SHAREHOLDERS AGREEMENT
                           PRAXIS PHARMACEUTICALS INC
                                   (PRAXIS US)

                       PERPETUAL TRUSTEES NOMINEES LIMITED
                                    (TRUSTEE)

                     ROTHSCHILD BIOSCIENCE MANAGERS LIMITED
                                  (ROTHSCHILD)

                         CM CAPITAL INVESTMENTS PTY LTD
                                  (CM CAPITAL)

                           CIBC AUSTRALIA VC FUND LLC
                                     (AVCF)

                         MOOROOLBARK TECHNOLOGY PTY LTD
                                  (MOOROOLBARK)

                       THE AUSTRALIAN NATIONAL UNIVERSITY
                                      (ANU)

                                       AND

                                PHARMAXIS PTY LTD
                                    (COMPANY)

                     DR WILLIAM COWDEN AND DR BRETT CHARLTON
                                   (FOUNDERS)

                             PIPER ALDERMAN LAWYERS
                       Level 23, Governor Macquarie Tower
                                 1 Farrer Place
                                 Sydney NSW 2000
                                    Australia

                           Telephone: + 612 9253 9999
                            Facsimile: +612 9253 9900






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CONTENTS                                                                    PAGE
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1.     DEFINITIONS.............................................................2

2.     INTERPRETATION..........................................................5

3.     SHAREHOLDER AGREEMENT...................................................5

4.     TERM....................................................................6

5.     INCORPORATION...........................................................7

6.     NAME....................................................................7

7.     CONSTITUTION............................................................7

8.     REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS.......................7

9.     COMMERCIAL OBJECTIVES...................................................7

10.    SOLE COMMERCIAL VEHICLE.................................................8

11.    DIRECTORS...............................................................9

12.    CHAIRMAN OF THE BOARD..................................................11

13.    BOARD MEETINGS.........................................................11

14.    CHIEF EXECUTIVE OFFICER................................................13

15.    FINANCIAL CONTROLLER AND SECRETARY.....................................13

16.    AUDITORS...............................................................14

17.    ACCOUNTING AND INFORMATION.............................................14

18.    CONDUCT OF BUSINESS....................................................15

19.    CRITICAL BUSINESS MATTERS AND CRITICAL SHAREHOLDER MATTERS.............15

20.    GENERAL MEETINGS.......................................................16

21.    CAPITAL STRUCTURE......................................................16

22.    PRE-EMPTIVE RIGHTS.....................................................17

23.    TAG-ALONG RIGHTS.......................................................21

24.    DRAG-ALONG RIGHTS......................................................21

25.    CONVERSION OF ACP AND BCP SHARES.......................................23

26.    REDEMPTION OF ACP AND BCP SHARES.......................................23

27.    ACP AND BCP SHARE DIVIDENDS............................................24

28.    FREEDOM TO ACT.........................................................25

29.    RELEASE AND INDEMNITY..................................................25

30.    DISPUTE RESOLUTION.....................................................25

31.    CONFIDENTIAL INFORMATION AND PUBLICITY.................................26

32.    ACCESS.................................................................27


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33.    NATURE OF RELATIONS....................................................27

34.    AGREEMENT PREVAILS.....................................................27

35.    ASSIGNMENT.............................................................27

36.    NOTICE.................................................................27

37.    COSTS..................................................................28

38.    GOVERNING LAW..........................................................28

39.    COUNTERPARTS...........................................................28

40.    LICENSED FUNDS.........................................................29

41.    LIMITATIONS OF LIABILITY...............................................31

ANNEXURE-A - INITIAL CAPITAL STRUCTURE........................................38

ANNEXURE B - BUSINESS PLAN....................................................39

ANNEXURE C - CRITICAL BUSINESS MATTERS........................................40

ANNEXURE D - CRITICAL SHAREHOLDER MATTERS.....................................41




















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                             SHAREHOLDERS AGREEMENT

PARTIES
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1.       PRAXIS PHARMACEUTICALS INC of 50 West  Broadway, Salt Lake  City, Utah,
         United States of America  84101, Facsimile: +1 604 646 5649 (PRAXIS US)

2.       PERPETUAL  TRUSTEES  NOMINEES LIMITED ABN 99 000 341 533 of Level 8, 39
         Castlereagh  Street,  Sydney,  NSW 2000, in its capacity as trustee for
         The Australian  Bioscience  Trust  constituted by a trust deed dated 20
         August 1998, Facsimile: 02 8256 1419 (TRUSTEE)

3.       ROTHSCHILD  BIOSCIENCE  MANAGERS  LIMITED  ABN  54 072 515 247  in  its
         capacity  as  manager  of the  Australian  Bioscience  Trust and in its
         capacity as trustee of Rothschild Bioscience Ventures II of Level 15, 1
         O'Connell  Street,   Sydney,   NSW  2000,   Facsimile:   02  9323  2000
         (ROTHSCHILD)

4.       CIBC AUSTRALIA VC FUND LLC, a Delaware  limited liability  company,  in
         its capacity as general  partner of the Australia  Venture Capital Fund
         L.P. of 425 Lexington Avenue, New York, NY 10017, USA (AVCF)

