**EXHIBIT 4.7**Metal Storm LimitedDavid A SmithDeed of Termination© Corrs Chambers Westgarth
 

 
Contents       **1** **Interpretation**  **1**          1.1 Definitions  1   1.2 Construction  2        **2** **Payments and benefits**  **2**          2.1 Payments and benefits  2   2.2 How payments effected  3   2.3 Acknowledgement options already received  3        **3** **Release**  **3**          3.1 Release  3   3.2 Bar to proceedings  3        **4** **Enforceability**  **3**        **5** **Confidential information and non-disclosure**  **4**          5.1 Confidentiality  4   5.2 Non-disclosure  4        **6** **Non-disparagement**  **4**          6.1 No disparagement by Executive  4   6.2 No disparagement by Company  4        **7** **Warranty and acknowledgment**  **4**          7.1 Entry into this document  4   7.2 Warranty as to reliance  5        **8** **Miscellaneous**  **5**          8.1 Governing law and jurisdiction  5   8.2 Counterparts  5   8.3 Effect of execution  5   8.4 Waiver and exercise of rights  5   8.5 Entire understanding  5 
 

 
**Date 20 May 2006**Parties**Metal Storm Limited**ACN 064 270 006 of Level 34 Central Plaza One, 345 QueenStreet, Brisbane, Queensland 4000 (**Company**)**David A Smith**of 9619 Potters Hill Circle, Lorton, VA 22079 (**Executive**)BackgroundA The Executive was employed by the Company from 14 February 2005 as Chief Executive Officer (**Employment**). B The Company and Executive have agreed that the Employment will be terminated as at 28 April 2006 on the terms set out in thisdocument (**Termination**).Agreed terms1 Interpretation**1.1** **Definitions**   In this document:   **Associated Persons**means each of the past and present directors, officers, employees andagents of the Company or a Related Company.   **Claims**means all claims, demands, suits, causes of action, damages, debts, costs,verdicts and judgments whatsoever whether at law or in equity or under any statuteincluding (but not limited to) all claims under any industrial relations legislation,anti-discrimination legislation, industrial instruments and contracts of employmentincluding claims for unpaid wages or leave entitlements and claims for unfair or unlawfultermination, but does not include any claims in respect of which the Company receives anindemnity under the *Workers Compensation and Rehabilitation Act 2003*(Qld).   **Confidential Information**means any information, however communicated or recorded,relating to the Company’s business to which the Executive gains access, whether before,during or after the Employment and includes but is not limited to:
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 (a) any trade secret or other commercially sensitive or confidentialinformation of or possessed by the Company;  (b) any techniques, methods, computer software, materials, documents ormanuals of the Company used in its business;  (c) technical information or research concerning products developed or usedby the Company, its customers and suppliers;  (d) inventions, improvements or products discovered or developed by anyemployee, officer or consultant of the Company;  (e) any information relating to the business affairs, accounts, marketresearch, marketing plans, sales plans, customer lists, prospects, management orfinances of the Company; and  (f) the identity of the Company’s customers, suppliers, consultants,distributors, agents, contractors and employees and the arrangements between theCompany and its customers, suppliers, consultants, distributors, agents, contractorsand employees.  **Related Company**means a related body corporate of the Company as defined in the*Corporations Act*2001 (Cth) and includes Metal Storm, Inc and Metal Storm USA Limited. **1.2** **Construction**   A reference to “$” or “dollars” is a reference to United States currency.2 Payments and benefits**2.1** **Payments and benefits**   In consideration of the release provided in this document and the Executive at alltimes complying with all terms of this document, the Company: (a) will pay to the Executive: (i) $120,000 (subject to deduction of any tax, including anyUnited States tax) as a separation payment;  (ii) $60,000 (subject to deduction of any tax including anyUnited States tax) as payment in lieu of notice of termination ; and  (iii) $2,000 in lieu of payment for medical insurance premiumsfor a period of three months; (b) will provide to the Executive access to his existing cellular telephoneaccount and meet the cost of all rental and charges incurred on that account for aperiod of 60 days from the date the Deed is signed by the Executive and returned tothe Company; and  (c) has issued 625,000 options over unissued shares in the Companyexercisable at $0.40 per option for an exercise period ending on 30 June 2011.
