Document:

Form of Escrow Agreement

ESCROW
DEPOSIT AGREEMENT

AGREEMENT
dated this __ day of ____ 20__, by and between SMARTMETRIC, INC., a Nevada
corporation (the “Company”), having its principal place of business at 67 Wall
Street, 22nd Floor,
New York, New York 10005 and SIGNATURE BANK (the "Escrow Agent"), a New York
State chartered bank and having an office at 71 Broadway, New York, New York
10006.

W I T N E S S E T H:

WHEREAS,
the Company has filed with the Securities and Exchange Commission (“SEC”) a
registration statement (the “Registration Statement”) covering a proposed public
offering (the “Offering”) of Company’s securities (collectively, the
“Securities”, and individually, a “Share”) at a price of $1.50 per Share on a
“best efforts, all or none basis” a minimum of 333,333 shares ($499,999.50)
(“Minimum Amount”) and a maximum of 6,666,6666 shares ($10,000,000) (“Maximum
Amount”); and

WHEREAS,
unless the Company sells the Minimum Amount by ______, which is 90 days from the
date of the prospectus (the “Termination Date”), or if the Offering is extended
by the Company for an additional 90 days until ______ (the “Final Termination
Date”), the Offering will terminate and all funds will be returned to the
Subscribers (hereinafter defined); and

WHEREAS,
the Company desires to establish an escrow account with Escrow Agent into which
the Company shall instruct subscribers to deposit checks and other instruments
for the payment of money made payable to the order of Signature Bank, as Escrow
Agent for SmartMetric, Inc. and Escrow Agent is willing to accept said checks
and other instruments for the payment of money in accordance with the terms
hereinafter set forth; and

WHEREAS,
Company represents and warrants to the Escrow Agent that it has not stated to
any individual or entity that the Escrow Agent's duties will include anything
other than those duties stated in this Agreement; and

WHEREAS,
Company warrants to the Escrow Agent that a copy of the Registration Statement
and all other documents which have been delivered to Subscribers and third
parties which include Escrow Agent’s name and duties, have been attached hereto
as Schedule 1;

NOW,
THEREFORE, IT IS AGREED as follows:

1. Delivery
of Escrow Funds.

(a) (i)
The Company shall cause to be delivered to Escrow Agent checks received from
Subscribers made payable to the order of Signature Bank, as Escrow Agent for
SmartMetric, Inc., along with the name, address and social security number or
taxpayer identification number of the individual or entity making payment
(“Subscriber”). The checks shall be deposited into a non interest-bearing
account at Signature Bank entitled "Signature Bank, as Escrow Agent for
SmartMetric, Inc.” (the "Escrow Account").

(a) (ii)
The Escrow Agent may receive money from the Subscriber by means of wire
transfer, whereby money shall be wired to Signature Bank, 565 Fifth Avenue, New
York, New York 10018, ABA Number 026013576 for credit to Signature Bank, as
Escrow Agent for SmartMetric, Inc., Account No. ____________. In the event that
the Escrow Agent receives funds directly from the Subscriber, the Company shall
provide the Escrow Agent in writing with the name, address and social security
number or taxpayer identification number of the Subscriber. All such money shall
be deposited into the Escrow Account.

(b) The
collected funds deposited into the Escrow Account are referred to as the "Escrow
Funds.”

(c) The
Escrow Agent shall have no duty or responsibility to enforce the collection or
demand payment of any funds deposited into the Escrow Account. If, for any
reason, any check deposited into the Escrow Account shall be returned unpaid to
the Escrow Agent, the sole duty of the Escrow Agent shall be to return the check
to the Subscriber and advise the Company promptly thereof.

2. Release
of Escrow Funds. The
Escrow Funds shall be paid by the Escrow Agent in accordance with the
following:

(a) In the
event that the Company advises the Escrow Agent in writing that the offering has
been withdrawn, Escrow Agent shall promptly return the funds paid by each
Subscriber to said Subscriber without interest or deduction, penalty or expense;

(b) If prior
to 3:00 P.M. (local New York City time) on the Termination Date, the Escrow
Agent receives written notification, in form of Exhibit A, attached hereto and
made a part hereof, and signed by the Company, stating that the Termination Date
has been extended to, or any date prior to, the Final Termination Date, the date
shall be so extended.

(c) Provided
that the Escrow Agent does not receive the notice stated in (a) above and there
is at least the Minimum Amount deposited into the Escrow Account on or prior to
the Termination Date or the Final Termination Date or such other date that is
after the Termination Date (if Escrow Agent has, prior to the Termination Date,
received Exhibit A), the Escrow Agent shall, upon receipt of written
instructions, in the form of Exhibit B or in form and substance satisfactory to
the Escrow Agent, received from the Company, pay the Escrow Funds in accordance
with such written instructions, such payment or payments to be made by wire
transfer or bank check. 

