NAME

STATE OF
         ------------------------------

COUNTY OF
          -----------------------------

         BEFORE me personally appeared            , who [ ] is personally
known to me, or [ ] has produced his/her driver's license as identification, to
be the person described in and who has executed the foregoing instrument for
the purpose therein expressed and who did take an oath.

         WITNESS my hand and official seal, this ____ day of __________________,
2000.

                                               ---------------------------------
                                               Notary Public

My Commission Expires: __________________

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                                  SCHEDULE "B"

                                POWER OF ATTORNEY

         KNOW EVERYONE BY THESE PRESENTS THAT , a Florida corporation, with its
chief executive office and principal place of business at , (hereinafter
"Dealer"), does hereby irrevocably make, constitute and appoint AFFORDABLE
DEALER SERVICES, INC., a Florida corporation, with an office and place of
business at 2650 McCormick Drive, Suite 185, Clearwater, Florida 33759
(hereinafter "Lender"), and any of Lender's officers, employees or agents
designated by Lender, as Dealer's true and lawful attorney with power:

         A. To sign Dealer's name on all title documents necessary to transfer
motor vehicle ownership to Lender, and to sign Dealer's name on all title
documents necessary to record Lender's lien on motor vehicles with appropriate
state authorities;

         B. To endorse Dealer's name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into Lender's
possession;B. To endorse Dealer's name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into Lender's
possession;

         C. To notify the Post Office authorities to change the address for
delivery of Dealer's mail to an address designated by Lender, to receive and
open all mail addressed to Dealer, and to retain all mail relating to the
Collateral and forward, within two (2) business days of Lender's receipt
thereof, all other mail to Dealer;

         D. To sign the name of Dealer on any UCC financing statements,
including, without limitation, UCC-1 and UCC-3 financing statements or on any
other similar documents which need to be executed, recorded and/or filed in
order to perfect or continue perfected Lender's security interest in the
Collateral;

         E. To sign Dealer's name on all documents described in the Loan and
Security Agreement between Dealer and Lender (the "Agreement") and to supply any
omitted information and correct patent errors in any documents executed by or on
behalf of Dealer;

         F. To do all things necessary to carry out the terms of the Agreement.

         The appointment of Lender as Dealer's attorney, and each and every one
of Lender's rights and powers, being coupled with an interest, are irrevocable
so long as there are any amounts or obligations owing from Dealer to Lender. The
Dealer ratifies and approves all acts of the attorney. Neither Lender nor its
employees, officers or agents shall be liable for any acts or omissions or for
any error in judgment or mistake of fact or law made in good faith, except for
gross negligence or willful misconduct.

         Lender may file one or more financing statements disclosing Lender's
security interest without the Dealer's signature appearing thereon.

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         IN WITNESS WHEREOF, , a Florida corporation, has executed this Power of
Attorney this _____ day of __________, 2000.

                                                         , a Florida corporation

                                             By: /s/
----------------------------------               -------------------------------
                                                      President

STATE OF FLORIDA          )

                          ) SS

COUNTY OF _______________ )

         The foregoing instrument was acknowledged before me on the ____ day of
__________, 2000, by ____________________, the ________________ of , a Florida
corporation. He / She is personally known to me, or who produced the following
type of identification:___________________________.

                                             /s/
                                                 -------------------------------
                                             Print Name:

                                             Notary Public

                                             My commission expires on:

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                                  SCHEDULE "C"

                             COPY OF DEALER LICENSE

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                                  SCHEDULE "D"

                        COPY OF CERTIFICATE OF INSURANCE

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                                  SCHEDULE "A"
                                       TO
                              FINANCING STATEMENT

DEBTOR:                                      SECURED PARTY:

                                             Affordable Dealer Services, Inc.
                                             2650 McCormick Drive
                                             Suite 185
                                             Clearwater, Florida 33759

         This Financing Statement covers the following types (or items) of
PROPERTY:

         a)       All inventory of new and used cars, trucks, trailers, motor
vehicles and all other vehicles, and all parts, accessories and furnishings used
in connection therewith, including all goods hereafter added to or acquired in
replacement of the foregoing goods; and

         b)       All goods, including all machinery, equipment, tools, parts
and appliances; cars, trucks trailers, and other vehicles; and office furniture
and fixtures; and

         c)       All accounts receivable, chattel paper, security agreements,
instruments, contract rights, policies and certificates of insurance,
documents and general intangibles, including all monies and credits now due or
to become due to Debtor from, and all claims against, manufacturers or
distributors of inventory or other lending institutions; and

         d)       The proceeds of the foregoing, including, without limitation,
insurance proceeds.

         All of the foregoing shall be defined as "Collateral."

         The security interest described herein continues in all Collateral as
described in this Financing Statement (except goods sold as provided in Section
9 307, UCC) notwithstanding sale, exchange or other disposition thereof by
Debtor; sale, exchange or other disposition of said [illegible] is NOT otherwise
authorized by Secured Party in the security agreement or otherwise.

         All terms used herein and not otherwise defined herein are used as
defined in the Uniform Commercial Code.

         NOTICE-PURSUANT TO AN AGREEMENT BETWEEN [ILLEGIBLE] AND SECURED PARTY,
DEBTOR HAS AGREED NOT TO FURTHER [ILLEGIBLE] COLLATERAL DESCRIBED HEREIN, THE
FURTHER ENCUMBERING [ILLEGIBLE] CONSTITUTE THE TORTIOUS INTERFERENCE WITH
SECURED PARTY'S [ILLEGIBLE] SUCH ENCUMBRANCER.

         IN THE EVENT THAT ANY ENTITY IS GRANTED A SECURITY INTEREST IN DEBTOR'S
ACCOUNTS, CHATTEL PAPER OR GENERAL [ILLEGIBLE] CONTRARY TO THE ABOVE, THE
SECURED PARTY ASSERTS A CLAIM [ILLEGIBLE] THEREOF RECEIVED BY SUCH ENTITY.

15<PAGE>   1
                                                                   EXHIBIT 10.12

                              Project No: .... GRA01530..........

                              R&D START GRANT DEED
INDUSTRY

RESEARCH AND

DEVELOPMENT

BOARD                         PARTICULAR CONDITIONS
                              ---------------------

PARTIES

THE BOARD                   INDUSTRY RESEARCH AND DEVELOPMENT BOARD on
                            behalf of the Commonwealth of Australia

- postal address            Mr A B Baker
                            Regional Director NSW
                            AusIndustry
                            GPO Box 9839
                            Sydney NSW 2001

- street address            Mr A B Baker
                            Regional Director NSW
                            AusIndustry
                            Level 17, MSB Tower
                            207 Kent Street
                            Sydney NSW 2000

THE GRANTEE                 Chip Application Technologies Limited

- ACN                       ACN 057 883 333

- postal address            Level 4, Ballarat House
                            68 Wentworth Avenue
                            Surry Hills
                            NSW 2010

- street address            Level 4, Ballarat House
                            68 Wentworth Avenue
                            Surry Hills
                            NSW 2010

                                    Version 2
<PAGE>   2

                                                                               2

OPERATIVE PROVISIONS

This Grant is made under the R&D Start Program to the Grantee respect of the
Project described in schedule 1. The Grant is made on the terms and conditions
contained in this deed, which incorporates the GENERAL CONDITIONS applying to
R&D Start Program grants as at 1 September 1998, as modified by the Special
Conditions in schedule 6.

The Grantee acknowledges receipt of a copy of the General Conditions.

If there is an inconsistency between these Particular Conditions and the General
Conditions these Particular Conditions prevail to the extent of the
inconsistency.

                                    Version 2
<PAGE>   3

                                                                               3

ACCEPTANCE OF TERMS

EXECUTED AS A DEED

Date of deed: 17th February 2000

BOARD

SIGNED, SEALED AND
DELIVERED on behalf of the
COMMONWEALTH OF
AUSTRALIA By A B Baker a delegate
of the INDUSTRY RESEARCH AND
DEVELOPMENT BOARD in the
presence of:

/s/  M. CHENG
-----------------------------------------
Signature of witness                         /s/  [SIGNATURE ILLEGIBLE]
M Cheng                                      -----------------------------------

-----------------------------------------
Name Of Witness (block letters)

Level 17, 207 Kew Street, Sydney, ???
-----------------------------------------
Address of witness

Customer Service Manager
-----------------------------------------
Occupation of witness

                                    Version 2
<PAGE>   4

                                                                               4

GRANTEE

SIGNED, SEALED AND
DELIVERED by CHIP APPLICATION                       [COMMON SEAL LOGO]
TECHNOLOGIES LIMITED ACN 057 883
333 whose COMMON SEAL is
affixed in accordance with its Articles
of Association in the presence of

/s/ DAVID C. MAC SMITH                       /s/ JOHN WEIHEN
-----------------------------------          -----------------------------------
Signature of director                        Signature of secretary
                                             (director/secretary)

David C. Mac Smith                           John Weihen
-----------------------------------          -----------------------------------
Name of director (block letters)             Name of secretary (block letters)

