Document:

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                                                                     Exhibit 4.5

                          DATED AS OF 17 October, 2002

                       METAL STORM LIMITED ACM 064 270 006
                                     ("MS")

                 SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
                                    ("SAIC")

                               MODIFICATION NO. 1

                                       TO

                         AGREEMENT DATED 17 OCTOBER 1998

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This Modification No. 1 to the Agreement dated 17 October 1998 (hereinafter
"Agreement") is made effective 17 October 2002

BETWEEN:   METAL STORM LIMITED ACN 064 270 006 of Level 34, Central Plaza One,
           345 Queen Street, Brisbane, Queensland, Australia ("MS")

AND:       SCIENCE APPLICATIONS INTERNATIONAL CORPORATION having an address at
           McLean, Virginia, United States of America ( "SAIC")

RECITALS:

A.   In accordance with Article 2.1.2 of the Agreement, the duration of the
     original Core Technology License expires 16 October 2002.

B.   MS and SAIC desire to continue the relationship established in the
     Agreement but on a non-exclusive basis.

C.   As consideration for the reduction in rights to SAIC, MS agrees to
     eliminate some of the reporting requirements.

THIS AGREEMENT WITNESSES that in consideration of, among other things, the
mutual promises contained in this Agreement the parties agree to the following
modifications:

1.   Article 2, CORE TECHNOLOGY LICENCE, is hereby replaced in its entirety by
the following:

     2.   CORE TECHNOLOGY LICENCE

               Grant of Core Technology Licence.

          MS grants to SAIC for the period 17 October 1998 to 16 October 2002
          the exclusive right and licence, and, for a period of three years
          after 16 October 2002, the non-exclusive right and licence, including
          the right to sub-license others, within the United States of America,
          Europe, and the United Kingdom to practice the Core Technology only in
          connection with:

               bids and potential bids for R&D Programmes; and

               the conduct of R&D Programmes that have been approved by MS

          For the purposes of this Agreement, the right to practice means the
          right to make, have made, use, sell, offer to sell, reproduce, prepare
          derivative works, distribute copies to the public by sale or
          otherwise, to perform and to publicly display the Core Technology but
          only for the purposes of paragraph (a) and (b).

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          The exclusive and non-exclusive right and licence set out above does
          not prevent MS, either by itself or through others, exploiting the
          Core Technology.

    2.1.2 Duration of Core Technology License.

          The non-exclusive license granted by MS to SAIC above shall be
          extended for an additional three years if mutually agreed by the
          parties in a bi-lateral, written modification to this agreement thirty
          (30) days prior to the termination date of 16 October 2005:

2.  Article 4. PRECONDITIONS TO BIDDING R&D PROGRAMMES is hereby replaced in its
entirety by the following:

     4.   PRECONDITIONS TO BIDDING R&D PROGRAMMES

               SAIC will seek approval from MS prior to the submission of a bid
               for, or the conduct of, any R&D Programme. MS' approval is
               subject to the financial arrangements for any R&D Programme being
               agreed upon.

               The procedures for accomplishing the requirements of this clause
               are included in Schedule 4, entitled "SAIC/Metal Storm Procedures
               to Give Effect to the Operation of Clause 4.1 in Their Teaming
               Agreement," attached hereto.

               MS may as a prime submit bids for any programmes. For any
               contract then awarded to MS to the extent possible, MS will use
               SAIC as a subcontractor subject to any requirements made by a
               Government or commercial entity.

               SAIC may, at any time, decide that it does not intend to lodge a
               bid for an R&D Programme. SAIC will, where possible. inform MS
               within 48 hours of Its decision not to lodge a bid.

3. Article 7, QUARTERLY REPORTS requirement is hereby deleted and replaced with
   the following.

     7.   MONTHLY MEETINGS

               The Parties agree to meet monthly, to discuss the status of the
               marketing activities. The default time for the meetings will be
               the first Monday of each month. It is recognized that the meeting
               day may need to be adjusted to accommodate the members'
               schedules.

4.   Article 8, APPOINTMENT OF SAIC AS MARKETER OF TECHNOLOGY is hereby replaced
     in its entirety with the following:

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     8.   APPOINTMENT OF SAIC AS MARKETER OF TECHNOLOGY

          Appointment

               (a)  MS hereby grants SAIC an exclusive right to market the
                    Technology to any commercial and government entities located
                    in the Territory for a period of 17 October 1998 through 16
                    October 2002. MS hereby grants SAIC a non-exclusive right to
                    market the Technology to any commercial and government
                    entities located in the Territory for a period of 17 October
                    2002 through 16 October 2005 and for a further period of
                    time of the same duration as any extension of the
                    non-exclusive license granted by MS to SAIC as set forth in
                    section 2.1.2.