(d) If by
3:00 P.M. (local New York City time) on the Termination Date, or in the event
the Escrow Agent has received Exhibit A, in accordance with (b) above, on the
Final Termination Date, the Escrow Agent has not received written instructions
from the Company regarding the disbursement of the Escrow Funds or there is a
balance in the Escrow Account of less than the Minimum Amount, the Escrow Agent
shall promptly return the Escrow Funds to the Subscribers.

(e) The
Escrow Agent shall not be required to pay any uncollected funds or any funds
that are not available for withdrawal. 

3. Acceptance
by Escrow Agent. The
Escrow Agent hereby accepts and agrees to perform its obligations hereunder,
provided that:

(a) The
Escrow Agent may act in reliance upon any signature believed by it to be
genuine, and may assume that any person who has been designated by the Company
to give any written instructions, notice or receipt, or make any statements in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent shall have no duty to make inquiry as to the genuineness, accuracy or
validity of any statements or instructions or any signatures on statements or
instructions. The names and true signatures of each individual authorized to act
singly on behalf of the Company is stated in Schedule A, which is attached
hereto and made a part hereof.

  (b) The
Escrow Agent may act relative hereto in reliance upon advice of counsel in
reference to any matter connected herewith. The Escrow Agent shall not be liable
for any mistake of fact or error of judgment or law, or for any acts or
omissions of any kind, unless caused by its willful misconduct or gross
negligence.

(c) The
Company agrees to indemnify and hold the Escrow Agent harmless from and against
any and all claims, losses, costs, liabilities, damages, suits, demands,
judgments or expenses (including but not limited to attorney's fees) claimed
against or incurred by Escrow Agent arising out of or related, directly or
indirectly, to the Escrow Agreement.

(d) In the
event that the Escrow Agent shall be uncertain as to its duties or rights
hereunder, the Escrow Agent shall, to the extent not prohibited by applicable
law, be entitled to (i) refrain from taking any action other than to keep safely
the Escrow Funds until it shall be directed otherwise by a court of competent
jurisdiction, or (ii) deliver the Escrow Funds to a court of competent
jurisdiction.

(e) The
Escrow Agent shall have no duty, responsibility or obligation to interpret or
enforce the terms of any agreement other than Escrow Agent's obligations
hereunder, and the Escrow Agent shall not be required to make a request that any
monies be delivered to the Escrow Account, it being agreed that the sole duties
and responsibilities of the Escrow Agent, to the extent not prohibited by
applicable law, shall be (i) to accept checks or other instruments for the
payment of money and wire transfers delivered to the Escrow Agent for the Escrow
Account and deposit said checks and wire transfers into the non-interest-bearing
Escrow Account, and (ii) to disburse or refrain from disbursing the Escrow Funds
as stated above, provided that the checks received by the Escrow Agent have been
collected and are available for withdrawal.

4. Resignation
and Termination of the Escrow Agent. The
Escrow Agent may resign at any time by giving 30 days' notice of such
resignation to the Company. Upon providing such notice, the Escrow Agent shall
have no further obligation hereunder except to hold the Escrow Funds that it has
received as of the date on which it provided the notice of resignation as
depositary. In such event, the Escrow Agent shall not take any action until the
Company has designated a banking corporation, trust company, attorney or other
person as successor. Upon receipt of such written instructions signed by the
Company, the Escrow Agent shall promptly deliver the Escrow Funds, net of any
outstanding charges, to such successor and shall thereafter have no further
obligations hereunder. If such instructions are not received within 30 days
following the effective date of such resignation, then the Escrow Agent may
deposit the Escrow Funds and any other amounts held by it pursuant to this
Agreement with a clerk of a court of competent jurisdiction pending the
appointment of a successor. In either case provided for in this paragraph, the
Escrow Agent shall be relieved of all further obligations and released from all
liability thereafter arising with respect to the Escrow Funds and all interest
earned thereon.

5. Termination. The
Company may terminate the appointment of the Escrow Agent hereunder upon written
notice specifying the date upon which such termination shall take effect, which
date shall be at least 30 days from the date of such notice. In the event of
such termination, the Company shall, within 30 days of such notice, appoint a
successor escrow agent and the Escrow Agent shall, upon receipt of written
instructions signed by the Company, turn over to such successor escrow agent all
of the Escrow Funds; provided, however, that if the Company fails to appoint a
successor escrow agent within such 30-day period, such termination notice shall
be null and void and the Escrow Agent shall continue to be bound by all of the
provisions hereof. Upon receipt of the Escrow Funds, the successor escrow agent
shall become the Escrow Agent hereunder and shall be bound by all of the
provisions hereof and the Escrow Agent shall be relieved of all further
obligations and released from all liability thereafter arising with respect to
the Escrow Funds.