58 View Street                               17 Bayswater Road
[Illegible]                                  Lindfield, NSW
-----------------------------------          -----------------------------------
Address of director                          Address of director/secretary

                                    Version 2

<PAGE>   5

                                                                               5

SCHEDULES

SCHEDULE 1                             PROJECT SUMMARY

SCHEDULE 2                             REFERENCE SCHEDULE

SCHEDULE 3                             PROJECT BUDGET

SCHEDULE 4                             FUNDING OF PROJECT AND PAYMENT DATES

SCHEDULE 5                             REPORTING REQUIREMENTS

SCHEDULE 6                             SPECIAL CONDITIONS

SCHEDULE 7                             COMMERCIALISATION STRATEGY

SCHEDULE 8                             REPAYMENT OF REPAYABLE CONTRIBUTION
                                       UNDER START PREMIUM

                                    Version 2
<PAGE>   6

                                                                               6

SCHEDULE 1 - PROJECT SUMMARY

1.1    PROJECT TITLE Internet Capable Multi Application Smartcard System

1.2    PROJECT REFERENCE NUMBER GRA 01530

1.3    PROJECT DURATION 18 months

Agreed Start Date 23 July 1999

Agreed Completion Date 31 December 2000

1.4 PROJECT DESCRIPTION

This project researches and develops systems for a multi application smartcard
scheme that operates in the internet and real world domains. It enables
cardholders to use the same smartcard on the Internet as they use in day to day
store transactions. Functions such as electronic purse, loyalty tickets,
membership and access are available seamlessly to the customer wherever they
are. Merchants can maximise their brand awareness and link their customers
whether they are on-line or in-store. This expands the merchant's marketing
possibilities and increases benefits to their customers.

1.5 COMPANY TURNOVER

-      Grantee and Related Bodies Corporate have a combined turnover of less
       than $50 million in each Relevant Year--Core Start

                                    Version 2
<PAGE>   7

                                                                               7

1.6 MAJOR ACTIVITIES

<TABLE>
<CAPTION>
                                                                                   Activity
                                                                    Finish         Eligible
                 Major Activity                     Start Date       Date        Expenditure $
                 --------------                     ----------      ------       -------------

<S>                                                 <C>             <C>          <C>
1   Proof of concept model research                    [*]            [*]             [*]

2   System architecture design;                        [*]            [*]             [*]

3   Phase 1 Product Development, Integration &         [*]            [*]             [*]
    Testing

4   Phase 2 Product Development, Integration &         [*]            [*]             [*]
    Testing

5   In house trials                                    [*]            [*]             [*]

6   Beta site trials                                   [*]            [*]             [*]

                                                                    Total             [*]
</TABLE>

                                    Version 2

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   8

                                                                               8

1.7 MAJOR MILESTONES

<TABLE>
<CAPTION>
                                                                          Milestone
                                                                          Eligible
                                                       Achievement        Cumulative
                    Major Milestone                        Date          Expenditure $
                    ---------------                    -----------       -------------
<S>                                                    <C>               <C>
1       Demonstrable Proof of Concept model                [*]               [*]

2       System design documentation complete:              [*]               [*]
        - functional specification
        - high level design documentation

3       Phase 1 Products Development complete:             [*]               [*]
        - Java Card applets and card creation,
        - POS terminal integration,
        - Web enquiries for members and
          merchants,

        - Web transactions for members.

4       Phase 2 Products Development complete:             [*]               [*]
        - Merchant maintenance via web
        - Online customer database product,
        - Online member POS transactions,
        - Online member internet enquiries and
          transactions.

5       In house Trials complete:                          [*]               [*]
        - Phase 1 and phase 2 demonstrations plus
          evaluation reports

6       Beta site Trials complete:                         [*]               [*]
        - Phase 1 and phase 2 installations
          complete plus evaluation reports
</TABLE>

                                    Version 2

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   9

                                                                               9

1.8 MAJOR ACTIVITIES

1. PROOF OF CONCEPT MODEL

The major activities for this part of the project include;

-      Development of a Functional Requirement Specification detailing the
       required functionality of the final system.

-      Research of the likely approaches to implement requirements,

-      Develop functional prototypes to demonstration standard for the Web
       Enquiries, Web transactions and PDA (Personal Digital Assistants)
       products.

-      Evaluate the effectiveness and update Functional Requirements as needed.

-      Demonstrate prototypes to key potential clients and enhance
       specifications according to market feedback.

2. SYSTEM ARCHITECTURE DESIGN

The prime activities here are to;

-    Refine the Functional Requirements Specification so it can be used as the
     source document for project plans and test plans.

-    Design the system architecture to ensure interoperability between products
     and adequate security.

-    Generate high level designs of the software for each product.

PHASE 1 PRODUCT DEVELOPMENT, INTEGRATION & TEST

Phase 1 of the Product Development activities includes software and system
development, integration and testing of the following products;

-      Java Card applets and card creation process.

-      Point of Sale terminal integration.

-      Web enquiries for members and merchants.

-      Web transactions for members.

PHASE 2 PRODUCT DEVELOPMENT, INTEGRATION & TEST

Phase 2 of the Product Development activities includes software and system
development, integration and testing of the following products;

-      Merchant maintenance of their application programs via the web.

-      Online customer database.

-      Online member point of sale transactions.

                                    Version 2
<PAGE>   10

                                                                              10

-      Online member internet enquiries and transactions.

IN HOUSE TRIALS

The activities for in house trials include;

-      Installation of phase 1 products in house at arms length from the
       development team.

-      Testing the individual products by setting up a simulated environment and
       exercising the product with life like operational activity.

BETA TRIALS

Beta trials of the various products include the following activities;

-      Installation of the products at a friendly Beta site.

-      Operation of the products by people not involved in the development of
       the products.

-      Evaluation of the products to assess usability and functional
       completeness.

1.9 INELIGIBLE ASSOCIATED WORK

The majority of ineligible work is associated with bringing the products to the
marketplace. This includes;

-      Marketing documentation, sales force training, trade show presentations
       and sales campaigns.

-      Enhancements to the existing system patents and their registration in
       other countries,

                                    Version 2
<PAGE>   11

                                                                              11

Schedule 2 - Reference Schedule

2.1 TYPE OF GRANT

Core Start

2.2 GRANT

A maximum amount of $860,150

2.3 GRANT PERCENTAGE
50%

2.4 REPAYABLE CONTRIBUTION (IF ANY).
0 %

2.5 INTEREST RATE

7.7 % (FIXED RATE), but for any period that the bank variable small business
loan rate set out in Table F4 (Indicator Lending Rates) published in the Reserve
Bank Bulletin (FLOATING RATE) is less than the Fixed Rate, the Interest Rate
will be the Floating Rate from time to time during that period.

If the Floating Rate index referred to above is no longer published, the
Floating Rate will reflect another index determined by the Commonwealth.

                                    Version 2
<PAGE>   12

                                                                              12

2.6 ADDRESSES FOR SERVICE OF NOTICES

                                    COMMONWEALTH
                                    Regional Director NSW
                                    Ausindustry
                                    GPO Box 9839
                                    Sydney NSW 2001
                                    Facsimile: (02) 9252 3652

                                    GRANTEE
                                    Project Manager: Mark Hallinan
                                    Address: Level 4 Ballarat House
                                    68 Wentworth Avenue
                                    Surry Hills
                                    NSW 2010
                                    Facsimile: 02 9281 1242

                                    Version 2
<PAGE>   13

SCHEDULE 3 - PROJECT BUDGET

3. 1 SUMMARY OF PROJECT ELIGIBLE EXPENDITURE

<TABLE>
<CAPTION>
                                          ESTIMATED EXPENDITURE
                                                    $
                                       --------------------------        TOTAL
    HEAD OF EXPENDITURE                  99-00             00-01           $
    -------------------                ---------          -------     ----------
<S>                                    <C>                <C>         <C>
R&D Salary Expenditure                    [*]               [*]          [*]

Contract Expenditure                      [*]               [*]          [*]

Plant Expenditure                         [*]               [*]          [*]

Prototype Expenditure                     [*]               [*]          [*]

Other Expenditure                         [*]               [*]          [*]

PROJECT ELIGIBLE EXPENDITURE              [*]               [*]          [*]
</TABLE>

3. 2 GLOBAL BUDGET

<TABLE>
<CAPTION>
                                          ESTIMATED EXPENDITURE
                                                    $
                                       --------------------------        TOTAL
                                         99-00             00-01           $
                                       ---------          -------     ----------
<S>                                    <C>                <C>         <C>
Project Eligible Expenditure              [*]               [*]           [*]

Project Ineligible Expenditure            [*]               [*]           [*]

TOTAL PROJECT COST                        [*]               [*]           [*]
</TABLE>

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   14

                                       14

SCHEDULE 4 - FUNDING OF PROJECT AND PAYMENT DATES

4. 1 PROJECT FUNDING

<TABLE>
<CAPTION>
       CONTRIBUTION
           SOURCE                      99-00             00-01        TOTAL
       ------------                  ---------          -------     ---------
<S>                                  <C>                <C>         <C>
R&D Start Grant                         [*]               [*]          [*]

Grantee                                 [*]               [*]          [*]

TOTAL PROJECT EXPENDITURE               [*]               [*]          [*]
</TABLE>

Note:    The amount to be paid by the Commonwealth to the Grantee under this
         deed will not exceed the Grant Percentage of Eligible Expenditure
         incurred on the Project. At any stage of the Project the Grantee must
         contribute towards the Eligible Expenditure an amount which equals or
         exceeds the Grant Percentage and must pay for 100% of the ineligible
         expenditure of the Project.

