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                                                                    EXHIBIT 10.4

                          EXECUTIVE SERVICES AGREEMENT

                                     BETWEEN

                      CHIP APPLICATION TECHNOLOGIES LIMITED

                                       AND

                         DAVID LANCELOT MACHATTIE SMITH

                                  (1 JUNE 1999)

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                                TABLE OF CONTENTS

<TABLE>
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1    DEFINITIONS AND INTERPRETATION ..................................    4

   1.1 DEFINITIONS ...................................................    4

2    EMPLOYMENT ......................................................    5

3    TERM ............................................................    5

4    DUTIES OF EXECUTIVE .............................................    6

   4.1 GENERAL DUTIES ................................................    6

   4.2 DUTY TO REPORT ................................................    6

5    REMUNERATION ....................................................    6

   5.1 BASIC SALARY PACKAGE ..........................................    6

   5.2 STARTING SALARY PACKAGE .......................................    6

   5.3 SALARY PACKAGE REVIEW .........................................    7

   5.4 NO DECREASE IN BASIC SALARY PACKAGE ...........................    7

   5.5 DIRECTORS' FEES ...............................................    7

6    SUPERANNUATION ..................................................    8

7    EXISTING LOAN SHARE AGREEMENT AMENDMENTS ........................    8

8    EXPENSES AND OTHER ENTITLEMENTS .................................    8

   8.1 EXPENSES ......................................................    8

   8.2 ENTITLEMENTS ..................................................    9

   8.3 FRINGE BENEFITS TAX ...........................................    9

9    MAINTENANCE OF REMUNERATION .....................................    9

10   LEAVE ENTITLEMENTS ..............................................   10

11   PAYMENT DURING ABSENCE ON MEDICAL GROUNDS .......................   10

12   CONFIDENTIALITY .................................................   10

   12.1  EXECUTIVE'S OBLIGATIONS .....................................   11

   12.2  SURVIVAL OF OBLIGATIONS .....................................   11

13   RESTRICTIONS ON OTHER ACTIVITIES OF THE EXECUTIVE ...............   11

   13.1  INDUCEMENTS .................................................   11

   13.2  OPTIONAL POST-EMPLOYMENT RESTRAINT ..........................   11

   13.3  USE OF THE COMPANY NAME .....................................   12

14   TERMINATION .....................................................   12

   14.1  TERMINATION BY THE EXECUTIVE ................................   12

   14.2  TERMINATION BECAUSE OF INCAPACITY ...........................   13

   14.3  IMMEDIATE TERMINATION BY THE COMPANY ........................   13

   14.4  TERMINATION BY THE COMPANY ..................................   13

   14.5  PAYMENTS ON TERMINATION OR FAILURE TO RENEW AGREEMENT .......   13
</TABLE>

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<TABLE>
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   14.6  TERMINATION PAYMENTS ........................................   14

   14.7  RESIGNATION AS DIRECTOR .....................................   14

   14.8  OBLIGATIONS ON TERMINATION ..................................   14

15   SHARES AND OPTIONS  14

   15.1  CONFIRMATION ................................................   14

   15.2  CONFIRMATION OF SHARES SUBJECT TO LIMITED RECOURSE LOANS ....   14

   15.3  LIMITED RECOURSE LOAN TERMS .................................   14

   15.4  NEW OPTIONS .................................................   15

16   INDEMNITY .......................................................   15

17   GENERAL .........................................................   15

   17.1  NOTICES .....................................................   15

   17.2  GOVERNING LAW AND JURISDICTION ..............................   16

   17.3  PROHIBITION, ENFORCEABILITY AND SEVERANCE ...................   16

   17.4  WAIVER ......................................................   16

   17.5  ENTIRE AGREEMENT ............................................   16

   13. TAXATION ......................................................   22

   14. UNEXERCISED OPTIONS ...........................................   22

   15. CHANGE OF CONTROL .............................................   23
</TABLE>

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THIS EXECUTIVE SERVICE AGREEMENT is made on 1 June 1999 between the following
parties:

CHIP APPLICATION TECHNOLOGIES LIMITED (ACN 057 883 333) of Level 5, 152-162
Riley Street, East Sydney, New South Wales ('COMPANY'), AND

DAVID LANCELOT MACHATTIE SMITH of 58 View Street, Woollahra, New South Wales
2025 ('EXECUTIVE').

RECITALS

A.      The Company is in the business of developing, marketing and operating
        software solutions for multi-application systems over POS and Internet.
        (the 'BUSINESS').

B.      The Company and the Executive entered into an Employment Agreement dated

1       May 1995 (`Employment Agreement') and Executive Services Agreement dated
        14 May 1997 (`Executive Agreement') under which the Executive has been
        employed as the Managing Director of the Company (the 'PREVIOUS
        AGREEMENTS').

C.       The Company and the Executive have agreed to enter into this Agreement
         to replace the Previous Agreements and to clarify the terms and
         conditions of the Executive's continued employment as Managing Director
         and CEO of the Company.

THE PARTIES AGREE, in consideration of, among other things, the mutual promises
contained in this agreement:

1       DEFINITIONS AND INTERPRETATION

1.1     DEFINITIONS

        In this agreement:

        'BOARD' means the board of directors of the Company,

        'GROUP' means the Company and any Group Company;

        'GROUP COMPANY' means a 'related body corporate' of the Company as that
        expression is defined in the Corporations Law;

        'INFORMATION' means any information in respect of the Company's Business
        which is not in the public domain and includes, but is not limited to,
        any document, book, account, process, patent, specification, drawing,
        design or know-how which is:

        (a)     supplied by the Company to the Executive; or

        (b)     generated by the Executive in the course of performing the
                Executive's obligations;

        'MONTH' means calendar month;

        'SALARY REVIEW DATE' means 1 May of each year that this Agreement is in
        effect;

        'SUBSIDIARY' means any 'subsidiary' of the Company as that expression is
        defined in the Corporations Law,.

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1.2     INTERPRETATION

        In this agreement, headings are for convenience only and do not affect
        the interpretation of this agreement and, unless the context otherwise
        requires:

        (a)     a reference to termination of this agreement includes a
                reference to termination of the Executive's contract of
                employment;

        (b)     words importing the singular include the plural and vice versa;

        (c)     words importing a gender include any gender;

        (d)     other parts of speech and grammatical forms of a word or phrase
                defined in this agreement have a corresponding meaning;

        (e)     an expression importing a natural person includes any company,
                partnership, joint venture, association, corporation or other
                body corporate and vice versa;

        (f)     a reference to any thing (including, but not limited to, any
                right) includes a part of that thing;

        (g)     a reference to a party to a document includes that party's
                successors and permitted assigns;

        (h)     a reference to a statute, regulation, proclamation, ordinance or
                by-law includes all statutes, regulations, proclamations,
                ordinances or by-laws varying, consolidating or replacing it,
                and a reference to a statute includes all regulations,
                proclamations, ordinances and by-laws issued under that statute;
                and

        (i)     a reference to a document or agreement includes all amendments
                or supplements to, or replacements or novations of, that
                document or agreement.

2       EMPLOYMENT

        (a)     Under the Previous Agreements the Company appointed the
                Executive as its Managing Director and the Executive accepted
                that appointment with effect from 1 May 1995 (the 'Commencement
                Date').

        (b)     The Executive continues to be employed as the Managing Director
                and CEO of the Company and from the date of this Agreement that
                employment is on the terms contained in this Agreement.

3       TERM

        (a)     The appointment of the Executive as CEO & Managing Director of
                the Company began on the Commencement Date under the terms of
                the Previous Agreements.

        (b)     The appointment of the Executive as Managing Director and CEO of
                the Company will continue until 1 June 2002, unless terminated
                at some earlier time in accordance with the terms of this
                Agreement.

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4       DUTIES OF EXECUTIVE

4.1     GENERAL DUTIES

        The Executive must:

        (a)     devote the whole of the Executive's time, attention and skill
                during normal business hours, and at other times as reasonably
                necessary, to the duties of office and the Executive shall not
                be entitled to receive any remuneration for work performed
                outside such normal business hours;

        (b)     faithfully and diligently perform the duties and exercise the
                powers:

                (i)     consistent with the position of Managing Director and
                        CEO; and

                (ii)    assigned to the Executive by the Board; and

        (c)     promote the interests of the Company and any Group Company.

4.2     DUTY TO REPORT

        The Executive must:

        (a)     report directly to the Board or as directed by the Board;

        (b)     provide prompt and full information to the Board regarding the
                conduct of the business of the Company by the Executive; and

        (c)     comply with reasonable directions given to the Executive by the
                Board.