6. Investment. All
funds received by the Escrow Agent shall be invested only in non-interest
bearing bank accounts at Signature Bank.

7. Compensation. Escrow
Agent shall be entitled, for the duties to be performed by it hereunder, to a
fee of $1,500 which fee shall be paid by the Company promptly following the
signing of this agreement. In addition, the Company shall be obligated to
reimburse Escrow Agent for all reasonable costs and expenses incurred in
connection with this Agreement, including reasonable counsel fees other than the
cost and expense attributable to the preparation and execution of this
Agreement. No modification, cancellation or rescission of this Agreement or
resignation or termination of the Escrow Agent shall affect the right of Escrow
Agent to retain the amount of any fee which has been paid prior to the effective
date of any such modification, cancellation, rescission, resignation or
termination. If the Company fails to pay such compensation or reimbursement,
then the Company shall incude such payment to the Escrow Agent on Exhibit B,
which provides disbursemnent instructions in accordance with paragraph
2(c).

8. Notices. All
notices, requests, demands and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
if sent by hand-delivery, by nationally recognized overnight courier service or
by prepaid registered or certified mail, return receipt requested, to the
addresses set forth below.

If to the
Company:

SmartMetric,
Inc. 

   67 Wall
Street, 22nd
Floor

New York,
NY 10005

Attention:
_____________________

Fax:
______________

If to
Escrow Agent:

Signature
Bank

71
Broadway

New York,
NY 10006

Attention: James
V. Raggi, Group Director & Senior Vice President 

Fax:
646-822-1556

9. General.

(a) This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of New York applicable to agreements made and to be entirely
performed within such State, without regard to choice of law
principles.

(b) This
Agreement sets forth the entire agreement and understanding of the parties in
respect to the matters contained herein and supersedes all prior agreements,
arrangements and understandings relating thereto.

(c) All of
the terms and conditions of this Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, the parties hereto.

(d) This
Agreement may be amended, modified, superseded or canceled, and any of the terms
or conditions hereof may be waived, only by a written instrument executed by
each party hereto or, in the case of a waiver, by the party waiving compliance.
The failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect its right at a later time to enforce
the same. No waiver of any party of any condition, or of the breach of any term
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach or a waiver of any other condition or of the
breach of any other term of this Agreement. No party may assign any rights,
duties or obligations hereunder unless all other parties have given their prior
written consent.

(e) If any
provision included in this Agreement proves to be invalid or unenforceable, it
shall not affect the validity of the remaining provisions.

(f) This
Agreement and any amendment or modification of this Agreement may be executed in
several counterparts or by separate instruments and all of such counterparts and
instruments shall constitute one agreement, binding on all of the parties
hereto.

10. Form
of Signature. The
parties hereto agree to accept a facsimile transmission copy of their respective
actual signatures as evidence of their actual signatures to this Agreement and
any amendment or modification of this Agreement; provided
however, that
each party who produces a facsimile signature agrees, by the express terms
hereof, to place, promptly after transmission of his or her signature by fax, a
true and correct original copy of his or her signature in overnight mail to the
address of the other party. 

IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first set forth above.

SmartMetric,
Inc.

By:
 _______________________

  Name:

  Title:

SIGNATURE
BANK

By:
 _____________________________

  Name:

  Title:

By:
 _____________________________

  Name:

  Title:

 

Exhibit
A

Date:
__________________

Signature
Bank

71
Broadway

New York,
NY 10006

Attention:
James V. Raggi, 

Group
Director & Senior Vice President

Dear Mr.
Raggi:

In
accordance with the terms of Section 2(b) of an Escrow Deposit Agreement dated
___ _______, by and between SmartMetric, Inc. (the “Company”) and Signature Bank
(the “Escrow Agent”), the Company hereby notifies the Escrow Agent that the
Termination Date has been extended to __________ __, 20__.

Very
truly yours,

SmartMetric,
Inc.

By:_____________

Name:

Title:

 

Exhibit
B

 

                                
 FORM OF ESCROW RELEASE NOTICE

Date:

SIGNATURE
BANK

261
Madison Avenue

New York,
N.Y. 10016

Attn:
____________

Dear
________:

In
accordance with the terms of paragraph 2(c) of an Escrow Deposit Agreement dated
as of ________ __, 2004 (the "Escrow Agreement"), by and between SmartMetric,
Inc. (the "Company") and Signature Bank (the "Escrow Agent"), the Company hereby
notifies the Escrow Agent that the ________ closing will be held on ___________
for gross proceeds of $_________.