4.2 INITIAL GRANT PAYMENT

4.2.1  The initial Grant payment will be the total of:

       (a)    the Grant Percentage of Eligible Expenditure incurred between the
              date of the Application and the last day of the quarter
              immediately before the quarter in which this deed is executed (if
              any); and

       (b)    the Grant Percentage of Eligible Expenditure for the quarter in
              which this deed is executed set out in the Budget approved under
              clause 4.15.

4.2.2  The Commonwealth must make the initial Grant payment on the later of:

       (a)    30 days of the date of this deed; and

       (b)    if the initial Grant payment includes a component under item 4.2
              1(a), the provision of a Project Progress Report which is
              accepted as satisfactory by the Commonwealth and, where necessary,
              an Audited Acquittal Report.

4.2.3  The Commonwealth may pay the component of the initial Grant payment under
       item 4.2. 1(a) before the time set out in item 4.2.2.

4.3 SUBSEQUENT PAYMENTS

FOR GRANTEES WITH A QUARTERLY REPORTING SCHEDULE

The amount of each subsequent payment will be calculated in accordance with the
following:

Quarterly payment =         Total Eligible Expenditure (cumulative) to the end
                            of the quarter which has just been completed,
                            multiplied by the Grant Percentage

Minus                       Total amount of Grant paid to date

                                    Version 2

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confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   15

                                       15

Plus                        Quarterly Budget for the quarter in which the
                            payment is intended to be made, multiplied by the
                            Grant Percentage.

and reduced if necessary to allow for withholding of the Retention Amount given
in item 4.5 of schedule 4.

4.4 RETENTION PERCENTAGE

5% of the amount given in 2.2 of schedule 2.

4.5 RETENTION AMOUNT             [*]

The total Retention Amount is withheld from the final payment(s) and the amount
will be paid to the Grantee upon satisfactory provision and acceptance of the
audited Final Financial Acquittal Report and the End of Project Report.

                                    Version 2

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   16

                                       16

SCHEDULE 5 - REPORTING REQUIREMENTS (CLAUSES 4.8 AND 4.9)

5.1 QUARTERLY REPORTING SCHEDULE

<TABLE>
<CAPTION>
DUE                             REPORTS                         FOR PERIOD
---                             -------                         ----------

<S>                      <C>                                <C>
  [*]                    Project Progress Report                  [*]

  [*]                    Project Progress Report                  [*]

  [*]                    Draft budget by quarter                  [*]
                         (Clause 4.14)

  [*]                    Project Progress Report                  [*]

  [*]                    Audited Acquittal Report                 [*]

  [*]                    Project Progress Report                  [*]

Within 6 weeks of        End-of Project Report                    N/A
Agreed Completion        Audited Final Financial
Date or termination      Acquittal Report
date
</TABLE>

Note:      The reporting schedules above represent the preference of the Board.
           The guiding principle is that larger projects will report more
           frequently. This also means that they will be paid more frequently
           (that is, quarterly). During agreement-making, Grantees will indicate
           their preferred reporting schedule and delete the one which is not
           applicable. The Commonwealth reserves the right to require a
           quarterly or half-yearly reporting REGIME from a Grantee.

5.2 REPORTS

PROJECT PROGRESS REPORT

The Project Progress Report is made up of:

1.     The Technical Progress Report;

2.     The Financial Acquittal Report; and

3.     A report on Commercialisation Progress.

                                    Version 2

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   17

                                       17

1.     The Technical Progress Report must set out:

       (a)    progress of the Project (including milestones achieved, progress
              on Project activities, the expected completion date, and expected
              progress of the Project for the next reporting period); and

       (b)    any other matters required by the Commonwealth.

2.     The financial Acquittal Report must set out:

       (a)    details:

              (i)    of Eligible Expenditure by the Grantee on the Project;

              (ii)   of other expenditure on the Project;

              (iii)  explaining any variation between Eligible Expenditure
                     incurred and budgeted Eligible Expenditure; and

              (iv)   of revised budgeted expenditure if the total Eligible
                     Expenditure is expected to change by 20% or more; and

       (b)    any other matters required by the Commonwealth.

3.     The report on Commercialisation Progress must set out:

       (a)    progress achieved in the reporting period towards the
              commercialisation of the Project with reference to the
              commercialisation strategy in schedule 7 (if any);

       (b)    details of domestic and export sales relating directly to the
              Project;

       (c)    any other matters required by the Commonwealth.

AUDITED ACQUITTAL REPORT

The Audited Acquittal Report means a Financial Acquittal Report which has been
audited in accordance with clause 4.10.

                                    Version 2
<PAGE>   18

                                       18

SCHEDULE 6 - SPECIAL CONDITIONS

The is no condition specified by the Board at the time of approval

                                    Version 2
<PAGE>   19

SCHEDULE 7 - COMMERCIALISATION STRATEGY (CLAUSE 6)

COMMERCIALISATION

Income generated by the comnmercialisation of this project will arise in two
ways The first is by the direct sale of software licences to use the products
and systems. The second is by way of revenue derived from Chip Application
Technologies (C.A.T.) operating the system and providing clients with bureau
services. Software licences for the products the system only extend a right to
use. They do not confer any rights to the Intellectual Property or the software
source code.

IMPLEMENTATION

As each of the products in this project reaches a commercial standard, it is
transferred to the sales and marketing teams who will use the technical
documentation and their own marketing material to present the products to
prospective customers. Many of these customers have already been approached and
have indeed contributed to the definition of the products.

Demonstration sites will be established in Australia and the US. These will be
used by the sales teams to demonstrate the complete feature set of the products
in a fully functional environment. C.A.T. will market the products in Australia
and New Zealand while Catuity Inc. will market them in North America. Catuity
Inc. is the US registered parent company of C.A.T.

Catuity Inc. will make use of the reseller network already established in the US
by C.A.T. This includes resellers such as IBM and associates such as Visa and
FDC.

Clients may wish to run the system themselves, in which case they would purchase
an operating software licence. Alternatively they may wish to have C.A.T. run
the system, in such cases they would purchase bureau services. In both
situations income is derived by charging clients based on the number of
cardholders or members and the volume of transactions run by the system. In
addition, there is a setup charge to cover installation at the client's site or
configuration bureau services.

The majority of clients are expected to use the products for the direct benefit
of their own customers. However, a small number may set themselves up as service
providers and run the system for other people's customers. Either way, the
commercialisation process is progressed and income is generated.

COMPLETION

The income derived from the commercialisation process continues for as long as
the clients are using the products. The licences are renewed annually with
provisions to adjust the agreements for fees and service charges. Further
commercial opportunities present themselves by way of system maintenance fees
and consulting charges. In time, the installed systems will be upgraded,
providing further income streams from business analysis and software
enhancements.

                                    Version 2
<PAGE>   20

                                       20

INTELLECTUAL PROPERTY

Chip Application Technologies is the owner of the Intellectual Property for
these products and the underlying technology. Australian and New Zealand sales
are conducted directly by C.A.T. while Catuity Inc conducts North American and
European sales. An agreement exists between C.A.T. and Catuity Inc. allowing
Catuity to licence the products to its clients. There is no transfer of IP or
source code. These remain the property of C.A.T.

COMMERCIALISATION TIMETABLE

The first products of this project will begin commercialisation early in 2000.
As subsequent products are released from development, they also proceed into the
commercialisation phase. It is expected that each product will start
commercialisation within a matter of weeks of being released from development.

<TABLE>
<CAPTION>
               PRODUCT                             SCHEDULED RELEASE FROM DEVELOPMENT
               -------                             ----------------------------------
<S>                                                <C>
Java Card applets and card creation                                 [*]

POS terminal integration,                                           [*]

Web enquiries for members and merchants,                            [*]

Web transactions for members.                                       [*]

Merchant maintenance via web                                        [*]

Online customer database product                                    [*]

Online member POS transactions                                      [*]

Online member internet enquiries and                                [*]

transactions.
</TABLE>

The generation of income from software licence sales is expected once
prospective clients have finalised their requirements and committed to the
product. This process is likely to take upwards of 6 months.

RISKS

A serious marketing risk was the barrier of, not invented here' being imposed by
the US marketplace. Marketing to the US through-Catuity Inc. and the US based
resellers, has now largely mitigated this problem.