5       REMUNERATION

5.1     BASIC SALARY PACKAGE

        (a)     During the period that the Executive serves the Company under
                this Agreement, the Company must pay the Executive a basic
                salary package, determined under this clause, the salary
                component of which is payable fortnightly in arrears by direct
                deposit into a bank account nominated by the Executive, or as
                otherwise agreed between the parties.

        (b)     At the sole discretion of the Executive as to the nature and
                amount of each component, payment by the Company of the basic
                salary package may be by way of salary, additional
                superannuation contributions, life insurance, health and
                incapacity insurance, income protection insurance or such other
                components as may otherwise be agreed between the parties. Any
                fringe benefits tax payable under the Fringe Benefits Tax
                Assessment Act 1986 (Cth) in respect of the nature of each
                component will be included in the calculation of the basic
                salary package.

5.2     STARTING SALARY PACKAGE

        The basic salary package for the period commencing on the date of this
        Agreement is $286,624.00 gross per annum.

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5.3     SALARY PACKAGE REVIEW

        (a)     The basic salary package is subject to review on each Salary
                Review Date.

        (b)     The basic salary package for the period after a review is the
                amount per annum agreed between the parties.

        (c)     At each review, the basic salary package may be increased having
                regard to:

                (i)     the cost of living;

                (ii)    the responsibilities of the Executive and remuneration
                        available in the workforce outside the Company for a
                        person with responsibilities and experience equivalent
                        to those of the Executive;

                (iii)   the performance of the Executive;

                (iv)    the performance of the Company; and

                (v)     any increases awarded to employees of the Company.

        (d)     In the absence of agreement under clause 3.3(b), the basic
                salary package for the period after a Salary Review Date will be
                the greater of.

                (i)     an amount equal to any percentage increase in the All
                        Groups Consumer Price Index ('CPI') for Sydney as
                        published by the Australian Bureau of Statistics; or

                (ii)    the average increase granted across the Company's
                        employees, in respect of the 12-month period preceding
                        the Salary Review Date.

        (e)     The parties must commence review of the basic salary package 1
                month before the Salary Review Date, with a view to the parties
                reaching an agreement for the purposes of clause 3.3(b), by the
                Salary Review Date.

5.4     NO DECREASE IN BASIC SALARY PACKAGE

        The basic salary package of the Executive must not decrease on any
        salary package review.

5.5     DIRECTORS' FEES

        The basic salary package includes directors' fees. In the event this
        Agreement is terminated for whatever reason and the Executive remains as
        a director of the Company, then director's fees shall be payable to the
        Executive on a similar basis to other non-executive directors (other
        than the Chairman).

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6       SUPERANNUATION

        (a)     The Company warrants that as at the date of this Agreement the
                Company has fully complied with its obligations under the
                Superannuation Guarantee Charge Legislation in relation to the
                employment of the Executive since 1 May 1995.

        (b)     The Company must, during the continuation of this Agreement,
                ensure that the minimum superannuation contributions required to
                be made for the benefit of the Executive by the Superannuation
                Guarantee Charge Legislation are made to the trustees of a
                complying superannuation fund (within the meaning of the Income
                Tax Assessment Act 1936 (Cth)).

        (c)     The Company's superannuation contributions under this clause 4
                form part of the Executive's basic salary package under clause 3
                of this Agreement, except that any increases after the date of
                this Agreement to the minimum superannuation contribution
                required to be made for the benefit of the Executive pursuant to
                the Superannuation Guarantee Charge Legislation as at the date
                of this Agreement will be paid by the Company in addition to,
                and will not form part of, the Executive's basic salary package
                under clause 3 of this Agreement. In addition the Executive will
                be compensated (by way of increased basic salary or otherwise)
                by the Company for any negative financial impact of any other
                amendments to prevailing superannuation legislation.

7       EXISTING LOAN SHARE AGREEMENT AMENDMENTS

(a)     The Executive agrees to waive the obligation of the Company to buy-back
        shares up to a maximum one million dollars.

(b)     The Company agrees that the Executive may transfer Loan Shares to
        members of the Executives family or entities controlled by one or more
        members of the Executive's family, and not necessarily the Executive,
        without any obligation to repay the Loan related to such shares. However
        on sale, transfer or any disposal of such shares to any third party or
        any third party assuming control of such entity, the Executive will
        repay the Loan applicable to such shares.

8       EXPENSES AND OTHER ENTITLEMENTS

8.1     EXPENSES

(a)     The Company must reimburse the Executive for all reasonable work related
        out-of-pocket expenses (approved by the Chairman or another director)
        incurred by the Executive on Company Business, including but not limited
        to:

        -       telephone calls, rentals and charges; home facsimile charges;
                internet expenses, travelling expenses; entertainment expenses;
                hotel expenses;

        -       car parking expenses;

        -       expenses associated with the use of the Executive's own car,
                calculated at the rates allowed by the Australian Taxation
                Office for the purposes of determining deductibility; and

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        -       any other expenditure reasonably made by the Executive on behalf
                of the Company.

(b)     No amount may be reimbursed pursuant to clause 6.1 before the Executive
        has provided written evidence of expenses incurred to the Company.

(c)     The Executive will be entitled to full reimbursement of all overseas
        travel (business class), accommodation and other costs for the
        Executive's wife on two trips with the Executive (each trip not to
        exceed 30 days) at any time prior to 1 June 2002, notwithstanding the
        early termination of the agreement for whatever reason.

8.2     ENTITLEMENTS

(a)     In addition to the payments under clause 3, 4, 5 and this clause 6, the
        Company agrees to provide the Executive the following benefits:

        -       the Company will provide the Executive with a portable computer,
                facsimile, mobile telephone and an internet service for use at
                home or out of the office;

        -       the Company will provide the Executive with car parking at or
                near the Company's premises;

        -       the Company will ensure that all overseas travel is at least
                business class

        -       for the duration of his employment by the Company, the Company
                will ensure that the Executive is covered by workers
                compensation insurance as required by legislation and directors'
                and officers' liability insurance world-wide; and

        -       the Company will pay all of the costs associated with the
                parties entering into this Agreement, including payment of stamp
                duty and up to $6,000 of the Executive's legal costs.

(b)     In relation to the benefits at clauses 8.2(a) the Company will pay all
        leasing and other costs associated therewith. In the event that the
        Executive pays for any part of the costs associated with these benefits
        the Company will reimburse the Executive for such amounts.

(c)     In relation to the benefits at clause 8.2(a), on termination of this
        Agreement for whatever reason the Executive may at his sole discretion
        purchase such items from the Company at the depreciated value of the
        items at the time of termination.

8.3     FRINGE BENEFITS TAX

The Company must pay any fringe benefits tax payable under the Fringe Benefits
Tax Assessment Act 1986 (Cth) in relation to any remuneration or benefit
provided by the Company to the Executive under this Agreement except as
specifically referred to in Clause 5.1 (b).

9       MAINTENANCE OF REMUNERATION

        If there is any change in:

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(a)     the corporate structure under which the Company or any Group Company
        operates the Business;

(b)     the accounting methods of the Company or its accountants or auditors,

which reduces or diminishes the total value of the remuneration payable to the
Executive, the Company must ensure that the total value of the remuneration
payable to the Executive is maintained at a level not less than that which
existed before the change.

10      LEAVE ENTITLEMENTS

(a)     The Executive is entitled to public holidays, long service leave and
        annual leave in conformity with statutory entitlements. The parties
        agree that annual leave and long service leave shall be taken at such
        time as is agreed by the parties provided that it does not unreasonably
        inconvenience or disrupt the Business or the Company. In addition to
        normal leave the Executive will be entitled to 1.5 days of special
        holiday leave for each overseas trip exceeding 21 days with a maximum
        entitlement of 5 days of special leave for each 100 days overseas.

(b)     The Company acknowledges that, at the date of this agreement, the
        Executive is currently entitled to 38 working days holiday as part of
        annual leave and that the Executive is entitled to long service leave of
        24 working days. If upon termination of the agreement for whatever
        reason, the Executive is entitled to annual leave or long service leave,
        the Company will pay the Executive the full entitlement upon such
        termination.

11      PAYMENT DURING ABSENCE ON MEDICAL GROUNDS

(a)     Where the Executive is at any time incapacitated from performing his
        duties for a period in excess of six months, where such incapacity is
        due to illness, injury, accident or any other circumstance, the Company
        may discontinue payment in whole or in part of the Executive's salary
        until such time as the incapacity shall cease or the Executive's
        employment is terminated in accordance with the terms of this Agreement.

(b)     The Company shall give written notice to the Executive of its intention
        to discontinue payment of salary and the notice shall specify the date
        from which payment of salary will be discontinued. The notice may be
        given at any time after the expiration of six months, so long as the
        incapacity remains.