PLEASE
DISTRIBUTE FUNDS BY WIRE TRANSFER AS FOLLOWS (wire instructions
attached):

____________________________:  $ 

________________________:  $  

________________________:  $ 

Very
truly yours,

SmartMetric,
Inc.

By:
__________________________________

Name:
_____________

Title:
_____________

 

Schedule
A

The
Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by any one of the following on behalf of SmartMetric,
Inc.

	
      Name
	
      True
      Signature

	
      _____________________________________
	
      ______________________________________
      

	 	 
	
      ____________________________________
	
      ______________________________________License Agreement btw SmartMetric and Applied Cryptology

 

PATENT
LICENSE AGREEMENT

 

AGREEMENT made and
entered into as of the 1st day of
August 2004, with revisions dated December 33, 2004 by and between Applied
Cryptology, Inc., a Nevada corporation having its principal offices at [address]
(the “Licensor”), and SmartMetric, Inc., a Nevada corporation having its
principal offices at 67 Wall Street, Level 22, New York,
New York 10005 (the “Company”).

WHEREAS, the
Licensor is the owner of certain technology which is the subject of a Patent
Cooperation Treaty Application filed on February 18, 2000 with the United States
Patent and Trademark Office, and originally the subject of an application filed
on February 18, 1999 with the Australian Patent and Trademark Office, a copy of
which is annexed hereto and made a part hereof as Exhibit A, and the recipient
of a patent from the United States Patent and Trademark office, dated September
14, 2004 which was filed on February 15, 2001, a copy of which is annexed hereto
and made a part hereof as Exhibit B, including adaptations, derivatives of, and
current and future technological developments thereto (the “Patent”);
and

WHEREAS, the
Licensor has agreed to license certain rights to use the Patent to the Company,
and the Company wishes to accept such rights to use from the Licensor, as more
fully described in Section 4.

 

NOW,
THEREFORE, in
consideration of the mutual covenants of the parties which are hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,

IT
IS AGREED: 

1.  Recitals.  The
parties hereby adopt as part of this Agreement each of the recitals which is
contained in the WHEREAS clauses, and agree that such recitals shall be binding
upon the parties hereto by way of contract and not merely by way of recital or
inducement; and such clauses are hereby confirmed and ratified as being true and
accurate by each party as to himself, herself or itself.

 

2.  Grant
of License.

 

A.  Subject
to the terms and conditions of this Agreement, the Licensor grants to the
Company, and the Company accepts from the Licensor, a license (the “License”) to
utilize the Patent, including the use, manufacture and sub-license of products
which utilize the Patent and the patented technology within the Territory
(hereinafter defined). During this terms of this Agreement, Licensor shall not
grant any license of the Patent to any other company that directly, or
indirectly through a subsidiary, affiliate, licensee or otherwise provides users
with Internet access or sells, distribute or manufacturers smartcards, nor shall
Licensor use the Patent in any way so as to compete with the Company. Further,
Licensor may not transfer the Patent to any third party that may compete with
SmartMetric.

 

B.  The
license herein granted to the Company shall be effective as of the date of this
Agreement. The Licensor agrees to execute any and all such other and further
instruments and documents, and to take any and all such further actions, which
are reasonably required to effectuate this Agreement and the intents and
purposes hereof. The Company and the Licensor each agree to execute any and all
instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Agreement and the intents and purposes
hereof.

 

3.  Reservation
of Rights.  The
Licensor retains all rights to the Patent, except with respect to the license of
the specific rights granted pursuant to this Agreement as provided for in
Section 4.

 

4.  Rights
to Use.  The
license here stated is a license to make use of the Patent for the purpose of
developing software, systems and products to be used in the business of the
company, namely providing secure transactions over the Internet from home and
office computers and/or providing either or an automatic method for connecting
to remote computers and/or a method of delivering targeted advertising to home
and/or office computers and/or providing identity verification and access
control as provided for in the Patent.

 

5.  Geographical
Scope.  The
geographical scope of this Agreement shall be worldwide (the
“Territory”).

 

6.  Royalty
Payments. In
consideration of the license and rights granted in this Agreement, the Company
shall pay to Licensor royalties in accordance with this Section 6.

A.  Accrual.
Royalties shall accrue on the first use or putting into use of the Patent as
evidenced by (a) the sub-license of the Patent, or the (b) sale, lease or
provision to others of one or more products which utilize the Patent by the
Company (“Licensed Products”). No royalties may accrue until the first such use
of the Patent by the Company. The obligation to pay accrued Royalties shall
survive termination of this Agreement. Notwithstanding any other provision
hereunder, royalties shall accrue and be payable only to the extent that
enforcement of the Company’s obligation to pay such royalty would not be
prohibited by applicable law.