Another potential risk to rapid market take-up centres on possible
customisations required to the products. These may come about as a requirement
to integrate the products with existing customer systems and processes.
Although standard interfaces have been incorporated into the products and sample
clients have been quizzed on their needs, the potential for customisations still
exists. Such enhancements could slow the commercialisation process for a
particular client, but probably not prevent sales.

There is always a risk that a competing product may overtake us in the
marketplace. This risk is best mitigated by being first to market with a good
product. Towards that end, the marketing strategy is to release individual
products, as they become available over a 12 month period, rather than waiting
to collect an entire suite and launching as a single entity.

                                    Version 2

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   21

                                       21

FAILURE

This project can be deemed a commercialisation failure if the combined income
from sales does not exceed development costs plus the marketing costs plus a
commercial return on investment.

                                    Version 2
<PAGE>   22

                                       22

SCHEDULE 8 - REPAYMENT OF REPAYABLE CONTRIBUTION UNDER START PREMIUM (CLAUSE 13)

                               [ NOT-APPLICABLE ]

                                    Version 2

<PAGE>   23
Industry
Research and                  R&D START GRANT
Development
Board

                               GENERAL CONDITIONS
<TABLE>
<S>                                                                      <C>
PROGRAM OBJECTIVES
PROJECT AND GRANT                                                          2
OPERATIVE PROVISIONS:                                                      2
1  Interpretation                                                          2
2  Warranties                                                              8
3  Payment of Grant                                                        8
4  Conduct of Project                                                      9
         Permitted expenditure                                             9
         Project performance                                               9
         Variations                                                        9
         Reporting                                                        10
         Budget of expenditure                                            10
         Bank account                                                     11
         Records to be kept                                               11
         Inspection and audit                                             11
         Other participants                                               12
5  Evaluation                                                             12
6  Commercialisation                                                      12
7  Other Financial Assistance                                             13
8  Acquittal of Grant                                                     13
9  Termination                                                            13
         Limits on Liability                                              14
         Termination by mutual deed                                       14
10  Notices                                                               14
11  Assignment and Protection of Intellectual Property                    15
12  Grantee's and Others Funding Contribution to the Project              15
13  Start Premium: Repayable Contribution                                 15
14  Acknowledgment and Public Statements                                  16
15  Waiver and Variation                                                  16
16  Dispute Resolution                                                    16
17  Governing law and jurisdiction                                        17
18  Term of Deed                                                          17
19  Exercise of Discretions                                               17
20  GST                                                                   17
</TABLE>

<PAGE>   24

                                        2

PROGRAM OBJECTIVES

      The Commonwealth has established the R&D Start Program which aims to:

      (a)   increase the number of research and development projects having a
            high commercial potential that are undertaken by companies;

      (b)   foster greater commercialisation of outcomes of those projects;

      (c)   increase the level of research and development activity that is
            commercialised in Australia; and

      (d)   provide national benefits.

PROJECT AND GRANT

      The Grantee proposes to undertake the Project. The Industry Research and
      Development Board has awarded the Grant under the R&D Start Program for
      the Project on the terms and conditions contained in this deed.

      The Grant is made to the Grantee pursuant to the Industry Research and
      Development Act 1986 (the Act), and the relevant Ministerial Directions
      issued under sections 19 and 20 of the Act.

OPERATIVE PROVISIONS:

1 INTERPRETATION

      1.1   Unless the contrary intention appears:

            AGREED COMPLETION DATE means the agreed completion date set out in
            item 1.3 of schedule 1.

            APPLICATION means the application submitted by the Grantee (and, if
            applicable, other persons) in respect of which the Grant was
            awarded.

            AUDITED ACQUITTAL REPORT means a Financial Acquittal Report which
            has been audited in accordance with clause 4. 1 0.

            BUDGET means the budget approved by the Commonwealth from time to
            time under clause 4.15 and the budget set out in schedule 3.

            CONTROL means control of a corporation through the possession
            directly or indirectly of the power, whether or not having
            statutory, legal or equitable rights, directly or indirectly to
            control more than 50% of the membership of the board of directors of
            the corporation or more than 50% of the voting shares (as defined in
            the Corporations Law) of the corporation whether by means of trusts,
            deeds, arrangements, understandings, practices, the ownership of any
            interest in shares or stock of that corporation or otherwise.

            CORE START means the program of financial assistance for research
            and development projects of non-tax exempt companies with turnovers
            of less than $50 million in each relevant year.

<PAGE>   25

                                        3

     DEAL WITH means:

         (a)   sell, transfer, declare a trust over or otherwise dispose or
               procure or effect the disposal of, or in any way whatever deal
               with, any legal or equitable interest in, or any right in respect
               of, any subject matter; or

         (b)   effect a change in the beneficial interest or beneficial unit
               holding under a trust the trustee of which has an estate or
               interest in the subject matter.

      ELIGIBLE EXPENDITURE has the meaning given in clause 4(l) of the R&D Start
      Program Directions No. 1 of 1998 (DIRECTIONS), given under the Act, and
      the relevant Industry Research and Development Board policies effective at
      the date of this deed

      ENCUMBRANCE means any Security Interest, notice under sections 218 or 255
      of the Income Tax Assessment Act 1936 (or any corresponding section of the
      Income Tax Assessment Act 1997) or under section 74 of the Sales Tax
      Assessment Act 1992, profit a prendre, easements restrictive covenant,
      equity, interest, garnishee order, writ of execution, right of set-off,
      lease, licence to use or occupy, assignment of income or monetary claim,
      and any deed to create any of them or allow them to exist.

      END OF PROJECT REPORT means a report in the form and containing the
      matters required by the Commonwealth.

      EXIT SURVEY FORMS mean questionnaires sent to the Grantee at the end of
      the Project to learn about its view of the quality of the services
      rendered to it in respect of the Grant by officers of the Commonwealth
      during the period of the Project.

      FINANCIAL ACQUITTAL REPORT means a report in the form required by the
      Commonwealth setting out:

      (a)   expenditure by the, Grantee on the Project;

      (b)   a tax invoice showing the GST payable on supplies to the
            Commonwealth in connection with the project;

      (c)   details of input tax credits, if any, to which the Grantee is
            entitled for creditable acquisitions made by the Grantee in
            connection with supplies (or deemed supplies) to the Commonwealth in
            connection with the Project;

      (d)   details of adjustment notes, if any, issued to the Grantee in
            respect of creditable acquisitions made by the Grantee in connection
            with supplies (or deemed supplies) to the Commonwealth in connection
            with the Project;

      (e)   details of adjustment notes, if any, issued by the Grantee to the
            Commonwealth in circumstances where the Grantee has previously been
            issued with one or more adjustment notes in respect of creditable
            acquisitions made by the Grantee in connection with supplies (or
            deemed supplies) to the Commonwealth in connection with the Project;
            and

<PAGE>   26

                                       4

       (f) any other maters required by the Commonwealth.

      FINAL FINANCIAL ACQUITTAL REPORT means a Financial Acquittal Report
      required at the end of the Project.

      GRANT means the amount set out in item 2.2 of schedule 2, plus the GST, if
      any, payable by the Grantee in respect of the supplies (or deemed
      supplies) made by the Grantee to the Commonwealth in the course of
      undertaking the project.

      GRANT PERCENTAGE means the percentage of Eligible Expenditure to be paid
      as a Grant, and:

      (a)   in the case of a Grant under Core Start, is an amount not exceeding
            50% of Eligible Expenditure;

      (b)   in the case of a Grant under Start Plus, is an amount not exceeding
            20% of the Eligible Expenditure;

      (c)   in the case of a Grant under Core Start and Start Premium is an
            amount not exceeding 56.25% of the Eligible Expenditure;

      (d)   in the case of a Grant under Start Plus and Start Premium is an
            amount not exceeding 56.25% of the Eligible Expenditure.

      The Grant Percentage is set out in item 2.3 of schedule 2.

      GST means any goods and services tax or similar value added tax imposed
      pursuant to the A New Tax System (Goods and Services) Tax Act 1999
      (Commonwealth) (as amended or regulations made under that Act on a supply
      (or deemed supply) of any goods, property, service or any other thing.