(c)     The Executive shall be entitled to no more than six months' sick leave
        in total throughout the term of this Agreement and the Company must
        continue to pay the Executive's salary in full during this period.

(d)     The Executive shall undertake such medical checks and blood tests as may
        be reasonably required to enable the Company to obtain Key Man insurance
        or other insurance coverage over the life of the Executive.

12      CONFIDENTIALITY

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12.1    EXECUTIVE'S OBLIGATIONS

The Executive must:

(a)     keep any Information secret and confidential,

(b)     take all reasonable and necessary precautions to maintain the secrecy
        and prevent the disclosure of any Information; and

(c)     not disclose Information to any third party without first obtaining the
        written consent of the Board except, provided however that these
        obligations do not to apply to Information:

(d)     that is in the public domain other than through breach of this
        Agreement;

(e)     that the Executive is required by law to disclose;

(f)     that is required to be disclosed by the Executive in the ordinary and
        proper course of employment with the Company; or

(g)     that has been disclosed to the Executive by a third party who is not
        under any duty of confidentiality with respect to that Information.

12.2    SURVIVAL OF OBLIGATIONS

The Executive's obligations under this part survive the termination of the
Executive's employment with the Company.

13      RESTRICTIONS ON OTHER ACTIVITIES OF THE EXECUTIVE

13.1    INDUCEMENTS

Other than under this agreement the Executive must not accept any payment or
other benefit as an inducement or reward for any act in connection with the
Business of the Company or any Group Company.

13.2    OPTIONAL POST-EMPLOYMENT RESTRAINT

(a)     The Executive and the Company agree that notwithstanding termination of
        this agreement for whatever reason, the Company may, at its option, pay
        the Executive an additional one year's basic salary package as per
        clause 5.1 of this Agreement in consideration for the Executive agreeing
        to the post-employment restraints in clause 13.2(d) of this Agreement.

(b)     The Executive may elect to have the amount payable under clause 13.2(a)
        paid monthly or in a lump sum on exercise of the option. If a lump sum
        is elected, the lump sum shall be discounted by the Discount Rate. For
        the purposes of this paragraph, the Discount Rate shall be equal to the
        Bank Bill Interest Rate at the date of termination, plus three
        percentage points.

(c)     The total amount referred to in clause 13.2(a) is payable in addition to
        any other payment to the Executive under this Agreement.

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(d)     On exercise of the option by the Company, the Executive agrees that for
        a period of 12 months from either:

        (i)     the expiry of the term of this Agreement; or

        (ii)    the date of termination (for any cause or by any means) of his
                employment with the Company, whichever is the first to occur,
                the Executive will not undertake or carry on (either alone or in
                partnership) or be employed or interested, whether directly or
                indirectly, in any capacity whatsoever, in the Restraint Area,
                in a business which is the same as or substantially similar to
                the Business or competes with the Company or the Business.

(e)     In clause 13.2(d), 'Restraint Area' means:

        (i)     all countries in which the Company, or any related body
                corporate of the Company, carry on business;

        (ii)    Australia;

        (iii)   New South Wales.

(f)     Clause 13.2(d) has the effect of several separate and individual
        covenants and restraints consisting of each separate covenant and
        restraint set out in clause 13.2(d) combined with each separate area set
        out in clause 13.2(e).

(g)     If any of the several separate and independent covenants and restraints
        referred to in clause 13.2(f) are or become invalid or unenforceable for
        any reason, then that invalidity or unenforceability will not effect the
        validity of enforceability of any of the other separate and independent
        covenants and restraints.

13.3    USE OF THE COMPANY NAME

The Executive agrees with the Company that at any time after termination (for
any cause or by any means) of his employment with the Company, he will not use
the name of the Company or any Group Company for any purpose, in connection with
his own or any other name, in any way which might suggest his continued
association with the Company or any Group Company (other than as a shareholder
or director of the Company, if he continues so to be).

14      TERMINATION

14.1    TERMINATION BY THE EXECUTIVE

This Agreement may be terminated by the Executive at any time by the Executive
giving six months' notice in writing to the Company. If any one entity or
person, acting alone or in association with others,

a)      lodges with the Company, or any parent of the Company, a substantial
        shareholders notice indicating an interest or

b)      in any way obtains an interest in

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more than 30% of the issued capital of the Company, or any parent of the
Company, then the Executive may terminate this agreement at any time for a
period of six months following such event on three months written notice to the
Company.

14.2    TERMINATION BECAUSE OF INCAPACITY

This Agreement will automatically terminate if the Company gives notice to the
Executive in accordance with clause 11.

14.3    IMMEDIATE TERMINATION BY THE COMPANY

The Company may terminate this Agreement immediately if the Executive:

(a)     is guilty of grave misconduct or wilful neglect in the unanimous opinion
        of all other directors; or

(b)     is of unsound mind or becomes liable to be dealt with under any law
        relating to mental health.

14.4    TERMINATION BY THE COMPANY

(a)     Subject to clauses 14.2 and 14.3, this Agreement may only be terminated
        by the Company in accordance with this clause 14.4.

(b)     If prior to 1 June 2001, the Company and the Executive have not entered
        into an agreement for the continued employment of the Executive, then
        this agreement will be deemed to have been terminated by the Company
        effective from 1 September 2001 and the Executive will cease to be an
        Executive of the Company from the 1 September 2001.

14.5    PAYMENTS ON TERMINATION OR FAILURE TO RENEW AGREEMENT

Upon termination of the Executive's employment by either party and for whatever
reason (including clause 14.4), the Company shall:

(a)     pay the Executive his then prevailing basic salary package for 12 months
        from the effective date of termination notwithstanding that the
        Executive no longer provides any services under this Agreement and
        notwithstanding any other benefits or entitlements to which the
        Executive is entitled under other terms of this Agreement. That amount
        is to be paid monthly in arrears in twelve equal instalments and is to
        be secured by a bank guarantee, or such other instalments (or lump sum)
        and security as otherwise mutually agreed by the parties.

(b)     pay the Executive all outstanding entitlements under this Agreement
        including, but not limited to, unpaid salary due and payable up to the
        date of termination and a sum representing any holiday or long service
        entitlements which have accrued, but not been taken, up to and including
        that date; and

(c)     facilitate the Executive in transferring to another superannuation fund
        the balance standing to the credit of his superannuation fund hereunder.

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14.6    TERMINATION PAYMENTS

The Company will ensure that all and any termination payments under this
agreement, including payments under clause 13.2 and 14.5, minimise the
Executives personal tax liability in respect of such payments, but the Company
shall not be obligated to make any payment in such a form as to be non tax
deductible to the Company.

14.7    RESIGNATION AS DIRECTOR

(a)     On termination of this Agreement by operation of clause 14.3, the
        Executive must resign from office as a director of the Company or any
        Group Company.

(b)     On termination of this Agreement for any reason other than under clause
        14.3, the Executive shall be under no obligation to resign from office
        as a director of the Company or any Group Company, but is required to
        stand for reappointment as a director at the next meeting at which any
        other person is required to stand for appointment or reappointment as a
        director.

14.8    OBLIGATIONS ON TERMINATION

        On termination of this Agreement, the Executive must return to the
        Company immediately all tangible property of the Company or any Group
        Company including, but not limited to, all books, documents, papers,
        materials, credit cards, cars, computer records and keys held by the
        Executive or under the Executive's control.

15      SHARES AND OPTIONS

15.1    CONFIRMATION

        The Company and the Executive confirm that the Executive is entitled to
        all shares and options referred to in the Previous Agreements under the
        terms of such Previous Agreements and nothing in this agreement will
        alter or otherwise effect the Executives rights, title and interest in
        such shares and options.

15.2    CONFIRMATION OF SHARES SUBJECT TO LIMITED RECOURSE LOANS

        The Company and the Executive confirm that the shares and options
        detailed in Schedule A to the Executive Agreement have been issued to
        the Executive in accordance with the agreed interpretation of the terms
        of the Previous Agreements. The Company hereby warrants to the Executive
        that the shares and options detailed in Schedule A of the Executive
        Agreement have been properly issued.

15.3    LIMITED RECOURSE LOAN TERMS

        The Company and the Executive agree that the terms of the Limited
        Recourse Loans made by the Company to the Executive for the purpose of
        acquiring the shares referred to in Schedule A of the Executive
        Agreement are as set out in Schedule B to the Executive Agreement.

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15.4    NEW OPTIONS

        The Company warrants to the Executive that the options detailed in
        Schedule A of this Agreement have been properly issued.