B.  Royalty
Reports and Payments. Within
forty-five (45) days after the end of each calendar quarter (i.e., within 45
days after March 31st, June
30th,
September 30th and
December 31st) during
the Term of this Agreement, the Company shall provide Licensor with a report
certified by a duly authorized officer of the Company (the “Royalty Report”)
which shall identify this Agreement and include the information set forth in
Schedule C as well as any other information Licensor may reasonably require from
time-to-time. If no Royalties were accrued during a calendar quarter, the
Royalty Report shall state that fact. Simultaneously with each Royalty Report
shall pay the Company the royalties accrued during such calendar quarter
(“Quarterly Payment”). In the event no royalties accrued during the quarter, no
funds shall be owed Licensor.

C.  Method
of Payment and Reporting.

	(i)  	
      All
      payments required hereunder shall be paid to Licensor by electronic bank
      transfer to the following account:

Bank Acct
Name:

Bank:

Bank
Number:

ABA:

	(ii)  	
      All
      Royalty Reports shall be sent to Licensor as follows, with a copy sent to
      the address indicated for receiving notice on the Cover Sheet (if
      different than below):

Applied
Cryptology, Inc.

314
Brooklyn Avenue

Brooklyn,
New York 11213

Licensor
may change the foregoing payment account and address upon written notice to the
Company.

D.  Overdue
Payments.
Payments which are required hereunder and which are overdue shall be subject to
a late payment charge calculated at an annual rate of one percent (1%) over the
U.S. prime rate or successive U.S. prime rate (as posted in the Wall Street
Journal) during delinquency. If the amount of such charge exceeds the maximum
permitted by law, such charge shall be reduced to such maximum.

E.  Currency. All
payments to be made under this Agreement shall be made in United States dollars
unless otherwise indicated. Any conversion to United States dollars for a
payment required under this Agreement shall be at the prevailing rate for bank
cable transfers as quoted for the day such payment is due under this Agreement
or, if paid earlier, the day actually paid, by leading United States banks in
New York City dealing in the foreign exchange market.

 

7.  Duties
of Licensor.  During
the Term, Licensor shall provide such other services to the Company as may be
necessary in order to implement the intent and purposes of this Agreement
including assisting the Company in obtaining the approval of the Patent in the
United States and in those other countries in which the Licensor determines to
file a patent.

 

8.  Term.  The term
of this Agreement (the “Term”) shall commence as of the date hereof and shall
remain in force in perpetuity, subject to the terms and conditions of this
Agreement, including, but not limited to, Article 13 of this
Agreement.

 

9.  Licensor’s
Representations, Warranties and Covenants.  The
Licensor warrants, represents and covenants to the Company as
follows:

 

A.  The
Licensor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada with full right, power and legal capacity
to enter into this Agreement. Licensor has no other business aside from owning
this Patent. The execution of this Agreement by the Licensor, its delivery to
the Company and the consummation of the transactions which are contemplated by
this Agreement have been approved and authorized by the Board of Directors of
Licensor and require no further authorization on the part of the Licensor for
the performance and consummation by the Licensor of the transactions which are
contemplated by this Agreement.

 

B.  The
performance of this Agreement shall not result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance upon any
property of the Licensor or cause an acceleration under any arrangement,
agreement or other instrument to which the Licensor is a party or by which any
of his assets are bound. The Licensor has performed all of his obligations which
are required to be performed by him pursuant to the terms of any such agreement,
contract or commitment.

 

C.  The
Licensor is the sole and exclusive owner and Licensor of the Patent which has
been approved by the United States Patent and Trademark Office with the
applicable authorities.

 

10.  Company’s
Representations, Warranties and Covenants. The
Company represents, warrants and covenants to the Licensor as
follows:

 

A.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, with all requisite power and authority to
carry on its business as presently conducted, to enter into this Agreement and
to carry out the transactions which are contemplated herein.

 

B.  The
Company has full right, power and legal capacity to enter into this Agreement.
The execution of this Agreement by the Company and its delivery to the Licensor,
and the consummation of the transactions which are contemplated by this
Agreement have been duly approved and authorized by all necessary action by its
Board of Directors and no further authorization on the part of the Company for
the performance and consummation by the Company of the transactions which are
contemplated in this Agreement.

 

C.  The
performance of this Agreement shall not result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance upon any
property of the Company or cause an acceleration under any arrangement,
agreement or other instrument to which the Company is a party or by which any of
its assets is bound.

 

11.  Company’s
Obligations.  

 

A.  The
Company shall take such steps and bear the costs related thereto as may be
necessary to develop the software and/or products which is necessary to utilize
and exploit the Patent. All technological developments under, including, without
limitation, all software, and any improvements to, and derivatives of, the
Patent which are developed by the Company shall be the Company’s property.