      INSOLVENCY EVENT means the happening of any of these events:

            (a)   an application is made to a court for an order or an order is
                  made that a body corporate be wound up; or

            (b)   an application is made to a court for an order appointing a
                  liquidator or provisional liquidator in respect of a body
                  corporate, or one of them is appointed, whether or not under
                  an order; or

            (c)   a receiver or receiver and manager is appointed in respect of
                  any part of the property of a body corporate; or

            (d)   except to reconstruct or amalgamate while solvent on terms not
                  prejudicial to its obligations and duties under this deed, a
                  body corporate enters into, or resolves to enter into, a
                  scheme of arrangement, deed of company arrangement or
                  composition with, or assignment for the benefit of, all or any
                  class of its creditors, or it proposes a reorganisation,
                  moratorium or other administration involving any of them; or

<PAGE>   27

                                        5

         (e)   there occurs any event which the Commonwealth considers, with
               the giving of notice, lapse of time or otherwise, would be or is
               likely to become, a breach of this deed; or

         (f)   a body corporate resolves to wind itself up, or otherwise
               dissolve itself, or gives notice of intention to do so, except to
               reconstruct or amalgamate while solvent on terms not prejudicial
               to its obligations and duties under this deed, or is otherwise
               wound up or dissolved, or

         (g)   a body corporate is or states that it is insolvent; or

         (h)   as a result of the operation of section 459F(l) of the
               Corporations Law, a body corporate is taken to have failed to
               comply with a statutory demand; or

         (i)   a body corporate is, or makes a statement from which it may be
               reasonably deduced that the body corporate is, the subject of an
               event described in section 459C(2)(b) or section 585 of the
               Corporations Law; or

         (j)   a body corporate takes any step to obtain protection or is
               granted protection from its creditors, under any applicable
               legislation or an administrator is appointed to a body corporate;
               or

         (k)   a body corporate sells, or enters into negotiations to sell,
               sufficient of its assets or resources so that, in the reasonable
               opinion of the Commonwealth, it is unable to fulfill its
               obligations under this deed; or

         (1)   a body corporate has a writ issued on any part of its assets
               which would have, in the reasonable opinion of the Commonwealth,
               a material adverse effect on its undertaking the Project and the
               body corporate either does not contest the writ in good faith or
               pay the creditor all amounts owing within 7 days; or

         (m)   anything analogous or having a substantially similar effect to
               any of the events specified above happens under the law of any
               applicable jurisdiction.

      INTELLECTUAL PROPERTY means statutory and other proprietary rights in
      respect of trade marks, patents, circuit layouts, copyrights, designs,
      confidential information, Know-how, plant varieties and all other rights
      with respect to intellectual property as defined in Article 2 of the July
      1967 Convention Establishing the World Intellectual Property Organisation.

      INTEREST RATE means the rate set out in item 2.5(a) of schedule 2.

      KEY PROJECT PERSONNEL means a person or persons engaged for the Project
      whose technical or scientific skills are crucial to the success of the
      Project.

      KNOW-HOW means expertise, knowledge, skills, techniques, methods,
      procedures, ideas and concepts.

<PAGE>   28

                                        6

      PARTICULAR CONDITIONS means those conditions which are specific to the
      Grant and the Project, and which are set out in the Schedules to this
      deed.

      POST-PROJECT REPORT FORMS mean forms to be completed by the Grantee to
      evaluate whether the objectives of the R&D Start program are being met
      through the Post-Project performance of grantees.

      PRODUCT means any goods or services the production or supply of which
      involves the exercise of Project Intellectual Property.

      PROJECT PROGRESS REPORT means a report to be given under clause 4.8, which
      includes information on financial acquittal, significant changes in
      budgeted Eligible Expenditure, technical progress of the Project, and
      progress on commercialisation.

      PROJECT means the project described in schedule 1.

      PROJECT INTELLECTUAL PROPERTY means all Intellectual Property created in
      the course of the Project including any improvements, inventions or
      discoveries (whether serendipitous or otherwise) arising out of the
      conduct of the Project.

      R&D START PROGRAM means the program of business research and development
      assistance administered under that name by the Commonwealth, through the
      Industry Research and Development Board.

      RELATED BODY CORPORATE has the same meaning as in the Corporations Law.

      RELEVANT YEAR for a Grantee means:

         (a)   if when the Application is made, the Grantee has been
               incorporated for each of the three years preceding the Year of
               income in which the Application was made -- each of those years;
               and

         (b)   if when the Application is made, the Grantee has been
               incorporated for fewer than three Years of income preceding the
               Year of income in which the application was made -- each of those
               years in which the Applicant was incorporated.

      REPAYABLE CONTRIBUTION means that part of the Grant which is made under
      Start Premium, which is:

         (a)    that percentage by which the Grant exceeds 50% of the Eligible
                Expenditure on the Project, where provided in conjunction with
                Core Start; or

         (b)    that percentage by which the Grant exceeds 20% of the Eligible
                Expenditure on the Project, where provided in conjunction with
                Start Plus.

        The Repayable Contribution is set out in item 2.4 of schedule 2.

<PAGE>   29

                                        7

                  SECURITY INTEREST means any bill of sale (as defined in any
                  statute), mortgage, charge, lien, pledge, hypothecation, title
                  retention arrangement, trust or power, as or in effect as
                  security for the payment of a monetary obligation or the
                  observance of any other obligation.

                  START PLUS means the program of financial assistance for
                  research and development projects of non-tax exempt companies
                  with turnover of $50 million or more in one, or more than one,
                  Relevant Year.

                  START PREMIUM means the program of financial assistance:

                        (a)   for high merit research and development projects
                              in non tax-exempt companies; and

                        (b)   that is repayable to the Commonwealth.

                  START PREMIUM INTEREST RATE means the rate set out in item
                  2.5(b) of schedule 2.

                  SUPPLY has the meaning given by the A New, Tax System (Goods
                  and Services) Tax Act 1999 (Cth).

                  TECHNICAL PROGRESS REPORT means a report required as part of
                  the Project Progress Report.

                  YEAR OF INCOME of a Grantee means the period of 12 months to
                  which the income tax returns of the company relate.

      1.2   INCLUDING, INCLUDES and IN PARTICULAR do not limit the words which
            precede them or to which they refer.

            1.3   Unless the contrary intention appears:

            (a)   A PERSON includes a firm, a body corporate, an unincorporated
                  association or an authority;

            (b)   a deed, representation or warranty in favour of two or more
                  persons is for the benefit of them jointly and severally;

            (c)   a deed, representation or warranty on the part of two or more
                  persons binds them jointly and severally;

            (d)   the singular includes the plural and vice versa;

            (e)   a reference to a statute, ordinance, code or other law
                  includes regulations and other instruments made under it and
                  consolidations, amendments, re-enactments or replacements of
                  any of them; and

            (f)   a reference to a financial year means the period beginning on
                  1 July and ending on 30 June in the following calendar year.

      1.4   Headings are inserted for convenience of reference only and are not
            to be used in the interpretation of this deed.

      1.5   A reference to a schedule is a reference to a schedule to the
            Particular Conditions

<PAGE>   30

                                       8

      2      WARRANTIES

                  2.1    The Grantee warrants that:

                        (a)   the Grantee is:

                               (i) incorporated under a law of the Commonwealth
                                   or a State or Territory; and

                               (ii) not exempt from income tax;

                        (b)   the Project consists of research and development
                              activities;

                        (c)   it does not have any interests or obligations that
                              conflict with its interests or obligations under
                              this deed;

                        (d)   all information it provides to the Commonwealth
                              from time to time (including in the Particular
                              Conditions and the Application) is true and
                              correct;

                        (e)   the Grantee, has and will have, at all times, all
                              the necessary rights in respect of the
                              Intellectual Property and all technical
                              information, including but not limited to, all
                              designs, specifications, data, drawings, plans,
                              reports, models, prototypes and other things that
                              will be required to conduct the Project and to
                              commercialise the Project's outcome;

                        (f)   the turnover of the Grantee and related companies
                              for each Relevant Year is as stated in item 1.5 of
                              schedule 1,

                        (g)   is not aware of any circumstances, which
                              adversely affect or might adversely affect the
                              Grantee's ability to fulfil its obligations under
                              the deed.

                        and the Grantee warrants that the statements set out
                        above are true and correct at the date of this deed, and
                        each day during the term of this deed.

                  2,2   If the Grantee becomes aware of a breach of warranty,
                        the Grantee must immediately notify the Commonwealth of
                        that breach.

      3     PAYMENT OF GRANT

                  3.1   Subject to parliamentary appropriation, the Grant is
                        payable in quarterly or six monthly instalments in
                        accordance with schedule 4.

                  3.2   The Commonwealth is not obliged to make a payment under
\                       clause 3.1 if:

                        (a)  any milestone set out in schedule 1 to be
                             completed before the date for payment has
                             not been achieved; or

                        (b)  the total of all Grant payments made to date, and
                             the next scheduled Grant payment, would exceed the
                             Grant Percentage of:

                             (i)  the Eligible Expenditure incurred to date;
                                  and

                             (ii) the budgeted Eligible Expenditure for the
                                  next 3 months,

<PAGE>   31

                                        9

                        as determined by the Commonwealth; or

                        (c)   the Grantee is otherwise in default under this
                              deed (including the failure to submit any report);
                              or

                        (d)   the Commonwealth has issued a notice under clause
                              4.11 pending the submission of a satisfactory
                              report; or

                        (e)   the Grantee has not provided a Budget which has
                              been approved by the Commonwealth under clause
                              4.15.

                   3.3   The Commonwealth's determination of the Eligible
                         Expenditure under clause 3.2(b) is final.

        4   CONDUCT OF PROJECT

                  4.1    The Grantee agrees to undertake the Project:

                         (a)  diligently;

                         (b)   in accordance with schedule 1; and
                         (c)   in accordance with any representations made in
                               the Application.