16      INDEMNITY

        To      the extent permitted by law, the Company indemnifies the
                Executive:

        (a)     against any liability incurred by him as an employee, officer
                and or director of the Company, a subsidiary of the Company or
                any parent of the Company to a person other than the Company or
                a related body corporate of the Company; and

        (b)     against any loss, cost, damage, expense or liability which the
                Executive suffers or incurs as a result of any litigation,
                proceeding or judgment arising in connection with this
                agreement, unless the liability, loss, cost, damage or expense
                arises out of conduct on the part of the Executive which:

                (a)     is in material breach of this agreement;

                (b)     involves a lack of good faith, fraud, grave misconduct
                        or wilful neglect; or

                (c)     is contrary to the Company's express instructions in
                        relation to the management of the Company's business.

17      GENERAL

17.1    NOTICES

        Any notice or other communication including, but not limited to, any
        request, demand, consent or approval, to or by a party to this
        agreement:

        (a)     must be in legible writing and in English addressed as shown at
                the commencement of this agreement, or as specified to the
                sender by any party by notice;

        (b)     where the sender is a company, must be signed by an officer or
                under the common seal of the sender;

        (c)     is regarded as being given by the sender and received by the
                addressee:

                (i)     if by delivery in person, when delivered to the
                        addressee;

                (ii)    if by post, three Business Days from and including the
                        date of postage/on delivery to the addressee; or

                (iii)   if by facsimile transmission, whether or not legibly
                        received, when received by the addressee, but if the
                        delivery or receipt is on a day which is not a Business
                        Day or is after 4.00 pm (addressee's time) it is
                        regarded as received at 9.00 am on the following
                        Business Day.

                                       15
<PAGE>   16

17.2    GOVERNING LAW AND JURISDICTION

        (a)     This agreement is governed by the laws of New South Wales.

        (b)     The parties irrevocably submit to the exclusive jurisdiction of
                the courts of New South Wales.

17.3    PROHIBITION, ENFORCEABILITY AND SEVERANCE

        (a)     Any provision of, or the application of any provision of, this
                agreement which is prohibited in any jurisdiction is, in that
                jurisdiction, ineffective only to the extent of that
                prohibition.

        (b)     Any provision of, or the application of any provision of, this
                agreement which is void, illegal or unenforceable in any
                jurisdiction does not affect the validity, legality or
                enforceability of that provision in any other jurisdiction or of
                the remaining provisions in that or any other jurisdiction.

        (c)     If a clause is void, illegal or unenforceable, it may be severed
                without affecting the enforceability of the other provisions in
                this agreement.

17.4    WAIVER

        (a)     The failure of either party at any time to require performance
                by the other party of any provision of this agreement does not
                affect the party's right to require the performance at any time.

        (b)     The waiver by either party of a breach of any provision must not
                be held to be a waiver of any succeeding breach of the provision
                or a waiver of the provision itself.

17.5    ENTIRE AGREEMENT

        This agreement supersedes all previous agreements in respect of the
        Executive's terms of employment by the Company and embodies the entire
        agreement between the parties, except for such terms of the Previous
        Agreements that relate to shares, options and the Limited Recourse Loan.

                                       16
<PAGE>   17

EXECUTED by the parties as an agreement.

SIGNED BY CHIP APPLICATION

TECHNOLOGIES  LIMITED
(ACN 057 883 333) by authority of the
Board of Directors by its duly authorised
representative Lance D. O'Connor Director
in the presence of
                                             /S/ LANCE DENIS O'CONNER
                                             -------------------------------
                                             Lance Denis O'Connor; Director
/S/ illegible
------------------------------------
Name of-Witness

SIGNED BY DAVID LANCELOT
MACHATTIE SMITH in the presence of

Signature of witness
                                             /s/ DAVID MAC SMITH
                                             -------------------------------
                                             David Lancelot Machattie Smith
/S/ illegible
------------------------------------
Name of witness (print)
illegible

                                       17
<PAGE>   18

                                   SCHEDULE A

<TABLE>
<CAPTION>
                                                    COLUMN 1         COLUMN 2.         COLUMN 3.
                                                     NO. OF       OPTION EXERCISE       OPTION
                   DETAILS                          OPTIONS            PRICE          EXPIRY DATE
                   -------                          -------            -----          -----------
<S>                                                 <C>           <C>                 <C>
Options to be unconditionally issued by the         500,000            A$1.00         1 July 2000
Company to the Executive on 1 June 1999

Options to be unconditionally issued by the         500,000            A$1.60         1 July 2004
Company to the Executive on 1 June 1999

Options issued conditional upon and will not        500,000            $A1.15         1 July 2002
vest unless the Executive is an Executive of
the Company on 1 June 2000 (`vesting date')

Options issued conditional upon and will not        500,000            $A1.20         1 July 2004
vest unless the Executive is an Executive of
the Company on 1 June 2001 (`vesting date')
</TABLE>

                                       18
<PAGE>   19

                      OTHER TERMS AND CONDITIONS OF OPTIONS

The terms and conditions of the options are as follows:

1.      ENTITLEMENT

        The Option holder is entitled to subscribe for one fully paid ordinary
        share in the capital of the Company for each Option held.

2.      ISSUE PRICE

        No amount is payable on issue of the Options.

3.      EXERCISE PRICE

        The exercise price of each Option is the exercise price referred to in
        Column 2 of Schedule A.

4.      OPTION PERIOD

        Each Option may be exercised in whole or in part at any time prior to
        the Option Expiry Date set out in Column 3 of Schedule A. Any Option
        that is not exercised will automatically expire on the Option Expiry
        Date.

5.      TRANSFERABILITY

        The Options may not be transferred without the prior consent of the
        Company (which consent will not be unreasonably withheld) and only in
        accordance with the Articles of Association of the Company.

6.      PARTICIPATION IN BONUS ISSUES AND CASH ISSUES

6.1     If the Company makes a bonus issue of shares or other securities
        convertible into ordinary shares pro rata to holders of ordinary shares
        (other than an issue in lieu of dividends or by way of dividend
        reinvestment pursuant to any shareholder election), the Option holder
        will be entitled to participate in such issue, upon exercise of all or
        part of the Options on or before the books closing date for that issue,
        on the same basis as the holders of ordinary shares in the capital of
        the Company.

6.2     If the Company makes an offer to subscribe for cash of ordinary shares
        pro rata to the holders of ordinary shares the Option holder will be
        entitled to participate in such offer, upon exercise of all or part of
        the Options on or before the books closing date for that offer, on the
        same basis as the holders of ordinary shares in the capital of the
        Company.

6.3     The Company must notify the Option holder at least 12 business days
        before the books closing date for determining entitlements to an offer
        referred to in Clauses 6.1 or 6.2 of:

        a)      the proposed terms of the issue of the offer, and

                                       19
<PAGE>   20

        b)      the right to exercise his Options under Clause 6,1 or 6.2 (as
                the case may be).

7.      ADJUSTMENTS FOR BONUS ISSUES AND CASH ISSUES

7.1     If the Company is listed on the Australian Stock Exchange and makes an
        offer for cash of ordinary shares pro rata to the holders of ordinary
        shares, the exercise price of each Option shall be reduced by the value
        of the theoretical rights entitlement per cum rights share (E) provided
        that the exercise price of each Option shall not be reduced to less than
        the nominal value of the Company" ordinary shares, where E is calculated
        in accordance with the following formula:

              E = P - (S + D)
                  ----------
                    N + 1

        Where:

        E = theoretical value of the rights entitlement attached to each share
        (quoted cum rights).

        P = the weighted average market price of fully paid ordinary shares of
        the Company sold in the ordinary course of trading on the Australian
        Stock Exchange Limited during the five trading days after the
        announcement of the rights issue

        S = subscription price (application money plus calls) for new shares

        D = any dividends due but not yet paid on existing shares which will not
        be payable in respect of new shares issued under the rights issue

        N = number of cum rights shares required to be held to receive a right
        to one new share

        No change will be made to the number of shares to which the Option
        holder is entitled.

7.2     If the Company makes a bonus issue of shares or other securities
        convertible into ordinary shares pro rata to holders of ordinary shares
        (other than an issue in lieu of dividends or by way of dividend
        reinvestment pursuant to any shareholder election), the number of shares
        issued on exercise of each Option will include the number of bonus
        shares that would have been issued if the Option had been exercised
        prior to the books closing date for bonus shares. No change will be made
        to the exercise price.

8.      RECONSTRUCTION

        In the event of a reconstruction (including consolidation, sub-division,
        reduction or return) of the issued capital of the Company, the number of
        Options or the exercise price of Options or both shall be reconstructed
        (as appropriate) in a manner which would not result in any benefits
        being conferred on the Option holders which are not conferred on
        shareholders (subject to the provisions with respect to rounding of
        entitlements as sanctioned by the meeting of shareholders approving the

                                       20
<PAGE>   21

        reconstruction of capital) but in all respects the terms for the
        exercise of Options shall remain unchanged.