               (b)  MS and SAIC will use their best efforts to coordinate their
                    marketing activities as facilitated by the Article 7 monthly
                    meetings.

5.   Article 16. NOTICES is hereby replaced in its entirety with the following:

     16.  NOTICES

               Notices are to be sent by facsimile transmittal and certified
               mail and are effective as of the date sent if actually received
               and addressed as follows:

                 METAL STORM PTY LTD
                 4350 N. Fairfax Drive, Suite 810
                 Arlington, VA 22201
                 Attention: Mr. Russell Zink

                 SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
                 10260 Campus Point Drive
                 San Diego, CA 92121
                 c/o 1710 SAIC Drive, M/S 2-3-1
                 McLean, VA 22102
                 Attention: Ms. Janet V. LaFever

SIGNED for and on behalf of
METAL STORM LIMITED               )
by a duly authorized signatory    )

/s/ CHARLES A. VEHLOW
---------------------
Name:  Charles A. Vehlow
------------------------
Title: Chief Corporate Officer
------------------------------

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SIGNED for and on behalf of            )
SCIENCE APPLICATIONS                   )
INTERNATIONAL CORPORATION              )
by a duly authorized signatory         )

/S/ JANET V. LAFEVER
---------------------
Name:  Janet V. LaFever
-----------------------
Title: Deputy Group Director of Contracts
-----------------------------------------
       and Vice President for Administration
--------------------------------------------

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                                   SCHEDULE 4

  SAIC/Metal Storm Procedures to Give Effect to the Operation of Clause 4.1 In
                            Their Teaming Agreement

The procedures which will satisfy the requirements of Clause 4.1 are set out
below.

These procedures are intended to operate in an environment of absolute
transparency between SAIC and Metal Storm (MS) in respect of all aspect,
including the financial arrangements, and the entire process, of a proposal.
This is the overarching spirit of the arrangement between SAIC and Metal Storm.

The intention of this agreed procedure is:

..    to provide an efficient operational mechanism which is accepted by SAIC and
     Metal Storm as satisfying the requirements of Clause 4.1;

..    to make Clause 4.1 as workable as possible within the overarching
     constraint that the rights of MS to provide approval to "finalise a program
     contract" by SAIC are reserved until MS has accepted the final financial
     arrangements on the program.

Each element of the procedures is of equal importance and weight, and each is to
be met in conjunction with every other procedure if they are to give proper
effect to Clause 4.1.

The procedures are these:

1.   Metal Storm will provide "approvals" of two types:
     .    a "rolling" approval;
     .    an approval to finalise a program contract.

2.   It is recognised that many proposals may be begun by SAIC as "marketing"
     type exercises. These are already advised to Metal Storm regularly, as part
     of the discussions in the monthly marketing meetings, and that will
     continue.

3.   Where any proposal appears likely to lead to a program MS and SAIC must
     give that program a name.

4.   SAIC may assume that MS provides approval to continue with the program as
     part of the rolling approval process.

5.   SAIC will provide preliminary Statements of Work (SOWs) for itself and for
     contractors and sub contractors to MS as soon as is possible after
     notifying the naming of a program. Templates and formats for SOWS will be
     agreed between the parties and will be standardised as much as possible.

6.   Each variation of any SOW will be dated and the most recent date will be
     taken to be the SOW on which both SAIC and MS are operating.

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7.   The "rolling" approval given by MS will be to continue to proceed based
     upon the disclosure and knowledge that Metal Storm has had provided to it,
     up until that time.

8.   SAIC will provide to MS detailed schedules of works which will as early as
     possible identify the work which SAIC might do. MS may request that the
     work mix be altered to allow MS to provide a greater proportion of the
     input in circumstances where it has the capacity to do that, or for any
     other reason, including a review of the equity of the profit amount, which
     is available from the program to each party. MS will provide the same
     reciprocal arrangement to SAIC.

9.   MS and SAIC will each provide a single contact who will have the
     information and resources to enable decisions to be made about manning
     levels and profit spilt between SAIC and MS. It is anticipated that that
     person will need to have experience across the working elements of the
     whole program.