        PERMITTED EXPENDITURE

                  4.2    The Grantee must use the Grant solely for the Project
                         and in accordance with the Budget.

      PROJECT PERFORMANCE

                  4.3   The Grantee must notify the Commonwealth if a milestone
                        is not achieved by the date for completion set out in
                        schedule 1. The notice must set out:

                        (a)  the reason for the delay;

                        (b)  the Grantee's proposed action to address the
                             delay;

                        (c)  the expected date for achievement of the
                             milestone;

                        (d)  the expected effect the delay will have on
                             subsequent milestones;

                        (e)  the expected effect the delay will have on the
                             Project and the Budget; and

                        (f)  Key Project Personnel changes not reported under
                             4.3(a) of this clause.

                  4.4   Nothing in this clause 4 affects the Commonwealth's
                        rights under clause 3.2 or clause 9.

      VARIATIONS

                  4.5   The Grantee may change or improve its work methods or
                        procedures to achieve efficiency, economy or improved
                        quality. However, the Grantee must not materially change
                        the Project as described in schedule 1 without the
                        Commonwealth's consent.

<PAGE>   32

                                       10

                  4.6   The Grantee may, by notice to the Commonwealth, propose
                        a variation to the Project, the Budget, the date for
                        achievement of a milestone or completion of the Project
                        or any other variation to the milestones. Any
                        such variation must be either approved or rejected by
                        the Commonwealth within 60 days of receipt from the
                        Grantee.

                  4.7   The Grantee may reallocate expenditure between heads of
                        expenditure listed in the Budget without obtaining the
                        Commonwealth's consent if the total re-allocation from a
                        particular head of expenditure does not exceed 20% of
                        the total allocated to that particular head of
                        expenditure in the Budget. Where the proposed
                        re-allocation will exceed 20% the Grantee must seek
                        approval in writing from the Commonwealth. Any such
                        request must be either approved or rejected by the
                        Commonwealth within 60 days of receipt from the Grantee.

      REPORTING

                  4.8   The Grantee must give the Commonwealth reports in
                        accordance with schedule 5 in the form required by the
                        Commonwealth from time to time.

                  4.9   Within 6 weeks of the Agreed Completion Date, or the
                        date of termination of this deed, whichever is the
                        earlier, the Grantee must give the Commonwealth an End
                        of Project Report and an audited Final Financial
                        Acquittal Report.

                  4.10   A report that is required by this clause 4 to be
                         audited must be audited by a member of the Institute of
                         Chartered Accountants in Australia, or the Society of
                         Certified Practising Accountants, who is not an
                         employee of the Grantee.

                  4.11  If in the Commonwealth's opinion either the form or the
                        content of a report is not adequate for the
                        Commonwealth's purposes, the Commonwealth may require
                        the Grantee to submit a revised report satisfactory to
                        the Commonwealth within 30 days of notice to the
                        Grantee.

                  4.12  Pursuant to clause 5, post-Project reporting is also
                        required of the Grantee.

      BUDGET OF EXPENDITURE

                  4.13   The grantee must give the Commonwealth a draft budget:

                        (a)   for the first financial year of the Project,
                              within 30 days of the date of this deed; and

                        (b)   for every subsequent financial year of the
                              Project, on July 31 of that year.

                  4.14   The draft budget must:

                        (a)   be in a form approved by the Commonwealth;

                        (b)   set out expenditure incurred and proposed to be
                              incurred on the Project for the financial year to
                              which the draft budget relates; and

                        (c)   divide expenditure into four quarters (July -
                              September, October - December, January - March,
                              April - June).

<PAGE>   33

                                      11

                  4.15  The Commonwealth must approve or reject the draft
                        budget within 60 days of receipt from the Grantee.

                  4.16  The Grantee must give the Commonwealth an amended budget
                        within 30 days of receipt of notification from the
                        Commonwealth that the draft budget has been rejected.
                        The amended budget is subject to clause 4.15 and this
                        clause 4.16.

      BANK ACCOUNT

                  4.17  The Grantee must establish a bank account for the sole
                        purpose of handling the Grant and interest on the Grant,
                        and disclose to the Commonwealth within 7 days of
                        request the location and details of that account.

                  4.18  The Grantee must pay all instalments of the Grant into
                        the account and not use the account for any purpose
                        other than the deposit and withdrawal of the Grant and
                        any interest.

      RECORDS TO BE KEPT

                  4.19  The Grantee must keep to the Commonwealth's satisfaction
                        the records (including original receipts and invoices)
                        necessary to provide a complete, detailed record and
                        explanation of;

                         (a)   expenditure by the Grantee on the Project;

                         (b)   Project activities;

                         (c)   the technical progress of the Project,

                         (d)   any amounts of GST paid by the Grantee in respect
                               of any supply made to the Commonwealth under this
                               deed,

                          and any other records required by the Commonwealth.

                  4.20   Those records must be retained by the Grantee for the
                         term of the deed and at least 3 years following the
                         last payment of the Grant.

      INSPECTION AND AUDIT

                  4.21   The Commonwealth or its auditor may at reasonable times
                         and on reasonable notice enter the Grantee's premises
                         and inspect the records kept by the Grantee, and
                         progress with the Project, to review the Grantee's
                         compliance with this deed.

                  4.22   The Grantee must give the Commonwealth and its auditor
                         all necessary facilities and assistance to enable them
                         to conduct an audit.

                  4.23   In conducting a review under clause 4.2 1, the
                         Commonwealth or its auditor may take copies of any
                         records (books, documents, invoices, receipts and any
                         other papers) that the Commonwealth or the auditor
                         considers relevant to the Project.

                  4.24   The Commonwealth must ensure that it and anyone
                         authorised by it under 4.21 uses confidential
                         information to which they are given access, only for
                         the purposes of this deed and does not disclose or use
                         it for any other purpose unless required by law.

<PAGE>   34

                                       12
      OTHER PARTICIPANTS

                 4.25   The Grantee must require any other participants engaged
                         for tile Project to keep like records to those required
                         to be maintained by the Grantee under clause 4.19 and
                         to give the Commonwealth similar access to their
                         premises and records pertaining to the Project.

      5      EVALUATION

                  5.1   The Grantee must cooperate with any evaluation of the
                        R&D Start Program by the Commonwealth. The Grantee
                        must, if requested by the Commonwealth, provide
                        information and completed survey forms relating to:

                        (a)  the Project; and

                        (b)  the R&D Start Program,

                        during the Project and for five years after the Agreed
                        Completion Date.

                  5.2   The Grantee must comply with a request under clause 5.1
                        within 28 days of receiving the request.

      6    COMMERCIALISATION

                  6.1   The Grantee must use its best endeavours to
                        commercialise the Project within a reasonable time of
                        completion of the Project.

                  6.2   The Grantee will be taken to have complied with its
                        obligations under clause 6.1 if it has complied with
                        schedule 7 and the conditions (if any) set out in
                        schedule 6 regarding the commercialisation obligations
                        of the Grantee.

                  6.3     If:

                         (a)   at any time the Grantee decides that it will not
                               commercialise the Project; or

                         (b)   the Grantee has not commercialized the Project
                               in accordance with schedule 7,

                        the Grantee must notify the Commonwealth and give the
                        Commonwealth details of the reasons for making that
                        decision or for not commercialising the Project, as the
                        case may be.

                  6.4   For the purposes of this deed, "commercialise the
                        Project" means to:

                        (a)  manufacture, sell, or hire a product; or

                        (b)  provide a service; or

                        (c)  exploit a process; or

                        (d)  license a third party as specified in schedule 7
                             to do any of paragraph (a), (b) or (c); or

<PAGE>   35

                                       13

                        (e) otherwise exploit the Project,

                        through a direct or an indirect application of the
                        Project Intellectual Property to obtain a commercial
                        return. Unless specified in schedule 7, to Deal With the
                        Project Intellectual Property under this deed shall not
                        be accepted as a means to "commercialise the Project".

                  6.5   If the Commonwealth receives a notice under clause 6.3,
                        or if the Grantee has not commercialised the Project to
                        the Commonwealth's satisfaction within the time referred
                        to in schedule 7, the Commonwealth may by notice to the
                        Grantee require the Grantee to repay some or all of the
                        Grant paid to the Grantee, together with interest at the
                        Interest Rate. Interest is calculated on daily rests
                        from the date of payment by the Commonwealth of an
                        amount under clause 3.1 to the date of repayment by the
                        Grantee,

                  6.6   If the Commonwealth does not give the Grantee a notice
                        under clause 6.5 within 3 months of receiving the notice
                        under clause 6.3, it will be taken to have accepted that
                        the Grantee has complied with clause 6.1.

      7    OTHER FINANCIAL ASSISTANCE

                  7.1   The Grantee must give the Commonwealth details of any
                        financial assistance for the Project it receives from
                        another Commonwealth, State or Territory government
                        source or agency after the date of this deed. The
                        Commonwealth may reduce the size of the Grant after
                        taking into account the other government financial
                        assistance.

