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your employment, you must resign from any such office or offices. During your employment,resignation from an office or offices at the request of Metal Storm will not result in terminationof your employment.If you are requested to accept an appointment to any office or offices of Metal Storm or any MetalStorm Group company, Metal Storm will provide you with a Deed of Indemnity and Access, and willmaintain Directors and Officers Liability insurance for your protection.**4 Location**You will be based in Brisbane, Australia.If it appears that any relocation will be required, Metal Storm will discuss and agree this withyou before making a final decision on the relocation.**5 Working hours**You will work during Metal Storm’s normal business hours and such other hours as are necessary foryou to perform your duties in a satisfactory manner. Your remuneration includes compensation forwork outside normal hours and you will not be entitled to any additional remuneration or otherbenefit for work outside these hours.**6 Travel**You may be required to travel within and outside Australia on Metal Storm Group business. You willnot be entitled to any additional remuneration for such travel. However, your reasonable travelexpenses for approved travel will be paid for by Metal Storm including airfares (economy class),accommodation and meals.**7 Other employment**You must not during your employment by Metal Storm, without the prior written consent of the CEO(which consent will not unreasonably be withheld), be engaged or interested in any other public orprivate work or duties, either directly or indirectly, in any capacity (including as principal,agent, partner, employee, shareholder, unit-holder, joint venturer, director, trustee, beneficiary,manager, consultant or advisor) with the exception of voluntary activities for a charitableorganisation or project.This does not preclude you from holding (directly or indirectly) in aggregate not more than 5% ofthe shares in any body corporate listed on a recognised stock exchange, and in aggregate not morethan 10% of the shares in any privately-held body corporate.**8 Metal Storm Group policies and procedures**You must treat Metal Storm’s policies and procedures as directions from Metal Storm. Subject tothe terms of this document you must comply with these policies and procedures, but they do not formpart of this document. Metal Storm may vary any policy or procedure from time to time.**9 Performance appraisal**Your performance will be reviewed by the CEO on an annual basis and at such other times as may bedetermined by Metal Storm.
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Your annual appraisal will be conducted having regard to any applicable performance criteria andperformance targets.**10 Remuneration****10.1 Base remuneration**You will receive a base remuneration package of $150,000 gross per annum or such amount as may bedetermined from time to time upon review under **clause 10.4**below (**BR**).Your BR includes:(a) salary; (b) income tax; (c) such other non-cash benefits (including motor vehicles) as are agreed with you from time totime; and (d) the amount of any fringe benefits tax, GST and other taxes payable by Metal Storm inconsequence of the provision of your non-cash benefits.**10.2 Salary**Your salary will be paid fortnightly by electronic deposit to your nominated bank account.**10.3 Superannuation**In addition to your BR, Metal Storm will make superannuation contributions at such rate as may beagreed from time to time, but in any event at a rate not less than the minimum rate required toavoid any charge under the *Superannuation Guarantee (Charge) Act 1992*(Cth). The Metal Stormsuperannuation contribution rate agreed as at 16th December 2008 is 9% of your BR.**10.4 BR Review**Your BR will be reviewed each year on such basis as the CEO in his absolute discretion maydetermine having regard to your performance (with reference to your annual performance appraisal)and the circumstances of the Metal Storm Group. There is no presumption that your BR will beincreased upon review. The first review will occur after 31st December 2008.**10.5 Legislation, industrial awards and agreements**Your BR is inclusive of all remuneration to which you are entitled under any applicablelegislation, or industrial award or agreement.**11 Expenses****11.1 Business expenses**Metal Storm will reimburse to you reasonable expenses incurred by you, with the consent of the CEO,in the performance of your duties including business calls from your home telephone. You will beprovided with a mobile telephone to use for business purposes.