10.  MS will flag as early as possible, any likely element or event, which may
     cause the withdrawal of its ongoing approval. It will provide two points of
     contact either of who can provide verbal agreement, which can be obtained
     within 24 hours of issues being put with subsequent confirmation in
     writing. Those two persons shall be Charles Vehlow and Russell Zink until
     otherwise advised in writing.

     However, it is understood between SAIC and MS that there may be some issues
     pertaining to the financial arrangement of any proposal that are so
     fundamental to clause 4.1 such as to require MS board approval, which will
     be provided within four (4) working days.

11.  Inclusions and parameters within the templates and contractors can be
     subject to change up to and into the commencement of the program. Changes,
     however, must be agreed between MS and SAIC. Where they are not agreed the
     changes are not to be given effect.

12.  SAIC must notify MS in writing four (4) working days, if possible, prior to
     its intention to sign off on any program and request MS's approval to
     finalise. In all cases, MS will be sent a copy of the proposal
     (appropriately sanitized as to SAIC's proprietary cost data) on the same
     day as the proposal is submitted to the customer.

13.  As soon as possible after that request, but in any event within four (4)
     working days of the request, MS will advise its intention to issue an
     approval to finalize or not to approve the program. Where a program is not
     approved by MS then it is not approved within the meaning of Clause 4.1.

     It is acknowledged and recognized by MS and SAIC that the outcome at Step
     13 above should have been flagged as part of the process of communication
     prior to the request being made. Put simply, it is the intention of the
     parties that any potential difficulties in the financial or other
     arrangements of a program will be dealt with as they arise and both SAIC
     and MS will attempt in good faith to resolve these difficulties as a matter
     of utmost urgency. Notwithstanding this where a difficulty has arisen and
     has not been resolved in the manner set out in this procedure, the
     "rolling" approval will be withdrawn, until the

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     difficulty has been resolved.

     Where, in an extreme or unusual situation, a proposal is required to be
     submitted in a time frame that does not enable proper consideration by MS
     so as to give an effective approval by MS after the exercise of its
     independent business judgement, SAIC may with MS's prior written consent
     submit the proposal. MS shall then be entitled to consider the proposal and
     form its judgement as to whether the proposal ought to be approved or not
     approved pursuant to the provisions of clause 4.1. MS may then within four
     (4) business days of receipt of the proposal from SAIC, as submitted,
     advise SAIC in writing as to whether the proposal is approved or not. If
     the proposal is not approved, SAIC shall forthwith withdraw the proposal.

                                       8<PAGE>

                                                                     Exhibit 4.8

                              EMPLOYMENT AGREEMENT

AGREEMENT dated 13 January 2003.

BETWEEN  METAL STORM LIMITED (ACN 064 270 006)
                                                                     (`Company')

AND      SYLVIE MOSER-SAVAGE

                                                                    (`Employee')

IT IS AGREED

1.    COMMENCEMENT OF EMPLOYMENT

1.1   The Employee shall commence employment as specified in Item A of the
      Schedule.

2.    DUTIES

2.1   The Employee must perform all the functions of the position set out in
      Item B of the Schedule and such other duties as may be determined by the
      Company from time to time.

2.2   The Employee must carry out the Employer's duties as the Company may from
      time to time reasonably direct to a standard the Company may reasonably
      require.

3.    REMUNERATION

3.1   The Company must pay to the Employee the Remuneration package specified in
      Item C, the components of which may be varied.

3.2   The Employee is not entitled to payment of overtime.

3.3   The Employee's salary will be initially reviewed by 1 July 2003.

3.4   The Company may, as part of the review provided in clause 3.3 and subject
      to performance, offer the Employee the issue of options in the Company.

4.    ANNUAL LEAVE

4.1   The Employee is entitled to be paid annual leave of 4 weeks pursuant to
      the Industrial Relations Act 1999.

4.2   Annual leave is to be taken within 12 months of it accruing.

                                                            Employment Agreement

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4.3   The Employee is not entitled to leave loading.

4.4   The Company may request the Employee to take accrued annual leave on 14
      days' written notice to the Employee.

5.    SICK LEAVE

5.1   The Employee is entitled to paid sick leave of 8 working days for each 12
      months of service.

5.2   Any accrued but not taken sick leave in one year may be taken in another
      year.

5.3   The Employee may use up to 5 days of sick leave to care for and support
      members of the Employee's immediate family or members of the Employee's
      household when they are ill.