      8    ACQUITTAL OF GRANT

                  8.1   If at any time the amount paid to the Grantee under this
                        deed exceeds the Grant (as initially determined or
                        varied), or the Grant Percentage of the Eligible
                        Expenditure incurred to date, the Commonwealth may by
                        notice to the Grantee require the Grantee to repay the
                        amount of the excess to the Commonwealth,

                  8.2   If the Grantee expends the Grant other than in
                        accordance with this deed the Commonwealth may by
                        notice require the Grantee to repay the Grant or so much
                        of the Grant as the Commonwealth determines.

                  8.3   If the Commonwealth gives the Grantee a notice under
                        clause 8.1 or 8.2, the Grantee must pay the
                        Commonwealth the excess within 28 days of receipt of the
                        notice,

      9      TERMINATION

                  9.1   Subject to clause 9.3 the Commonwealth may terminate
                        this deed by notice to the Grantee if:

                        (a)  the Grantee is in breach of this deed, that breach
                             is capable of being remedied and the Grantee fails
                             to remedy that breach within 21 days of receipt of
                             a notice from the Commonwealth requiring it to do
                             so (or within any longer period specified in the
                             notice); or

                        (b)  the Grantee is otherwise in breach of this deed;
                             or

<PAGE>   36

                                       14

                        (c)   tile Grantee is in breach of a warranty set out in
                              this deed; or

                        (d)   an Insolvency Event occurs in respect of the
                              Grantee.

                  9.2   On termination of this deed:

                        (a)   the Commonwealth's obligation to pay any amount
                              of the Grant that is unpaid as at the date of
                              termination ceases;

                        (b)   the Grantee must give the Commonwealth:

                             (i)   a Financial Acquittal Report as at the date
                                   of termination; and

                             (ii)  a report on the Project and its progress,

                        in a form satisfactory to the Commonwealth,

                        (c)   the Commonwealth may by notice to the Grantee
                              require the Grantee to repay some or all of the
                              Grant paid to the Grantee, together with interest
                              at the Interest Rate; and

                        (d)   interest payable under clause 9.2(c) is
                              calculated on daily rests from the date of
                              payment by the Commonwealth of an amount under
                              clause 3.1 to the date of repayment by the
                              Grantee.

      LIMITS ON LIABILITY

                  9.3   The Commonwealth may not take action under clause 9 for
                        a breach of this deed due to a cause or causes beyond
                        the Grantee's reasonable control which does not continue
                        for more than 12 weeks in the aggregate.

      TERMINATION BY MUTUAL DEED

                  9.4   This deed may be terminated at any time by the mutual
                        written deed of the parties.

      10 NOTICES

                  10.1  A notice, approval, consent or other communication in
                        connection with this deed must be:

                        (a)  in writing; and

                        (b)  left at the address of the addressee, or sent by
                             prepaid ordinary post (airmail if posted to or from
                             a place outside Australia) to the address of the
                             addressee or sent by facsimile to the facsimile
                             number of the addressee (or if the addressee
                             notifies another address or facsimile number then
                             to that address or facsimile number).

                        The address and facsimile number of each party is set
                        out in item 2.6 of schedule 2.

                  10.2  A notice, approval, consent or other communication takes
                        effect from the time it is received unless a later time
                        is specified in it.

                  10.3  A letter or facsimile is taken to be received:

<PAGE>   37

                                       15

                         (a)   in the case of a posted letter, on the third
                               (seventh, if posted to or from a place outside
                               Australia) day after posting, and

                         (b)   in the case of facsimile, on production of a
                               transmission report by the machine from which the
                               facsimile was sent which indicates that the
                               facsimile was sent in its entirety to the
                               facsimile number of the recipient.

      11 ASSIGNMENT AND PROTECTION OF INTELLECTUAL PROPERTY

                  11.1 The Grantee must not Deal With, assign, grant or create
                       any Encumbrance over:

                        (a)  its rights under this deed; or

                        (b)  its Interest in any Project Intellectual Property,

                        other than in accordance with any special conditions set
                        out in schedule 6, or the commercialisation strategy set
                        out in schedule 7, without the prior written consent of
                        the Commonwealth.

                  11.2  A change in Control of the Grantee is taken to be
                        Dealing With the Grantee's rights under this deed.

                  11.3  If a change in Control of the Grantee occurs and the
                        Commonwealth reasonably considers that the change in
                        Control adversely affects or may adversely affect the
                        objectives from time to time of the R&D Start Program,
                        the Board may require the Grantee to repay the Grant to
                        the Commonwealth together with interest at the Interest
                        Rate. Interest payable under this clause 11.3 is
                        calculated on daily rests from the date of payment by
                        the Commonwealth of an amount under clause 3.1 to the
                        date of repayment by the Grantee.

                  11.4  The Commonwealth may impose conditions in giving its
                        consent under clause 11.1. A breach of those conditions
                        is a breach of this deed.

                  11.5  Subject to this deed, the Grantee must take all
                        reasonable steps to protect the Project Intellectual
                        Property and must not do anything to diminish or destroy
                        its commercial value without the prior written consent
                        of the Commonwealth.

      12 GRANTEE'S AND OTHERS' FUNDING CONTRIBUTION TO THE PROJECT

                  12.1  The Grantee and the Contributors must spend money on the
                        Project in accordance with item 4.1 of schedule 4.

                  12.2  The Grantee must notify the Commonwealth in the next
                        Progress Report if the Grantee or any of the
                        Contributors fails to comply with clause 12.1.

      13 START PREMIUM: REPAYABLE CONTRIBUTION

                  13.1  The Grantee must repay the Repayable Contribution
                        together with interest at the Start Premium Interest
                        Rate to the Commonwealth in accordance with schedule 8.

<PAGE>   38

                                       16

      14 ACKNOWLEDGMENT AND PUBLIC STATEMENTS

                  14.1  The Grantee must acknowledge the financial assistance
                        received from the Commonwealth under the R&D Start
                        Program in any public statements about the Project or
                        any products, processes or inventions developed as a
                        result of it,

                  14.2  The Commonwealth may publicise the awarding of the
                        Grant.

                  14.3  The Commonwealth may include in press releases and
                        general announcements about the Grant and in its annual
                        report, the following information:

                        (a)  the name of the Grantee,

                        (b)  the amount of the Grant; and

                        (c)  the title and a brief description of the Project.

                  14.4  The provisions of this clause continue for a period of 5
                        years after payment of the last instalment of the Grant.

      15 WAIVER AND VARIATION

                  15.1  A provision of, or a right created under, this deed may
                        not be:

                        (a)  waived except in writing signed by the party
                             granting the waiver; or

                        (b)  varied except in writing signed by the parties.

      16 DISPUTE RESOLUTION

                  16.1. A party who gives another party notice that a dispute
                        has arisen under this deed must include in that notice
                        the name of a representative with authority to negotiate
                        the dispute on the first party's behalf

                  16.2   A party who receives a notice under clause 16.1 must
                         promptly, and in any case within 14 days of receipt of
                         the notice, notify the first party of a representative
                         with authority to negotiate the dispute on the other
                         party's behalf.

                  16.3   The representatives must seek to resolve the dispute
                         as soon as possible.

                  16.4   If the dispute is not resolved within 30 days of the
                         notice referred to in clause 16.2 (or within such
                         further period as the parties agree), the
                         representatives must seek to agree on a process for
                         resolving the dispute through a means other than
                         litigation or arbitration (such as further
                         negotiations, mediation, conciliation, independent
                         expert resolution or mini-trial).

                  16.5   If the representatives are not able to agree on such a
                         process within a further 14 days (or within such
                         further period as the representatives agree), if the
                         process agreed upon fails to resolve the dispute, then
                         either party may take such action as it sees fit with
                         respect to the dispute without further reference to
                         this clause.

<PAGE>   39

                                       17

                  16.6  This clause 16 does not prevent a party from taking
                        legal action if it considers not to do so would
                        prejudice its interests.

      17 GOVERNING LAW AND JURISDICTION

                  17.1  This deed and the transactions contemplated by this deed
                        are governed by the law in force in the Australian
                        Capital Territory.

                  17.2  Each party irrevocably and unconditionally submits to
                        the non-exclusive jurisdiction of the courts of the
                        Australian Capital Territory and courts of appeal from
                        them for determining any dispute concerning this deed or
                        the transactions contemplated by this deed. Each party
                        waives any right it has to object to an action being
                        brought in those courts, including claiming that the
                        action has been brought in an inconvenient forum or that
                        those courts do not have jurisdiction.

      18 TERM OF DEED

                  Obligations under this deed, unless otherwise stated,
                  terminate ten years after the day this deed is made.

      19 EXERCISE OF DISCRETIONS

                  The Commonwealth must act fairly, reasonably and in good faith
                  in exercising its discretions, making decisions and generally
                  in all dealings with the Grantee under this Deed.