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**12 Leave****12.1 Annual leave, personal/carer’s leave, parental leave and compassionate leave**You are entitled to:(a) four weeks of annual leave per annum; (b) 8 days of personal/carer’s leave per annum (paid personal leave in addition to your accruedentitlement may be taken with the approval of the CEO); (c) parental leave; and (d) compassionate leave,subject to and in accordance with law.Annual leave will be taken at a time approved in advance by the CEO having regard to operationalrequirements. Metal Storm may direct you to take excessive accrued annual leave as permitted bylaw.**12.2 Long service leave**You will be entitled to long service leave subject to and in accordance with the applicablelegislation in the State of your domicile. Metal Storm may direct you to take accrued long serviceleave as permitted by law.**13 Intellectual Property and Moral Rights****13.1 Intellectual Property**Metal Storm will own and be exclusively entitled to the benefit of the Intellectual Property in allmaterial developed, produced or created by you during the period of your employment by Metal Stormwhich relates in any way to the business of Metal Storm or a Metal Storm Group company.You will promptly take any reasonable action necessary to transfer to Metal Storm your interests inany such Intellectual Property.**Intellectual Property**includes inventions and improvements, patents, trade marks, copyright anddesigns whether registered or unregistered, circuit layout rights and know-how and any other formof intellectual property.**13.2 Moral Rights**You irrevocably consent to Metal Storm taking any action in relation to any Intellectual Propertydeveloped, produced or created by you in the course of your employment even where such conductwould, but for this clause, infringe any moral rights which you may have in relation to suchIntellectual Property.**Moral Rights**means a right of attribution of authorship, a right not to have authorship falselyattributed and a right of integrity of authorship.**13.3 Enduring obligations**Your obligations in respect of Intellectual Property and Moral Rights survive termination of youremployment.
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**14 Confidentiality**You will understand that the Metal Storm Group is concerned to protect its sensitive andconfidential information and its reputation. To ensure protection of these interests, you arerequired to execute the Confidentiality Deed at **annexure A**to this document.**15 Termination of employment****15.1 Summary termination**Metal Storm may at any time immediately terminate your employment by giving written notice to youif you commit any act of serious misconduct.For the purposes of this clause, **serious misconduct**includes but is not limited to:(a) committing any illegal or immoral acts (whether in the course of the employment or not) thatresult in a criminal conviction which, in the opinion of Metal Storm, materially affects yourability to represent Metal Storm and to perform your role as Chief Financial Officer; (b) being precluded by the provisions of the *Corporations Act 2001*(Cth) (as amended or replacedfrom time to time) from taking part in the management of a corporation, or being disqualifiedfor any reason from holding an office of Metal Storm or of a Metal Storm Group company.**15.2 Termination on notice by Metal Storm**Metal Storm may terminate your employment at any time by giving you three months’ written notice.Metal Storm may provide payment in lieu of all or part of this notice period.**15.3 Termination by you**You may terminate your employment at any time by giving three months written notice to Metal Storm.After receiving notice of termination from you, Metal Storm may elect to make the termination takeeffect immediately or part way through the notice period, in which case you will be entitled topayment calculated on your BR in respect of the period after the date of termination to the end ofthe notice period.**15.4 Payment of accrued entitlements upon termination**On termination of your employment, you will be entitled to receive the following payments andbenefits and will not be entitled to any other termination payment or benefit (whether under aMetal Storm Group policy or practice or otherwise):(a) the remuneration and any expenses payable to you up to and including the date of termination; (b) pay in lieu of any accrued annual leave and long service leave to which you are entitled upto and including the date of termination, calculated on the basis of your BR; and (c) any superannuation contribution to which you are entitled as at the date of termination.