5.4   The Employee must when the absence due to sickness (including that
      specified in 5.3) exceeds 2 days, provide a doctor's certificate or other
      evidence of the need for sick leave.

6.    GENERAL OBLIGATIONS

6.1   The Employee must:

      (a)   devote the whole of the Employee's time during usual business hours
            to the Company's business unless otherwise approved in writing; and

      (b)   diligently and faithfully devote themself to the business of the
            Company.

7.    TERMINATION OF EMPLOYMENT

7.1   The employment is terminated automatically on the Employee's death or
      Significant Disability.

7.2   The term `Significant Injury' means any injury or illness which would
      preclude the Employee from performing the inherent requirements of the
      Employee's job and,

      (a)   if the illness or injury arises out of a work-related activity at
            least 6 months has elapsed since the Employee first became ill or
            incapacitated;

      (b)   in any other case the Employee has been absent for a period of more
            than 3 months in any period of 12 consecutive months.

7.3   The employment may be terminated immediately by the Company if the
      Employee:

      (a)   is guilty of any criminal or indictable offence or of any dishonesty
            in relation to the affairs of the Company;

      (b)   is guilty of any serious breach of faith, or serious neglect or
            default or wilful disregard of directions or serious professional
            misconduct or gross misconduct;

      (c)   is precluded or suspended from acting in the role of a Director
            pursuant to Corporations Law.

7.4   The Company may at any time terminate employment (other than for reasons
      described in clauses 7.1 and 7.3) on 60 days notice or payment in lieu.

                                                     Employment Agreement Page 2

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8.    COMPLIANCE WITH OBLIGATIONS ON TERMINATION

8.1   The Company will pay the Employee all entitlements accrued to the date of
      termination.

8.2   The Employee agrees that any amounts owing to the Company may be deducted
      from any entitlements to be paid under clause 8.1.

8.3   Termination of the employment does not relieve the Employee from payment
      in full of all sums then owing to the Company or which may become owing in
      respect of any period prior to termination and is without prejudice to the
      rights of the Company to sue for antecedent breach by the Employee of the
      terms and conditions of this agreement.

9.    DUTY TO DELIVER UP

9.1   The Employee must:

            (a)  whenever requested by the Company;

            (b)  without demand as soon as no longer needed; and

            (c)  immediately on termination

      deliver up to the Company all papers, writings, disks, access keys
      (including computer and other information technology access codes and
      passwords) and any other material which are in the possession or custody
      or under the control of the Employee relating in whole or in part to the
      affairs of the Company or its business.

10.   INTELLECTUAL PROPERTY

10.1  The Employee assigns to the Company:

      (a)   all inventions, discoveries and novel designs, whether or not
            registrable as designs under the Designs Act 1906, patents under the
            Patents Act 1990 and trademarks under the Trade Marks Act 1995; and

      (b)   the entire copyright in all works, including but not limited to all
            literary and other works as defined in the Copyright Act 1968;

      created by the Employee as a result of and/or in the course of employment,
      either solely or jointly with others.

10.2  The assignment under clause 10.1 does not restrict the Employee's right to
      utilise the general expertise and knowledge accumulated by the Employee in
      the performance of services under this agreement, and the Employee is
      entitled to use routine procedures developed by the Employee in the
      performance of those services, but the Employee may not subject to 10.3
      make any reproduction or substantial reproduction of any of the
      intellectual property assigned by clause 10.1 without the written licence
      of the Company.

10.3  Where the Employee makes a design as a result of and in the course of the
      performance of the Employee's services, the design is owned by the
      Company.

10.4  Where the Employee makes any patentable process or article as a result of
      and in the course of the performance of the Employees services, the patent
      is owned by the Company.

                                                     Employment Agreement Page 3

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11.   FURTHER ASSURANCES AS TO INTELLECTUAL PROPERTY

11.1  The Employee must during and after the term of this agreement do all acts
      and things and sign all documents which the Company may reasonably request
      to secure the Company's ownership of rights in the intellectual property
      referred to in clause 10.

12.   RESTRAINT DURING EMPLOYMENT

12.1  Without the prior consent of the Company, the Employee must not during
      employment by the Company:

      (a)   act as an officer or Employee of or as a consultant or adviser to
            any other corporation, firm or person;

      (b)   take up any other position with any other corporation, firm or
            person; or

      (c)   hold any shares or securities which create or may create a conflict
            between the interests of the Company and the  interests of the
            Employee.