      20 GOODS AND SERVICES TAX

                  20.1   Any amount referred to in this deed is exclusive of GST
                         unless it is expressly included.

                  20.2   Subject to subclause 20.3, if GST is imposed on a
                         supply (or deemed supply) of any goods, property,
                         service or any other thing made under or in connection
                         with this deed, then the consideration for that supply
                         (or deemed supply) is increased by an amount equal to
                         the amount which would otherwise have been payable
                         multiplied by the rate at which GST is imposed in
                         respect of that supply (or deemed supply), having
                         regard to input tax credits and adjustments, if any,
                         applicable to creditable acquisitions made by the
                         Grantee in relation to that supply (or deemed supply).
                         The increased amount will be payable in the same manner
                         and at the same times as the amount which would
                         otherwise have been payable.

                  20.3  Tile party making the supply (or deemed supply) must
                        provide to the recipient of that supply (or deemed
                        supply) from time to time over the course of the Project
                        GST tax invoices and, if applicable, adjustments notes
                        as required by the A New, Tax System (Goods and
                        Services) Tax Act 1999 (Cth).

                  20.4   If, due to the acquisition by the Grantee of an input
                         tax credit, or the issue to the Grantee of an
                         adjustment note, in respect of a creditable acquisition
                         made by the Grantee in relation to a supply (or deemed
                         supply) or for any other reason, the additional amount
                         of GST paid by the Commonwealth to the Grantee exceeds
                         the amount of GST payable in respect of the relevant

<PAGE>   40

                                       18

                        supply (or deemed supply), the Grantee must repay the
                        excess amount to the Commonwealth and an off-setting
                        adjustment will be made at the time the next instalment
                        of the Grant is paid.

<PAGE>   41
Chip Application Technologies Ltd                              Costcheck Summary

<TABLE>
<CAPTION>

                               START GRANT - SUMMARY OF COST ESTIMATES
<S>                            <C>                              <C>
                               COMPANY:                         Chip Application Technologies Limited

                               PROJECT TITLE:                   Internet Capable Multi Application Smartcard System

                               PROJECT DURATION:                23.7, 1999 - 31.12.2000
-------------------------------------------------------------------------------------------------------------
                                             ASSESSED ESTIMATE OF EXPENDITURE
                                             ----------------------------------------------------------------
              ITEM             Claimed       DISTRIBUTION BY FINANCIAL YEAR ENDING 30TH JUNE
                               Estimate of   ----------------------------------------------------------------
                               Expenditure             1999-00           2000-01     NOTE        TOTAL
                               ----------             ----------         --------    ----        -----
   Salary Expenditure              [*]                   [*]               [*]        (1)         [*]

   Contract Expenditure            [*]                   [*]               [*]                    [*]

   Net Plant Expenditure           [*]                   [*]               [*]        (2)         [*]

   Net Prototype Expenditure       [*]                   [*]               [*]        (3)         [*]

   Other Expenditure               [*]                   [*]               [*]        (4)         [*]
   Total Project Expenditure       [*]                   [*]               [*]                    [*]
   Grant authorised @ 50%          [*]                   [*]               [*]                    [*]

</TABLE>

Reasons for adjustments to claimed estimates of expenditure

Note (1)-(4) - Please see attached cost check details

                                                                        Page 1

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   42

Chip Application Technologies Ltd                             Costcheck Detail

                        START GRANT - COST CHECK

     Company:          Chip Application Technologies Limited
     Project:          Internet Capable Multi Application Smartcard System
     Project Duration: 23.7.1999 - 31.12.2000
Note (1) - R&D Salary Expenditure
<TABLE>
<CAPTION>
                                                 Time on proj. Time on proj.
                                         rate      99-00 [%]   00-01 [%]
                                       [$/hour]  starts 7.99  ends 30.12.00     1999-00        2000-01         Total
                                       --------  -----------  -------------   ----------      --------      ----------
<S>                                    <C>        <C>         <C>             <C>             <C>           <C>
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]
                 [*]                      [*]        [*]         [*]              [*]            [*]            [*]

                                                                 [*]              [*]            [*]            [*]

                 Salary on costs at                  [*]                          [*]            [*]            [*]
                 Admin Support Costs at              [*]                          [*]            [*]            [*]
                 Total Salary Expenditure                                         [*]            [*]            [*]
                 Rounded                                                          [*]            [*]            [*]
</TABLE>

(i) - Salary Expenditure is payable only on reconcilable salary
      records. Individual employee time sheets, detailing task numbers,
      milestone numbers, time spent and supervisor authorisations must be kept
      by Chip Application Technologies. All source documents including pay
      records, time sheets, master task lists, evidence of payments and group
      certificates should be made available at the request of the Board's
      Assessors on cost review visits.
      Salary expenditure will be paid on actual time worked on the project
      only, as all holiday, sick leaves are allowed through the on cost and
      admin support costs

      Increased in salary expenditure due to firming up of estimates

                                                                     Page 1 of 3

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
<PAGE>   43
Chip Applicaon Technologies Ltd                                 Costcheck Detail

Note (2) - R&D Contract Expenditure
<TABLE>
<CAPTION>

                                                                 1999-00     2000-01     Total
                                                                 ------      -------     ------
<S>                                                               <C>        <C>        <C>
  [*]                                                              [*]         [*]        [*]
                                                                                          [*]
                                                                  ------      -----     ------
Total Contract Expenditure                                         [*]         [*]        [*]
        Rounded                                                    [*]         [*]        [*]
                                                                  ======      =====     ======
</TABLE>

Note (2) - R&D Plant Expenditure
<TABLE>
<CAPTION>
                                                                 1999-00     2000-01     Total
                                                                 ------      -------     ------
<S>                         <C>         <C>                      <C>         <C>         <C>
                            Date
Hardware                    purchased    cost    depn p.a.
 [*]                         [*]         [*]        [*]            [*]         [*]        [*]
 [*]                         [*]         [*]        [*]            [*]         [*]        [*]
 [*]                         [*]         [*]        [*]            [*]         [*]        [*]

 [*]
 [*]                         [*]         [*]        [*]            [*]                    [*]
 [*]                         [*]         [*]        [*]            [*]                    [*]

 [*]
 [*]                                                               [*]         [*]        [*]
 [*]                                                               [*]         [*]        [*]

Total Plant Expenditure                                            [*]         [*]        [*]
                                                                   ------     -----      ------
Rounded                                                            [*]         [*]        [*]
                                                                   ======     =====      ======

</TABLE>

Reduction in expenditure due to firming up of estimates

Note (3) - Prototype Expenditure
<TABLE>
<CAPTION>
                                                                 1999-00       2000-01   Total
                                                                 ------        -------   ------
<S>                                                               <C>          <C>      <C>
 [*]

                           [*]         [*]         [*]
 [*]                       [*]         [*]         [*]             [*]           [*]       [*]
 [*]                       [*]         [*]         [*]             [*]           [*]       [*]
 [*]                                                               [*]           [*]       [*]

Total Prototype Expenditure                                        [*]           [*]       [*]
                                                                  -----       -----       -----
Rounded                                                            [*]           [*]       [*]
                                                                  =====         =====     =====
</TABLE>

Reduction in expenditure due to firming up of estimates

Note (4) - Other Expenditure
<TABLE>
<CAPTION>

                                                                   1999-00   2000-01     Total
                                                                   -------   -------     ------
<S>                                                                <C>       <C>         <C>
 [*]                 [*]                                             [*]        [*]        [*]
 [*]                 [*]                                             [*]        [*]        [*]
 [*]                 [*]                                             [*]        [*]        [*]
 [*]                 [*]                                             [*]        [*]        [*]
 [*]                                                                 [*]        [*]        [*]
                                                                   ------    ------      ------
Total other Expenditure                                        (ii)  [*]        [*]        [*]
Rounded                                                              [*]        [*]        [*]
                                                                   ======    ======      ======
</TABLE>

(ii)  - Chip Application Technologies Ltd is required to keep all source
      documents including air ticket vouchers, itineraries, diaries, invoices,
      receipts and correspondence regarding the purpose of travel. These
      documents should be made available and accessible to the Board's
      Assessors.

Reduction in expenditure due to reduction in audit certificate fees, travel
expenses and beta site testing as well as patent searches being disallowed.

                                                                 page 2 of 3

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.

<PAGE>   44

Chip Application Technologies Ltd                              Costcheck Detail

SUMMARY OF EXPENDITURES:
<TABLE>
<CAPTION>
                                                        1999-00      2000-01      Total
                                                       ---------     -------     --------
<S>                                                    <C>           <C>         <C>
Salary Expenditure                                        [*]          [*]          [*]
Contact Expenditure                                       [*]          [*]          [*]
Plant Expenditure                                         [*]          [*]          [*]
Prototype Expenditure                                     [*]          [*]          [*]
Other Expenditure                                         [*]          [*]          [*]
                                                       ---------     -------     ---------
                                                          [*]          [*]          [*]
                                                       =========     =======     =========
                                                          [*]          [*]          [*]
</TABLE>

                                                                     Page 3 of 3

An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}]]