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**2.2** **How payments effected**   Payments required by **clause 2.**1 will be paid as follows: (a) for the payments referred to in **clauses 2.****1(a)(i)** and **2.****1(a)(ii)**, to theExecutive’s bank account in the following instalments: (i) $60,000, within 15 days of the date the Deed is signed bythe Executive and returned to the Company;  (ii) $60,000, within 60 days of the date the Deed is signed bythe Executive and returned to the Company; and  (iii) $60,000, within 90 days of the date the Deed is signed bythe Executive and returned to the Company; (b) for the payments referred to in **clause 2.****1(a)(iii)**, to the Executive’sbank account within 15 days of the date the Deed is signed by the Executive andreturned to the Company;  (c) for payments referred to in **clause 2.1(b)**, by way of cheque to thesupplier of the benefit, within seven days after receipt of the appropriateinvoices/statements being provided by the Executive to the Company’s satisfaction.**2.3** **Acknowledgement options already received**   The Executive acknowledges that he has already received the options referred to in**clause 2.1(c)**.3 Release**3.1** **Release**   In consideration of the receipt of the benefits provided under **clause 2.1**, theExecutive, to the greatest extent permitted by law, releases, discharges and indemnifiesthe Company, each Related Company and each Associated Person from all Claims which he hasor which but for this Deed could, would or might at any time hereafter have or have hadagainst the Company, each Related Company and each Associated Person in respect of orarising out of, either directly or indirectly, the Employment or the Termination. **3.2** **Bar to proceedings**   The Executive agrees that the release in this Deed may be pleaded by the Company,each Related Company and each Associated Person as an absolute bar to proceedings in anycourt of law, arbitral tribunal or otherwise in response to any Claims brought by or onbehalf of the Executive which are the subject of a release contained in this Deed.4 EnforceabilityThe Executive agrees that the terms of this Deed may be enforced by the Company onits own behalf and on behalf of any Related Company or
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Associated Person, or enforced by any Related Company or Associated Person individually.5 Confidential information and non-disclosure**5.1** **Confidentiality**   The Executive covenants with the Company: (a) not to disclose any Confidential Information to any other person;  (b) not to use any Confidential Information for the benefit of the Executiveor of any other person;without the prior consent in writing of the Company, except that this obligation willcease in respect of any information which becomes generally available to the public otherthan through any unlawful act of the Executive.**5.2** **Non-disclosure**   The Executive agrees that he will not disclose the terms of this document to anyperson other than: (a) in confidence, to his respective legal or financial advisers;  (b) for the proper purposes of enforcing the terms of this document; or  (c) as may be required by law.6 Non-disparagement**6.1** **No disparagement by Executive**   The Executive will not at any time after executing this document, disparage theCompany, a Related Company or an Associated Person or make any statement or publication,whether oral or in writing, which does or is likely to bring the Company into disreputeor ridicule or otherwise adversely affect its reputation. **6.2** **No disparagement by Company**   The Company will not at any time after executing this document disparage theExecutive or make any statement or publication, whether oral or in writing, which does oris likely to bring the Executive into disrepute or ridicule or otherwise adversely affectthe Executive’s reputation.7 Warranty and acknowledgment**7.1** **Entry into this document**   The Executive: (a) has voluntarily entered into this document;
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 (b) in entering into this document, has not relied on any promises,representations or inducements other than those set out in this document; and  (c) has had opportunity to consult with advisers as to the nature and effectof this document.**7.2** **Warranty as to reliance**   The Executive warrants the accuracy of **clause 7.1**and acknowledges that theCompany is relying upon this warranty in executing this document.8 Miscellaneous**8.1** **Governing law and jurisdiction** (a) This document is governed by and is to be construed in accordance with thelaws applicable in Queensland.  (b) Each party irrevocably and unconditionally submits to the non-exclusivejurisdiction of the courts of Queensland and any courts which have jurisdiction tohear appeals from any of those courts and waives any right to object to anyproceedings being brought in those courts.**8.2** **Counterparts**   This document may consist of a number of counterparts and, if so, the counterpartstaken together constitute one document. **8.3** **Effect of execution**   This document is not binding on either party unless it has been executed by bothparties. **8.4** **Waiver and exercise of rights** (a) A single or partial exercise or waiver by a party of a right relating to thisdocument does not prevent any other exercise of that right or the exercise of anyother right.  (b) A party is not liable for any loss, cost or expense of any other partycaused or contributed to by the waiver, exercise, attempted exercise, failure toexercise or delay in exercise of a right.**8.5** **Entire understanding** (a) This document contains the entire understanding between the parties as to thesubject matter of this document.  (b) All previous negotiations, understandings, representations, warranties,memoranda or commitments concerning the subject matter of this document are mergedin and superseded by this document and are of no effect. No party is liable to anyother party in respect of those matters.  (c) No oral explanation or information provided by any party to another: (i) affects the meaning or interpretation of this document; or
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 (ii) constitutes any collateral agreement, warranty orunderstanding between any of the parties.
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**Executed**as a deed.                  **Executed**by **Metal Storm Limited**  )        )     /s/ JAMES D. MACDONALD     /s/ WAYNE A. DOWNING           Company Secretary     Director           James D. MacDonald     Wayne A. Downing  Name of Company Secretary/Director (print)     Name of Director (print)           **Signed sealed and delivered**  )     by **David A Smith**in the presence of:  )  /s/ DAVID A. SMITH                    /s/ KATHLEEN M. MAY                 Witness                 Kathleen M. May        Name of Witness (print)        
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