9)      RANKING OF SHARES ALLOTTED ON EXERCISE OF OPTIONS

        All share allotted pursuant to the exercise of Options will, subject to
        the Memorandum and Articles of Association of the Company, rank in all
        respects (including rights relating to dividends) pari passu with the
        existing ordinary shares of the Company on issue at date of allotment.

10.     METHOD OF EXERCISE OF OPTIONS

10.1    Options may be exercised by written notice to the Secretary of the
        Company. The exercise notice must specify the number of shares required
        to be allotted, which number must be a multiple of 1,000 if only part of
        the Options are exercised, or if the total number of Options held is
        less than 1,000, then the total of all Options held must be exercised.
        Options will be deemed to have been exercised on the date that the
        application is lodged with the Secretary of the Company.

10.2    The Option holder must pay the exercise price in full to the Company on
        the date of the exercise of the Options.

10.3    The exercise of less than all of the Option holder's Options will not
        prevent the Option holder from exercising an Option in respect of the
        whole or any part of the balance of the entitlement under his remaining
        Options.

10.4    On exercise of the Options the Option holder must surrender his Option
        certificate to the Company in respect of those Options being exercised.

10.5    If the Option holder exercises less than the total number of Options
        then registered in his name:

        a)      The Option holder must surrender his Option certificate to the
                Company, and

        b)      the Company must cancel that Option certificate and issue to the
                holder a new Option certificate in respect of the Option
                holder's unexercised Options.

10.6    Within 10 days of receipt of the application for the exercise of Options
        and payment by the Option holder of the exercise price of such Options,
        the Company must issue and allot to the Option holder the number of
        fully paid ordinary shares in the capital of the Company specified in
        the application.

10.7    If the Company is listed on the Australian Stock Exchange then it will
        as soon as practicable after issue make application for the shares
        issued upon exercise of Options by the Option holder to be granted
        official quotation on the Australian Stock Exchange. The Options are not
        to be listed on the ASX.

11.     COMPULSORY ACQUISITION

        If an entity ("Offeror") serves a notice on the option holder in
        accordance with section 703(4) of the Corporations Law, all options,
        which have not yet vested, become

                                       21
<PAGE>   22

        vested on the date that notice is served on the option holder,
        irrespective of any unfulfilled conditions of vesting.

        All options (including all existing options and all options that have
        been vested by virtue of the preceding paragraph) will lapse on the date
        3 months after delivery of that notice.

        Unless waived by written notice from the Company, the option holder must
        accept an offer to acquire all options which remain unexercised which is
        delivered in accordance with section 703(4) of the Corporations Law.
        This obligation is conditional on the terms offered by the Offeror being
        no less favourable than the offer price paid or payable by the Offeror
        in connection with the acquisition of ordinary shares in the Company
        under the Offeror's take-over scheme or take-over announcement, adjusted
        to reflect the offer for options rather than ordinary shares or on terms
        determined by a Court as contemplated by section 703(8) of the
        Corporations Law.

12.     OPTION EXPIRY DATE

        Subject to clause 11, the Option Expiry Date is the option expiry date
        referred to in Column 3 of Schedule A.

13.     TAXATION

        The Option holder is exclusively and solely responsible for all and any
        tax that may be payable as a result of the issue and or exercise of the
        Options and or the sale of shares resulting from the exercise of the
        Options. The issuer makes no warranty or representation in respect of
        any taxation that may be applicable to the issue and or exercise of the
        Options and or the sale of shares resulting from the exercise of the
        Options.

14.     UNEXERCISED OPTIONS

(a)     This clause 14 applies to all Unexercised Options. If there is any
        inconsistency between this clause and the other provisions of these
        Terms and Conditions in respect of the exercise of Unexercised Options,
        this clause prevails to the extent of this inconsistency.

(b)     If, at the time an Unexercised Option is exercised:

        i)      the Company is not listed on ASX; and

        ii)     the Company is a subsidiary of another company (the "Parent
                Company") and

        iii)    the Parent Company is listed on ASX or any Approved Exchange

        the Company may, instead of issuing shares in the capital of the
        Company, elect to have the Parent Company issue one fully paid share of
        common stock in the Parent Company for each Unexercised Option held.

(c)     If the Company makes the election referred to in paragraph (b):

        i)      in lieu of the Option holder's entitlement under clause 1 to
                subscribe for one fully paid ordinary share in the capital of
                the Company for each Option held, the Option holder will be
                issued one fully paid share of

                                       22
<PAGE>   23

                common stock of the Parent Company for each Unexercised Option
                held;

        ii)     in lieu of paying the exercise price to the Company in
                accordance with Clause 10.2, the Option holder must pay the full
                exercise price (which would have otherwise been payable to the
                Company) to the Parent Company on the date of exercise of the
                Unexercised Options and the Company is authorised to pay over
                any such moneys received by it to the Parent Company without
                further act or authority of the Option holder; and

        iii)    within 10 days of receipt of the application for the exercise of
                the Unexercised Options and payment by the Option holder of the
                exercise price of such Options, the Parent Company must issue to
                the Option holder the number of fully paid shares of common
                stock of the Parent Company specified in the application; and

        iv)     to avoid doubt, the Option holder has no entitlement to be
                issued or allotted any shares in the capital of the Company upon
                exercise of the Unexercised Options.

(d)     In this Clause 14:

        "Unexercised Options" means all Options that have been granted but are
        unexercised

15.     CHANGE OF CONTROL

If any one entity or person, acting alone or in association with others,

a)      lodges with the Company, or any parent of the Company, a substantial
        shareholders notice indicating an interest or

b)      in any way obtains an interest in

more than 30% of the issued capital of the Company, or any parent of the
Company, then all options, which have not yet vested, become immediately vested,
irrespective of any unfulfilled conditions of vesting.

                                       23<PAGE>   1
                                                                    EXHIBIT 10.5

                               DEED OF EMPLOYMENT

DEED dated

BETWEEN        Chip Application Technologies Limited, ACN 057 883 333 of
               152-162 Riley Street, East Sydney, New South Wales (EMPLOYER)

AND            THE EMPLOYEE (AS DEFINED IN SCHEDULE 1).

RECITALS

A.      The Employee is currently employed by the Employer

B.      The Employer and Employee wish to record the terms on which the Employee
        will continue to be employed by the Employer in the capacity set out in
        Schedule 1 of this Deed, which from the Effective Date will replace the
        terms of the Employee's current employment.

AGREEMENT

1.      DEFINITIONS

        Effective Date means the 1st April, 1999

        Intellectual Property Rights means all intellectual property rights
        including without limitation:

        a)      patents, copyright, rights in circuit layouts, registered
                designs, trademarks and the right to have confidential
                information kept confidential, and

        b)      any application or right to apply for registration of any of
                those rights.

        Options means options over unissued shares in the capital of the
        Employer to be granted on the terms set out in Schedule 2 and Schedule
        3.

        Total Remuneration means the salary and benefits due under Clause 4.1
        from time to time.

2.      APPOINTMENT

2.1     The Employee has been employed by the Employer since September 1994 and
        Employee benefits have accrued since that date.

                                       1
<PAGE>   2

2.2     The Employer hereby confirms that the Employee is currently employed as
        Vice President Technology for the Company and that this Employment
        Contract will commence on the Effective Date and, unless terminated
        sooner under clause 11, or extended under Clause 9, will conclude on
        30th June, 2001.

3.      DUTIES AND RESPONSIBILITIES

3.1     The Employee shall have the duties and responsibilities specified in
        Schedule 1.

3.2     Any alteration or modification to the duties and responsibilities of the
        Employee specified in Schedule 1 after the Effective Date shall be by
        mutual agreement of the parties hereto.

3.3     The Employee must discharge faithfully and to the best of his knowledge,
        skill and ability the duties and responsibilities referred to herein in
        the best interests of the Employer, within normal and reasonable
        business hours.

3.4     The Employee may engage in other business or accept other employment or
        directorships provided that:

        a)      the Employee informs the Employer of the business or employment
                immediately upon the engagement in the business, or commencement
                of employment.

        b)      the business or employment in the reasonable opinion of the
                Managing Director is not related to the mandate of the Employer
                or any member of the Employer unless the Managing Director has
                given his prior approval, and

        c)      the business or employment in the reasonable opinion of the
                Managing Director does not interfere with the discharge of the
                Employees duties and responsibilities under this agreement

3.5     The Employee may hold shares in other public and private companies.

3.6     The parties agree that, in order to better represent the interests of
        the Employer and its members, the Employee shall be an active member of
        selected service, commercial, governmental, and advocacy organisations
        approved by the Managing Director, in which case(s) the Employer will
        provide release time and will cover expenses for membership and other
        participation fees and for costs associated with attendance, according
        to such terms as it may decide.