13.   CONFIDENTIALITY

13.1  The Employee must not directly or indirectly make use of any intellectual
      property of the Company except with the authority and for the benefit of
      the Company.

13.2  The Employee must not without the written consent of the Company publish
      or disclose any information concerning the business, transactions, or
      affairs of the Company or of any related body corporate of the Company
      within the meaning of the Corporations Law unless such publication or
      disclosure is made in the normal course of employment.

13.3  The information referred to in clause 13 includes information disclosed to
      the Company or the Employee by any existing or potential customer,
      supplier, contractor, agent, licensor or licensee of the Company.

13.4  The Employee must at the request of the Company sign a confidentiality
      agreement containing provisions similar to the provisions in this clause
      13 in favour of any person referred to in clause 13.3.

13.5  The Employee acknowledges that:

      (a)   a breach of clause 13.1 or clause 13.2 of this agreement would be
            harmful to the business of the Company;

      (b)   monetary damages alone would not be a sufficient remedy for the
            breach; and

      (c)   in addition to any other remedy which may be available in law or
            equity, the Company is entitled to interim, interlocutory and
            permanent injunctions or any of them to prevent the breach.

                                                     Employment Agreement Page 4

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14.   FURTHER ASSURANCE

14.1  Each party must promptly at its own cost do all things (including
      executing all documents) necessary or desirable to give full effect to
      this agreement.

15.   SEVERABILITY

15.1  If anything in this agreement is unenforceable, illegal or void then it is
      severed and the rest of this agreement remains in force.

16.   ENTIRE UNDERSTANDING

16.1  This agreement:

      (a)   is the entire agreement and understanding between the parties on
            everything connected with the subject matter of this agreement; and

      (b)   supersedes any prior agreement or understanding on anything
            connected with that subject matter.

16.2  Each party has entered into this agreement without relying on any
      representation by any other party or any person purporting to represent
      that party.

17.   VARIATION

17.1  An amendment or variation to this agreement is not effective unless it is
      in writing and signed by the parties.

18.   WAIVER

18.1  A party's failure or delay to exercise a power or right does not operate
      as a waiver of that power or right.

18.2  The exercise of a power or right does not preclude either its exercise in
      the future or the exercise of any other power or right.

18.3  A waiver is not effective unless it is in writing.

18.4  Waiver of a power or right is effective only in respect of the specific
      instance to which it relates and for the specific purpose for which it is
      given.

19.   GOVERNING LAW AND JURISDICTION

19.1  The law of Queensland governs this agreement.

19.2  The parties submit to the non-exclusive jurisdiction of the courts of
      Queensland and the Federal Court of Australia.

                                                     Employment Agreement Page 5

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EXECUTED as an agreement in Queensland.

EXECUTED for and on behalf of                 )
METAL STORM LIMITED                           )
ACN 064 270 006 by authority of the directors )
in the presence of:                           )

<TABLE>
      <S>                                      <C>
      /S/ JAMES MICHAEL O'DWYER                 /S/ PETER LOUIS GEORGE PURSEY
      -------------------------------           -------------------------------------
       Director                                  Director/Secretary

      JAMES MICHAEL O'DWYER                     PETER LOUIS GEORGE PURSEY
      -------------------------------           -------------------------------------
       Full Name of Director                     Full Name of Director/Secretary

SIGNED by Sylvie Moser-Savage                 )
in the presence of:                           ) /S/ SYLVIE MOSER-SAVAGE
                                                -------------------------------------
                                                 Signature of Sylvie Moser-Savage
</TABLE>

      /S/ SALLY ANN KAYE
      -------------------------------
       Signature of Witness

       SALLY ANN KAYE
      ----------------------------
       Name of Witness (Print)

                                                            Employment Agreement

<PAGE>

                                  THE SCHEDULE

Item A:     Commencement Date:       13 January 2003

Item B:     Position:                Company Secretary

Item C:     Remuneration:            A$95,000 per annum inclusive of the
            Company's superannuation obligation. The employee is entitled to
            make salary sacrifice arrangements with the Company as desired in
            relation to remuneration. The Company will provide a fully supported
            laptop computer and mobile phone for business purposes, and will
            cover car parking costs.

                                                            Employment Agreement

<PAGE>

            Metal Storm Limited (acn 064 270 006)

            (`Company')

            SYLVIE MOSER-SAVAGE

            (`Employee')

            EMPLOYMENT AGREEMENT

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