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**15.5 Limitation on payment of termination benefits**Notwithstanding any other provision of this document, where the maximum total amount which ispayable to you by Metal Storm in connection with the termination of your employment exceeds theamount which Metal Storm is permitted to pay to you without shareholder approval in the applicablecircumstances (in accordance with Division 2 of Part 2D.2 of the *Corporations Act 2001*(Cth), asamended or replaced from time to time), then Metal Storm will take reasonable steps to seekshareholder approval at the next annual general meeting.If shareholder approval is required but not granted, Metal Storm will pay you the maximum amountwhich it is permitted to pay you without shareholder approval (in accordance with Division 2 ofPart 2D.2 of the *Corporations Act 2001*(Cth), as amended or replaced from time to time).**15.6 Set-off**Metal Storm may deduct from any payment due to you (including but not limited to any terminationpayment) any money advanced to you or owing by you to Metal Storm or any Metal Storm Group company.**15.7 Disciplinary and grievance procedures**In view of the seniority of your position, Metal Storm is not required to follow any performancereview, disciplinary, warning or grievance procedures before terminating your employment.**16 Garden leave**During part or all of any period of notice of termination given by you or by Metal Storm and anyreasonable period during which Metal Storm is investigating any disciplinary issue involving you,Metal Storm may, at its sole discretion:(a) require you to perform only such duties as Metal Storm may determine or not to perform anyduties at all; (b) require you not to have any contact with any employees, customers or business associates ofMetal Storm or any Metal Storm Group company other than normal social contact; and/or (c) exclude you from all or any part of Metal Storm’s and any Metal Storm Group company’spremises,provided that your remuneration will not be withheld or reduced as a result of you complying withsuch directions.**17 Return of property**Upon termination of your employment for any reason, or at any time at the request of Metal Storm,you must immediately return to Metal Storm any Metal Storm property or the property of any MetalStorm Group company in your possession or control. In the case of documents, computer records andother information and computer software, you must not retain any copies or parts of them.
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**18 Restrictions after employment****18.1 No representation**You must not at any time after termination of your employment, represent to any person that you arestill in any way connected with or involved in the business of Metal Storm or any Metal Storm Groupcompany.**18.2 Restraint deed**The Metal Storm Group is concerned to protect its valuable commercial information and tradecontacts. To ensure protection of these interests you are required to execute the Restraint Deedat **annexure B**to this document.**18.3 Warranty**You warrant that in performing your duties under this document, you will not be in breach of anyobligation to a third party, including any restrictive covenant or confidentiality obligation.**19 Miscellaneous****19.1 Governing law**This document is governed by and is to be construed in accordance with the laws in force inQueensland.The parties irrevocably and unconditionally submit to the non-exclusive jurisdiction of the courtsof Queensland and any courts which have jurisdiction to hear appeals from any of those courts.**19.2 No waiver**No failure to exercise or any delay in exercising any right, power or remedy under this documentwill operate as a waiver. Nor will any single or partial exercise of any right, power or remedypreclude any other or further exercise of that or any other right, power or remedy.**19.3 Severance**Any provision of this document which is or becomes illegal, void or unenforceable in anyjurisdiction:(a) is severable; (b) will be ineffective and severable in that jurisdiction to the extent of the illegality,voidness or unenforceability; (c) will not invalidate the remaining provisions of this document; and (d) will not affect the validity or enforceability of that provision in any other jurisdiction.**19.4 Variation and entire agreement**The terms and conditions set out in this document may only be varied, replaced or terminated byagreement in writing signed by yourself and an authorised representative of Metal Storm.
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These terms and conditions will continue to govern your employment with Metal Storm despite anychanges from time to time to your position, duties and responsibilities, remuneration, workinghours or employment location, unless otherwise agreed in writing.The terms and conditions set out in this document embody the entire understanding of the parties inrelation to your employment by Metal Storm. All previous negotiations, representations oragreements are superseded by this document.**19.5 Independent advice**You acknowledge that you have had the opportunity to obtain independent legal advice in relation tothe terms of this document including the Confidentiality and Restraint Deed in the annexures tothis document.     **/s/ LEE FINNIEAR** **16/12/2008**       **Lee Finniear** **Date**       **I have read and accept the termsof employment set out above.**       **/s/ BRETT FARMER** **16/12/2008**       **Brett Farmer** **Date**  
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