3.7     The Employee agrees that it may be necessary for the Employee to travel
        overseas for the purpose of the Employers business and the Employee
        agrees to such travel subject to any qualifications specified in
        Schedule 1.

4.      SALARY

4.1     The Employer must remunerate the Employee in accordance with Schedule 1.

                                       2
<PAGE>   3

4.2     On each anniversary of the Effective Date, the Employee's Total
        Remuneration will be reviewed and increased by a percentage amount not
        less than the percentage increase in the All Groups Consumer Price Index
        for Sydney (CPI) as published by the Australian Bureau of Statistics for
        the 12-month period preceding the anniversary of the Effective Date.

4.3     In addition to the Employee's Total Remuneration, the Employer will
        grant to the Employee options in accordance with and subject to the
        conditions in Schedule 2 and 3.

4.4     An increase in salary, once confirmed by the Managing Director, may not
        be rescinded or revoked in whole or in part.

4.5     The Employee's Total Remuneration includes contributions made by the
        Employer for the Employee into a superannuation fund agreed between the
        parties or, if there is no agreement, into a superannuation fund
        nominated by the employer, on account of the minimum level of
        superannuation contributions which the Employer must make for the
        Employee for the purposes of the Superannuation Guarantee
        (Administration) Act 1992 and the Superannuation Guarantee Charge Act
        1992 (collectively SGC Legislation) as amended from time to time
        (contributions). If there is any increase in the minimum level of
        superannuation contributions which the employer must make for the
        purposes of the SGC Legislation, the Employee's Total Remuneration will
        be increased by the amount of the additional superannuation levy payment
        up to a maximum of 9% contribution in accordance with the Law. Upon the
        commencement of this Contract, the Employee must do everything necessary
        for the Employer to make the contributions.

4.6     Within the Employee's Total Remuneration, the Employee has the option to
        contribute further amounts to superannuation and/or term life cover.

4.7     The parties agree that any further salary increases shall be on the
        basis of merit as measured by the Managing Directors periodic
        performance appraisal of the Employee, and the Managing Directors
        decision shall be at his sole discretion and shall be within the
        percentage range offered to other employees of the company.

5.      BENEFITS AND COMPLEMENTARY ACTIVITIES

5.1     The Employer must pay the Employee's membership and subscription fees in
        professional and commercial organisations relevant to the Employers
        business approved by the Managing Director.

5.2     The Employer, recognising the value to the Employer of the Employee's
        participation in professional and commercial organisations, courses,
        conferences and meetings, encourages his participation in the same, and
        will pay fees, including membership and subscription fees, and other
        costs associated with membership and attendance. The Employer expects
        the Employee to attend national and/or international conferences and
        will provide funding in its annual budget for this activity.

6.      LEAVE

                                       3
<PAGE>   4

        The Employer must grant the Employee an annual paid vacation of twenty
        work days, with such leave to be taken at a time mutually agreed that
        does not inconvenience the Employer or restrict the Employee in
        discharge of the Employee's duties and responsibilities. In addition the
        employer will grant the Employee any special leave entitlements referred
        to in Schedule 1.

7.      EXPENSES AND ALLOWANCES

7.1     The Employer must reimburse the Employee for travel, entertainment and
        any other necessarily incurred and reasonable expenses, including the
        cost of transportation, parking, tolls and taxes, food and lodging
        incurred in performing any of the duties and responsibilities expected
        of the Employee.

7.2     Where the Employee uses his own car for company business, costs will be
        reimbursed on a kilometre allowance basis in accordance with the
        recommended scale published from time to time by the Australian Tax
        Office.

7.3     The Employer must pay for the costs of telephone calls relevant to the
        Employers business or reimburse the Employee for the amount expended on
        telephones.

8.      ILLNESS OR INJURY

8.1     Subject to Clause 8.2:

        a)      the Employer must grant the Employee up to 6 days paid sick
                leave each year if the Employee is unable to perform the
                Employee's duties due to illness or injury, and

        b)      untaken sick leave will accumulate from year to year to a
                maximum of 12 days.

8.2     Before granting paid sick leave, where the leave exceeds three days, the
        Employer may require the Employee to provide the Employer with a
        certificate signed by a medical practitioner confirming the illness or
        injury.

9.      RENEWAL

9.1     This Agreement terminates on the Expiry Date specified in Schedule 1,
        unless: it is terminated sooner in accordance with the terms of this
        Agreement

10.     ASSIGNMENT OF INTELLECTUAL PROPERTY

10.1    The Employee:

a)      presently assigns to the Employer all existing and future Intellectual
        Property Rights in all inventions, models, designs, drawings, plans,
        software, reports, proposals and other materials created or generated by
        the Employee (whether alone or with the Employer, its other employees or
        contractors) for use by the Employer, and

b)      acknowledges that by virtue of this clause all such existing rights are
        vested in the

                                       4
<PAGE>   5

        Employer and, on their creation, all such future rights will vest in the
        Employer

10.2    The Employee must do all things reasonably requested by the Employer to
        enable the Employer to assure further the rights assigned under Clause
        10.1.

11.     TERMINATION

11.1    The Employer may terminate this agreement at any time for just cause
        without notice to the Employee, or upon thirty days written notice by
        the Managing Director to the Employee, if the Employee:

        a)      is charged with a criminal offence, excluding a traffic offence,
                or

        b)      breaches the Confidentiality Agreement, or

        c)      the Employee has committed an act of serious misconduct of a
                dishonest or fraudulent nature, or

        d)      breaches any material provision of this Agreement and fails to
                rectify such breach within 30 days of being required to do so in
                writing, or

        e)      becomes unable to pay his debts as they became due, or

        f)      through illness is unable to return to duties within three (3)
                months, or

        g)      is an "injured employee" as defined in Section 91(1) of the
                Industrial Relations Act 1996 (NSW) and is not fit to perform
                the Employee's duties for three months from the time the
                Employee first became unfit for employment

11.2    The Employer may terminate this agreement at any time without just cause
        upon expiry of the Employer Notice Period (specified in Schedule 1) by
        providing written notice from the Managing Director to the Employee.

11.3    The Employee may terminate this agreement with two months notice if the
        Employer breaches any of its material obligations under this contract,
        and has not rectified the breach within 30 days of notice of such
        breach, and shall be entitled to an amount equal to the balance of the
        salary and benefits due under the full term of the contract or six
        months salary and benefits, whichever is the lesser.

11.4    The Employee may terminate this agreement for significant and serious
        personal or family reasons by providing the Managing Director with prior
        notice in writing of a minimum period specified in Schedule 1 as the
        Employee notice Period.

11.5    The Employer agrees that the rules of natural justice shall apply in any
        termination of the Employee's contract by the Employer.

11.6    This agreement may be terminated at any time by mutual agreement of the
        parties.

                                       5
<PAGE>   6

11.7    During any period of notice referred to in this Clause 11, the Employee
        must perform his duties and responsibilities under this Agreement unless
        the Employer and Employee mutually agree to an alternative arrangement.

12.     WHAT HAPPENS AFTER TERMINATION OF EMPLOYMENT

12.1    The Employer must set off any amounts the Employee owes the Employer
        against any amounts the Employer owes the Employee at the date of
        termination except for amounts the Employer is not entitled by law to
        set off.

12.2    The Employee must return all the Employer's property (including property
        leased by the Employer) to the Employer on termination including all
        written or machine readable material, software, computers, credit cards,
        keys and vehicles.

12.3    The Employee's obligations under the Confidentiality Agreement continue
        after termination except in respect of information that is part of the
        Employee's general skill and knowledge.

12.4    The Employee must not record any Confidential Information in any form
        after termination.

13.     RESTRAINT ON THE EMPLOYEE'S CONDUCT

13.1    During the restraint period of 9 months after termination of the
        Employee's employment, the Employee must not

        a)      solicit, canvass, approach or accept any approach from any
                person who was at any time during the Employee's last 12 months
                with the Employer a client of the Employer in that part or parts
                of the business carried on by the Employer in which the Employee
                was employed with a view to obtaining the custom of that person
                in a business that is the same or similar to the business
                conducted by the Employer, or

        b)      interfere with the relationship between the Employer and its
                customers, employees or suppliers, or

        c)      induce or assist in the inducement of any employee, consultant,
                customer, supplier or any other contractor of the employer to
                leave their employment or terminate any contract.

13.2    The Employee acknowledges that each restriction specified in clause 13.1
        is in the circumstances reasonable and necessary to protect the
        Employer's legitimate interests.

13.3    For the purpose of this Clause 13, the Employee acknowledges that the
        definition of Employer will include any subsidiary of Chip Application
        Technologies Limited.