 

B.  The
Company shall bear the costs related to both defending and enforcing the Patent,
including, but not limited to, legal fees and filing fees with patent
offices.

 

12.  Non-Use
and Non-Disclosure of Confidential Information.

 

A.  As used
in this Agreement, “Confidential Information” means information which is
disclosed to the Company or known by the Company as a result of or through this
Agreement, and not generally known by the public about the Patent, including
without limitation, all documentation and software relating thereto, and all
know-how and technology required to use the Patent and information and data in
written, graphic and/or machine readable form, processes and services, including
information with respect to research, development, inventions, manufacture,
purchasing, accounting, engineering, marketing, merchandising and selling
regardless of whether patentable, trademarkable or copyrightable, including, but
not limited to, any information acquired by the Company from any source prior to
the commencement of this Agreement.

 

B.  Except as
required in order to exploit the Patent pursuant to this Agreement, the Company
will not, during or after the term of this Agreement, directly or indirectly,
use any Confidential Information or disseminate or disclose any Confidential
Information to any person, firm, corporation, association or other entity except
in accordance with this Agreement. The foregoing prohibition shall not apply to
any Confidential Information which (i) becomes publicly available through
no act or omission of the Company, (ii) is reasonably required to be
disclosed in a proceeding to enforce the Company’s rights under this Agreement,
(iii) is required to be disclosed by court order or by any law,
(iv) is or becomes available to the Company from third parties who in
making such disclosure breach no confidentiality relationships, or (v) is
intentionally disclosed by the Licensor on an unrestricted basis to any entity
not a party to this Agreement.

 

C.  Upon the
termination of this Agreement, all documents, records, notebooks and similar
repositories of or containing Confidential Information, including copies
thereof, then in the Company’s possession, whether prepared by it or others,
will be delivered to the Licensor.

 

D.  The
Company hereby waives, now and for the future, any rights under or with respect
to any discoveries, concepts or ideas, or improvements or know-how which relate
to the Patent.

 

13.  Rescission.

 

A.  If there
occurs a rescission of this Agreement pursuant to Paragraph B of this
Article 13, the Licensor, upon written notice to the Company pursuant to
Paragraph C of Article 15, may:

 

	 	
      (i)
	
      Require
      that the Company cease any further use of the Patent;
  and

 

	 	
      (ii)
	
      Cease
      performance of all the Licensor’s obligations hereunder without liability
      to the Company.

 

B.  The
Licensor may rescind this Agreement and reclaim all rights and interest in the
Patent if:

 

	(i)  	
      the
      Company admits in writing that it is unable to pay its debts as they
      mature;

 

	(ii)  	
      the
      Company files a petition for protection as a debtor under the bankruptcy
      laws, or a petition to take advantage of any insolvency
    act;

 

	(iii)  	
      the
      Company makes an assignment for the benefit of its
    creditors;

 

	(iv)  	
      the
      Company consents to the appointment of, or possession by, a custodian for
      the whole or any substantial part of its
property;

 

	(v)  	
      the
      Company, with regard to a petition filed with or without the Company’s
      consent by a third party to subject the Company as a debtor to the
      bankruptcy laws, fails to have such petition dismissed within
      sixty (60) days from the date that such petition is
      filed;

 

	(vi)  	
      notwithstanding
      the sixty (60) day provision in subparagraph v of this
      paragraph B of this Article 13, the Company, pursuant to a
      petition in bankruptcy filed against it, is adjudicated a bankrupt;
      or

 

	(vii)  	
      the
      Company files a petition or answer seeking reorganization or similar aid
      or relief under the bankruptcy laws or any state or the federal law for
      the relief of debtors, or if the Company fails in a timely fashion to deny
      the material allegations of a petition filed against it for any such
      relief; or

 

	(viii)  	
      a
      court of competent jurisdiction shall enter an order, judgment or decree
      appointing, with or without the Company’s consent, a custodian for the
      whole or any substantial part of the Company’s property, or approving a
      petition filed against the Company seeking reorganization or similar aid
      or relief under any bankruptcy or insolvency laws or any state or the
      federal law for the relief of debtors, and such order, judgment or decree
      shall not be vacated, set aside or stayed within sixty (60) days from
      the date of entry thereof; or

 

	(ix)  	
      under
      the provisions of any law for the relief of debtors, any court of
      competent jurisdiction, or a custodian, shall assume custody or control of
      the whole or any substantial part of the Company’s property, with or
      without the Company’s consent, and such custody or control shall not be
      terminated or stayed within sixty (60) days from the date of
      assumption of such custody or control; or

 

	(x)  	
      any
      creditor of the Company commences a proceeding to foreclose a security
      interest in, or lien on, any property or assets of the Company;
      or

 

	(xi)  	
      a
      court of competent jurisdiction shall enter a final judgment for the
      payment of money by the Company and such judgment shall not be vacated,
      set aside or stayed within sixty (60) days from the date of entry
      thereof; or

 

	(xii)  	
      there
      is an imposition of any attachment or levy, or the issuance of any note of
      eviction against the assets or properties of the
  Company.