14.     INDEMNITY AND INSURANCE

        14.1 The Employer agrees to defend, save harmless and indemnify the
        Employee from any demands, claims, suits, actions or other proceedings
        which may be brought against him

                                       6
<PAGE>   7

        arising from the performance of his duties and for any cost, loss,
        damage or liability arising therefrom, including all legal fees and
        disbursements incurred in connection therewith.

14.2    During the term of this Agreement, and any subsequent renewal of this
        Agreement, the Employer will provide the Employee appropriate insurance
        cover including where applicable cover under a Directors and Officers
        Liability Insurance Policy.

15.     GOVERNING LAW AND ARBITRATION

        This Agreement is governed by the law applicable in New South Wales. Any
        dispute may be decided by the Australian Commercial Disputes Centre or
        equivalent body.

16.     CANCELLATION OF PREVIOUS AGREEMENTS

        From the Effective Date, this Agreement supersedes and takes the place
        of all prior oral or written agreements made between the parties, other
        than where relevant for the purposes of accruing long service leave and
        other employee benefits and confidentiality, and any prior condition,
        warranty, indemnity or representation imposed, given or made by a party.

17.     WAIVER

        The failure of either party at any time to insist on performance of any
        provision of this Agreement is not a waiver of its right at any later
        time to insist on performance of that or any other provision of this
        Agreement, provided that the lack of notice does not prejudice the other
        party's ability to rectify its or his performance.

18.     NOTICES

        Any notice which may be or is required to be given pursuant to this
        Agreement shall be sufficiently given if served personally upon the
        party for whom it is intended or if mailed by Certified Mail, in the
        case of the Employer, to it at its head office for the time being and in
        the case of the Employee, to him at his address as last shown on the
        books of the Employer. The date of receipt of such notice shall be
        deemed to be the date of delivery, if such notice is served personally,
        and five (5) days after the date of posting if sent by prepaid Certified
        Mail, except in the event of an actual or threatened postal disruption
        in which case all notices shall be delivered.

19.     ALTERATION

        This Agreement (including its schedule) may only be altered by agreement
        in writing signed by each party.

20.     THIS AGREEMENT IS CONFIDENTIAL

        The terms of this Agreement and any subsequent amendments are
        confidential and may not be disclosed by the Employee or the Employer
        other than in a non-personalised form to any other person or company,
        other than for the purpose of obtaining professional legal or

                                       7
<PAGE>   8

        accounting advice, or as may be required by law or Australian Stock
        Exchange listing or reporting requirements, without the written approval
        of both parties.

21.     GENERAL

21.1    Headings are for each of reference only and do not affect the meaning of
        this Agreement.

21.2    In the event that any term of this agreement is inconsistent with or in
        violation of any provision of any law of NSW or Australia, it is hereby
        deemed to be amended to the extent required to avoid such inconsistency
        or illegality and, if any term of this agreement is thereby annulled,
        the remainder of this agreement shall remain in full force and effect.

21.3    Time shall be the essence of this Agreement.

21.4    This agreement shall ensure to the benefit of and be binding upon the
        parties hereto and their respective successors and assigns of the
        Employer.

21.5    Schedules 1, 2 and 3 annexed to this Agreement are for all purposes an
        integral part of this Agreement.

                                       8
<PAGE>   9

IN WITNESS WHEREOF the party of the first part has affixed its corporate seal,
duly attested to by the signature of its proper signing officers in that behalf
and the party of the second part has affixed his signature the day and year
first above written.

Signed for and on behalf of CHIP  TECHNOLOGIES
AUSTRALIA LIMITED in the presence of

/S/ illegible
----------------------------------------
        Signature of Witness

----------------------------------------
Name of Witness (print)

SIGNED SEALED AND DELIVERED by
___________________ in the presence of

/s/ illegible                                /s/ BEN GARTON
----------------------------------------     -------------------------------
Signature of Witness                         Ben Garton

----------------------------------------
Name of Witness (print)

                                       9
<PAGE>   10

                          DEED OF EMPLOYMENT SCHEDULES

       TO BE READ IN CONJUNCTION WITH AND PART OF THE STANDARD EMPLOYMENT
                              CONTRACT APRIL 1999

                         SCHEDULE 1 - TOTAL REMUNERATION

Employee means Ben Garton of 65 Wilson Street, Newtown, New South Wales 2042

The Employee is currently employed in the capacity as Manager Technology

Under this agreement, the Employee will be employed in the following capacity:-

        The Employee shall be employed as Vice President Product Management and
        Development or other position of equal or like status to be performed
        from the Sydney office and the Employee will be provided with the
        appropriate office, support staff and facilities to enable his
        responsibilities to be performed and the Employee shall be and agrees to
        be responsible and accountable to the Managing Director or such other
        person nominated by the Managing Director from time to time.

The Effective Date is 1 April 1999

The Initial Employment Date was September 1994

Travel under Clause 3.7 will be limited such that the time frame of any one trip
is not more than 1 month and the total period of such travel in any one calendar
year does not exceed 3 months.

A remuneration package (inclusive of fringe benefits tax) to the value of $165,
000 gross per annum

        Base Salary                                $159,600

        Superannuation                               $5,400

The Employee's salary will be paid by equal fortnightly instalments by
electronic funds transfer commencing on 1 April 1999.

The Employee's first and last instalments will be proportionate if necessary.

As a special leave entitlement and in addition to any other leave entitlements,
the Employee will be entitled to take 1 days per month leave (on full pay) but
if this entitlement at any time exceeds 2 days, then the balance will be
forfeited.

The Expiry Date of this agreement is 30 June 2001 unless prior to 31 March 2001,
the Employee elects to renew for a further period of one year on the same terms,

The Employer Notice Period for termination without cause by the Employer
referred to in Clause 11.2 is 9 months.

The Employee Notice Period for termination referred to in Clause 11.4 is 6
months.

                                       10
<PAGE>   11

                     SCHEDULE 2 - BASIS FOR GRANT OF OPTIONS

The Employee is exclusively and solely responsible for all and any tax that may
be payable as a result of the issue and or exercise of the Options and or the
sales of shares resulting from the exercise of the Options. The Employer makes
no warranty or representation in respect of any taxation that may be applicable
to the issue and or exercise of the Options and or the sales of shares resulting
from the exercise of the Options.

Subject to clause 11 in Schedule 3, options are exercisable at any time prior to
the Option Expiry Date which is the earlier of 5.00 PM Eastern Australian
Standard Time on the day 90 days after the effective termination of the Option
holder's employment with the Company or the date referred to in Column 3 below.

<TABLE>
<CAPTION>
                                                                                          COLUMN 3.
                                                                       COLUMN 2.           OPTION
                                                                    OPTION EXERCISE      EXPIRY DATE
                                                    COLUMN 1.            PRICE          (SEE ABOVE &
                                                      NO. OF          (CLAUSE 3 OF     CLAUSE 11 & 12
                    DETAILS                          OPTIONS          SCHEDULE 3)      OF SCHEDULE 3)
                    -------                         --------        ---------------    --------------
<S>                                                 <C>             <C>                <C>
Options to be conditionally issued by the           500,000
Employer to the Employee on 1 July 1999

OTHER TERMS AND CONDITIONS OF
OPTIONS VESTING AND EXERCISE (in
addition to Schedule 3)

Options are conditional upon and will not           150,000            $A0.95         30 June 2001
vest unless the Employee is an Employee of
the Employer on 1 July 1999 (`vesting date')

Options are conditional upon and will not            75,000            $A0.95         30 June 2002
vest unless the Employee is an Employee of
the Employer on 1 July 2000 (`vesting date')

Options are conditional upon and will not            75,000            $A0.95         30 June 2003
vest unless the Employee is an Employee of
the Employer on 30 June 2001 (`vesting date')

Options are conditional upon and will not           200,000            $A0.95         30 June 2004
vest unless the Employee is an Employee of
the Employer on 30 June 2002 (`vesting date')
</TABLE>

                                       11
<PAGE>   12

               SCHEDULE 3 - OTHER TERMS AND CONDITIONS OF OPTIONS

The terms and conditions of the options are as follows:

1.      ENTITLEMENT

        The Option holder is entitled to subscribe for one fully paid ordinary
        share in the capital of the Company for each Option held.

2.      ISSUE PRICE

        No amount is payable on issue of the Options.

3.      EXERCISE PRICE

        The exercise price of each Option is the exercise price referred to in
        Schedule 2.

4.      OPTION PERIOD

        Each Option may be exercised in whole or in part at any time prior to
        the Option Expiry Date set out below. Any Option that is not exercised
        will automatically expire on the Option Expiry Date.