 

C.  The
foregoing rights and remedies of the Licensor shall be cumulative and in
addition to all other rights and remedies available to the Licensor in law and
equity.

 

D.  The
Company agrees to execute any and all other instruments and documents, and to
take any and all further actions, which may be reasonably required to effectuate
this Agreement and the intents and purposes hereof.

 

14.  Survival.  All
covenants, agreements, representations and warranties made in or in connection
with this Agreement shall survive its termination, and shall continue in full
force and effect after its termination, it being understood and agreed that each
of such covenants, agreements, representations and warranties is of the essence
of this Agreement and the same shall be binding upon and shall inure to the
benefit of the parties hereto, their successors and assigns.

 

15.  Miscellaneous.

 

A.  Headings.  Headings
contained in this Agreement are for reference only and shall not in any way
affect the meaning or interpretation of this Agreement.

 

B.  Enforceability.  If any
provision of this Agreement should, for any reason, be held to be invalid or
unenforceable under the laws of any jurisdiction, this Agreement shall be
construed as if such invalid or unenforceable provisions are not contained
herein.

 

C.  Notices.  Any
notice or other communication required or permitted hereunder must be in writing
and sent by either (i) registered or certified mail, postage prepaid,
return receipt requested, (ii) overnight delivery with confirmation of
delivery or (iii) facsimile transmission with an original mailed by first
class mail, postage prepaid, in each case addressed as follows:

 

	
      To
      the Licensor:
	
      Applied
      Cryptology, Inc.

	 	
      c/o
      Colin Hendrick, President

	 	
      314
      Brooklyn Avenue

	 	
      Brooklyn,
      New York 11213

	 	 
	
      To
      the Company:
	
      SmartMetric,
      Inc.

	 	
      67
      Wall Street, Level 22

	 	
      New
      York, New York 10005

	 	
      Attn:
      Colin Hendrick, President

	 	
      Facsimile
      No.: 917.591.3226

	 	 
	
      Copy
      to:
	
      Schonfeld
      & Weinstein, L.L.P.

	 	
      80
      Wall Street, Suite 815

	 	
      New
      York, New York 10005

	 	
      Facsimile
      No.: 212.344.1600

 

or in
each case to such other address and facsimile number as shall have last been
furnished by like notice. If mailing is impossible due to an absence of postal
service, notice shall be in writing and personally delivered to the aforesaid
addresses. Each notice or communication shall be deemed to have been given as of
three (3) days after the date so mailed or as of the date delivered, as the case
may be.

 

D.  Governing
Law; Disputes.  This
Agreement shall in all respects be construed, governed, applied and enforced in
accordance with the laws of the State of New York without giving effect to
the principles of conflicts of laws thereof and shall be deemed to be an
agreement made pursuant to the laws of the State of New York entered into
in the State of New York. The parties hereby consent to and submit to
personal jurisdiction over each of them by the courts of the State of
New York in any action or proceeding, waive personal service of any and all
process and specifically consent that in any such action or proceeding any
service of process may be effectuated upon any of them by certified mail, return
receipt requested, in accordance with paragraph C of this Article 14.
The parties agree, further, that the prevailing party in any action or
proceeding as determined by the tribunal making the final and nonappealable
determination of the matter in dispute, shall be entitled to reimbursement of
all of its reasonable fees, costs and expenses, including, without limitation,
legal fees and disbursements, in connection with such matter. In connection with
the tribunal’s determination for the purpose of which party, if any, is the
prevailing party, the tribunal shall take into account all of the factors and
circumstances including, without limitation, the relief sought, and by whom, and
the relief, if any, awarded, and to whom. In addition, and notwithstanding the
foregoing sentence, a party shall not be deemed to be the prevailing party in a
claim seeking monetary damages unless the amount of the final determination
exceeds the amount offered in a writing by the other party by fifteen percent
(15%) or more. For example, if the party initiating a claim (“A”) seeks damages
of $100,000 plus costs and expenses, and the other party (“B”) has offered A
$50,000 prior to the commencement of the proceeding, if the tribunal awards any
amount less than $57,500 to A, the tribunal should determine that B has
prevailed.

 

E.  Modification.  This
Agreement may not be changed, modified, extended, terminated or discharged
except in writing, signed by each of the parties hereto.

 

F.  Further
Actions.  The
parties hereto agree to execute any and all instruments and documents, and to
take any and all such further actions reasonably required, to effectuate this
Agreement and the intents and purposes hereof.

 

G.  Binding
Agreement.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and assigns.

 

H.  Non-Waiver.  Except
as otherwise expressly provided herein, no waiver of any covenant, condition, or
provision of this Agreement shall be deemed to have been made unless expressly
made in writing and signed by the party against whom such waiver is charged. The
failure of any party to insist upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained, shall not be construed as a waiver or relinquishment in the future of
such provision, covenant, or condition. The acceptance by a party, made with
such party’s knowledge of the breach or failure of any covenant, condition, or
provision hereof, of performance by the other party, shall not be deemed a
waiver by the accepting party of such breach or failure. The waiver by one party
of breach by the other party shall not be construed as a waiver of any other or
any subsequent breach.

 

I.  Counterparts.  This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

J.  Entire
Agreement.  The
parties have not made any representations, warranties, or covenants about the
subject matter hereof which is not set forth herein, and this Agreement,
together with any instruments executed simultaneously herewith, constitutes the
entire Agreement between them about the subject matter hereof. All
understandings and agreements heretofore had between the parties about the
subject matter hereof are merged in this Agreement and any instrument executed
simultaneously herewith.

-- SmartMetric/License
Agreement August1, 2004

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers, as of the day, month and year first above
written.

 

	 	
      Licensor

	 	 
	 	
      /s/
      Colin Hendrick 

	 	
      Colin
      Hendrick

	 	 
	
      Attest:
	
      SmartMetric,
      Inc.

	 	 
	 	
      By:/s/
      Colin Hendrick

 

-- SmartMetric/License
Agreement August1, 2004

SCHEDULE
A

To
Patent License Agreement

The
following patent, as well as all continuations and reissues thereof, are
“Licensed Patents” under the Agreement:

	
      U.S.
      Patent No.
	
       

      Issue
      Date
	
       

      Title

	
      6,325,285
	
      Sept.
      14, 2004
	
      Smart
      Card With Integrated Fingerprint Reader

	
      Signature
      below by both Parties indicates that this
	 
	
      Schedule
      is agreed to and accepted by them as part of the patent License
      Agreement.
	 
	 	 
	
      THE
      COMPANY:  
	
      LICENSOR:

	 	 
	
      By:
      /s/
      Colin Hendrick
	
      By:
      /s/
      Colin Hendrick

	
      (Authorized
      Signature)
	
      (Authorized
      Signature)

	 	 
	
      Colin
      Hendrick
	
      Colin
      Hendrick

	
      (Typed
      or Printed Name)
	
      (Typed
      or Printed Name)

	 	 
	 	 
	
      (Date)
      12/22/04
	
      (Date)
      12/22/04

-- SmartMetric/License
Agreement August1, 2004

SCHEDULE
C

To
Patent License Agreement

	1.  	
      Royalties

For each
product made by or for the Company or a sub-license of the Company which
products utilize the Patent pursuant to this Agreement, royalties shall be Two
Percent (2%) of the greater of 

	(a)  	
      The
      sales price of such Licensed Product; OR

	(b)  	
      The
      Fair Market Value of such Licensed Product, where “Fair Market Value”
      shall mean the selling price which a seller would realize from an
      unaffiliated buyer in an arms-length sale of the licensed product at the
      time of the making of the Product, and wherein such selling price is not
      discounted or diminished by any other agreement or arrangement between
      such buyer and seller, including agreements or arrangements relating to
      any other product, service, or benefit furnished or provided by the seller
      to the buyer.

	2.  	
      Royalty
      Report

Each
Royal Report required under the Agreement shall identify the gross receipts of
the Company in accordance with this Agreement, as well as, for the Company, the
number of products manufactured in accordance with this Agreement; the identity
of each customer who is furnished such product(s), the number of units of
licensed product furnished to each such customer (such units identified by type
and model number), the price charged to each such customer for each such unit to
licensed product, and the date such units of Licensed Product were furnished to
each such customer.

	
      Signature
      below by both Parties indicates that this
	 
	
      Schedule
      is agreed to and accepted by them as part of the patent License
      Agreement.
	 
	 	 
	
      THE
      COMPANY:
	
      LICENSOR:

	 	 
	
      By:
      /s/
      Colin Hendrick
	
      By:
      /s/
      Colin Hendrick

	
      (Authorized
      Signature)
	
      (Authorized
      Signature)

	 	 
	
      Colin
      Hendrick
	
      Colin
      Hendrick

	
      (Typed
      or Printed Name)
	
      (Typed
      or Printed Name)

	 	 
	 	 
	
      (Date)
      12/22/04
	
      (Date)
      12/22/04

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