5.      TRANSFERABILITY

        The Options may not be transferred without the prior consent of the
        Company (which consent will not be unreasonably withheld) and only in
        accordance with the Articles of Association of the Company.

6.      PARTICIPATION IN BONUS ISSUES AND CASH ISSUES

6.1     If the Company makes a bonus issue of shares or other securities
        convertible into ordinary shares pro rata to holders of ordinary shares
        (other than an issue in lieu of dividends or by way of dividend
        reinvestment pursuant to any shareholder election), the Option holder
        will be entitled to participate in such issue, upon exercise of all or
        part of the Options on or before the books closing date for that issue,
        on the same basis as the holders of ordinary shares in the capital of
        the Company.

6.2     If the Company makes an offer to subscribe for cash of ordinary shares
        pro rata to the holders of ordinary shares the Option holder will be
        entitled to participate in such offer, upon exercise of all or part of
        the Options on or before the books closing date for that offer, on the
        same basis as the holders of ordinary shares in the capital of the
        Company.

6.3     The Company must notify the Option holder at least 12 business days
        before the books closing date for determining entitlements to an offer
        referred to in Clauses 6.1 or 6.2 of:

        a)      the proposed terms of the issue of the offer, and

        b)      the right to exercise his Options under Clause 6,1 or 6.2 (as
                the case may be).

                                       12
<PAGE>   13

7.      ADJUSTMENTS FOR BONUS ISSUES AND CASH ISSUES

7.1     If the Company is listed on the Australian Stock Exchange and makes an
        offer for cash of ordinary shares pro rata to the holders of ordinary
        shares, the exercise price of each Option shall be reduced by the value
        of the theoretical rights entitlement per cum rights share (E) provided
        that the exercise price of each Option shall not be reduced to less than
        the nominal value of the Company" ordinary shares, where E is calculated
        in accordance with the following formula:

               E = P - (S + D)
                   -----------
                      N + 1

        Where:

        E = theoretical value of the rights entitlement attached to each share
        (quoted cum rights).

        P = the weighted average market price of fully paid ordinary shares of
        the Company sold in the ordinary course of trading on the Australian
        Stock Exchange Limited during the five trading days after the
        announcement of the rights issue

        S = subscription price (application money plus calls) for new shares

        D = any dividends due but not yet paid on existing shares which will not
        be payable in respect of new shares issued under the rights issue

        N = number of cum rights shares required to be held to receive a right
        to one new share

        No change will be made to the number of shares to which the Option
        holder is entitled.

7.2     If the Company makes a bonus issue of shares or other securities
        convertible into ordinary shares pro rata to holders of ordinary shares
        (other than an issue in lieu of dividends or by way of dividend
        reinvestment pursuant to any shareholder election), the number of shares
        issued on exercise of each Option will include the number of bonus
        shares that would have been issued if the Option had been exercised
        prior to the books closing date for bonus shares. No change will be made
        to the exercise price.

8.      RECONSTRUCTION

        In the event of a reconstruction (including consolidation, sub-division,
        reduction or return) of the issued capital of the Company, the number of
        Options or the exercise price of Options or both shall be reconstructed
        (as appropriate) in a manner which would not result in any benefits
        being conferred on the Option holders which are not conferred on
        shareholders (subject to the provisions with respect to rounding of
        entitlements as sanctioned by the meeting of shareholders approving the
        reconstruction of capital) but in all respects the terms for the
        exercise of Options shall remain unchanged.

9)      RANKING OF SHARES ALLOTTED ON EXERCISE OF OPTIONS

        All share allotted pursuant to the exercise of Options will, subject to
        the Memorandum and Articles of Association of the Company, rank in all
        respects (including rights relating to

                                       13
<PAGE>   14

        dividends) pari passu with the existing ordinary shares of the Company
        on issue at date of allotment.

10.     METHOD OF EXERCISE OF OPTIONS

10.1    Options may be exercised by written notice to the Secretary of the
        Company. The exercise notice must specify the number of shares required
        to be allotted, which number must be a multiple of 1,000 if only part of
        the Options are exercised, or if the total number of Options held is
        less than 1,000, then the total of all Options held must be exercised.
        Options will be deemed to have been exercised on the date that the
        application is lodged with the Secretary of the Company.

10.2    The Option holder must pay the exercise price in full to the Company on
        the date of the exercise of the Options.

10.3    The exercise of less than all of the Option holder's Options will not
        prevent the Option holder from exercising an Option in respect of the
        whole or any part of the balance of the entitlement under his remaining
        Options.

10.4    On exercise of the Options the Option holder must surrender his Option
        certificate to the Company in respect of those Options being exercised.

10.5    If the Option holder exercises less than the total number of Options
        then registered in his name:

        a)      The Option holder must surrender his Option certificate to the
                Company, and

        b)      the Company must cancel that Option certificate and issue to the
                holder a new Option certificate in respect of the Option
                holder's unexercised Options.

10.6    Within 10 days of receipt of the application for the exercise of Options
        and payment by the Option holder of the exercise price of such Options,
        the Company must issue and allot to the Option holder the number of
        fully paid ordinary shares in the capital of the Company specified in
        the application.

10.7    If the Company is listed on the Australian Stock Exchange then it will
        as soon as practicable after issue make application for the shares
        issued upon exercise of Options by the Option holder to be granted
        official quotation on the Australian Stock Exchange. The Options are not
        to be listed on the ASX.

11.     COMPULSORY ACQUISITION

        If an entity ("Offeror") serves a notice on the option holder in
        accordance with section 703(4) of the Corporations Law, all options,
        which have not yet vested, become vested on the date that notice is
        served on the option holder.

        All options (including all existing options and all options that have
        been vested by virtue of the preceding paragraph) will lapse on the date
        3 months after delivery of that notice.

        Unless waived by written notice from the Company, the option holder must
        accept an offer to acquire all options which remain unexercised which is
        delivered in accordance with section 703(4) of the Corporations Law.
        This obligation is conditional on the terms offered by the Offeror being
        no less favourable than the offer price paid or payable by the Offeror
        in

                                       14
<PAGE>   15

        connection with the acquisition of ordinary shares in the Company under
        the Offeror's take-over scheme or take-over announcement, adjusted to
        reflect the offer for options rather than ordinary share's or on terms
        determined by a Court as contemplated by section 703(8) of the
        Corporations Law".

12.     OPTION EXPIRY DATE

        Subject to clause 11, the Option Expiry Date is the option expiry date
        referred to in Schedule 2.

13.     TAXATION

        The Employee is exclusively and solely responsible for all and any tax
        that may be payable as a result of the issue and or exercise of the
        Options and or the sale of shares resulting from the exercise of the
        Options. The Employer makes no warranty or representation in respect of
        any taxation that may be applicable to the issue and or exercise of the
        Options and or the sale of shares resulting from the exercise of the
        Options.

14.     UNEXERCISED OPTIONS

(a)     This clause 14 applies to all Unexercised Options. If there is any
        inconsistency between this clause and the other provisions of these
        Terms and Conditions in respect of the exercise of Unexercised Options,
        this clause prevails to the extent of this inconsistency.

(b)     If, at the time an Unexercised Option is exercised:

        i)      the Company is not listed on ASX; and

        ii)     the Company is a subsidiary of another company (the "Parent
                Company") and

        iii)    the Parent Company is listed on ASX or any Approved Exchange

        the Company may, instead of issuing shares in the capital of the
        Company, elect to have the Parent Company issue one fully paid share of
        common stock in the Parent Company for each Unexercised Option held.

(c)     If the Company makes the election referred to in paragraph (b):

        i)      in lieu of the Option holder's entitlement under clause 1 to
                subscribe for one fully paid ordinary share in the capital of
                the Company for each Option held, the Option holder will be
                issued one fully paid share of common stock of the Parent
                Company for each Unexercised Option held;

        ii)     in lieu of paying the exercise price to the Company in
                accordance with Clause 10.2, the Option holder must pay the full
                exercise price (which would have otherwise been payable to the
                Company) to the Parent Company on the date of exercise of the
                Unexercised Options and the Company is authorised to pay over
                any such moneys received by it to the Parent Company without
                further act or authority of the Option holder; and

        iii)    within 10 days of receipt of the application for the exercise of
                the Unexercised Options and payment by the Option holder of the
                exercise price of such Options, the Parent Company must issue to
                the Option holder the number of fully paid shares of common
                stock of the Parent

                                       15
<PAGE>   16

                Company specified in the application; and

        iv)     to avoid doubt, the Option holder has no entitlement to be
                issued or allotted any shares in the capital of the Company upon
                exercise of the Unexercised Options.

(d)     In this Clause 14:

        "Unexercised Options" means all Options that have been granted but are
        unexercised

                                       16

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