5.       CM  CAPITAL  INVESTMENTS  PTY LTD ACN  098 048 830 of  Level 2, Telstra
         House, 167 Eagle Street,  Brisbane, QLD 4000, as trustee for CM Capital
         Venture Trust No.3 Facsimile: 07 3221 5933 (CM CAPITAL)

6.       MOOROOLBARK  TECHNOLOGY  PTY  LTD ABN  60 080 904 892 of  Level 1,  159
         Dorcas Street, South Melbourne, VIC 3205 in its capacity as trustee for
         the Pharmaxis  Investment Trust constituted by a trust deed dated on or
         about the date of this agreement, Facsimile: 03 8646 3899 (MOOROOLBARK)

7.       THE AUSTRALIAN NATIONAL UNIVERSITY, a body corporate  established under
         the  Australian  National  University Act of 1991 ABN 52 234 063 906 of
         The Australian National  University,  Investment Office,  Building 10C,
         Acton, ACT 0200, Facsimile: 02 6125 8795 (ANU)

8.       PHARMAXIS  PTY  LTD  ABN  75 082 811 630  of  60 Marcus Clarke  Street,
         Canberra, ACT 2061, Facsimile:  02 6279 5444 (COMPANY)

9.       DR WILLIAM COWDEN of 56 Urambi  Village,  Crozier Street,  Kambah,  ACT
         2902 (COWDEN) and DR BRETT  CHARLTON of 22 Rogers Street,  Fraser,  ACT
         2615 (CHARLTON) (together called the FOUNDERS)

INTRODUCTION
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A.       The parties wish to provide for the terms and  conditions  on which the
         parties have agreed to operate the Company in the future.

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B.       The parties also wish to regulate as between themselves certain matters
         relating to their shareholdings in the Company.

C.       The Company has agreed to become a  party to give effect to those terms
         of this  agreement  to  which  it may  lawfully  give  effect.  For the
         avoidance of doubt,  nothing in clauses 22 to 24  (inclusive)  is to be
         read or  construed  as  requiring  any action or  participation  by the
         Company  if to do  so  would  be  contrary  to  any  provision  of  the
         Corporations Act 2001.

D.       The parties agree to work together to maximise the value of the Company
         with a  view to effecting a trade sale or offering shares to the public
         as soon as practicable and market conditions permitting.

OPERATIVE CLAUSES
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1.       DEFINITIONS

         In this agreement:

         ACP  SHAREHOLDER  means a person  that holds ACP Shares and  includes a
         party who holds the beneficial interest in ACP Shares registered in the
         name of another person as nominee for that Party;

         ACP SHARES means Series A converting  preference  shares in the capital
         of the Company;

         ASSOCIATED ENTITY means:

         (a)      in respect of  a corporate  shareholder,  an  entity that is a
                  related  body  corporate  of the  Shareholder  as  defined  in
                  section 50 of the Corporations Act 2001;

         (b)      in respect of  a shareholder who  holds shares as trustee, any
                  replacement trustee of the relevant trust;

         (c)      in  respect  of  a shareholder, a  nominee or custodian of the
                  shareholder (or replacement nominee or custodian); and

         (d)      in  respect  of the  Trustee and Rothschild, a fund managed by
                  Rothschild or a related body  corporate of  Rothschild  and in
                  respect of CM Capital and  Mooroolbark,  a fund  managed by CM
                  Capital  or  Mooroolbark   respectively   or  a  related  body
                  corporate of either of those companies;

         (e)      in respect of AVCF, any  replacement  general  partner of AVCF
                  and any fund managed by CM Capital  Investments Pty Ltd or any
                  of its related bodies corporate;

         BOARD means the board of Directors of the Company;


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         BUSINESS  means the  business  of drug  research  and  development  and
         disease specific diagnosis and therapies,  and the commercialisation of
         such drugs and therapies;

         BUSINESS  DAY  means  any day  except a  Saturday  or a Sunday or other
         public holiday in the Australian Capital Territory;

         BUSINESS  PLAN means the  business  plan of the Company as amended from
         time to time under clause 18;

         BCP  SHAREHOLDER  means a person  that holds BCP Shares and  includes a
         Party who holds the beneficial interest in BCP Shares registered in the
         name of another person as nominee for that Party;

         BCP SHARES means Series B converting  preference  shares in the capital
         of the Company;

         CHIEF  EXECUTIVE  OFFICER  means the  Chief  Executive  Officer  of the
         Company appointed under clause 14;

         DILUTED  CAPITAL means,  at any time, the issued ordinary share capital
         of the Company  assuming the  conversion at that time of all issued ACP
         Shares and BCP Shares into Ordinary Shares;

         DIRECTOR means a director of the Company  appointed under clause 11 (or
         his or her  alternate) and DIRECTORS  means any or all such  appointees
         (or their alternates);

         DIRECTORS  SPECIAL  MAJORITY  means,  in  relation to a  resolution  of
         Directors,  a resolution  passed by a majority of all Directors as well
         as  a  majority  of  all  Directors   nominated  by  the  ACP  and  BCP
         Shareholders;

         EMPLOYEE  SHARE OPTION PLAN means the  Executive  and Staff Option Plan
         adopted by the Company on 30 March 2001;

         EXECUTIVE  DIRECTORS means a Director who is also a full time executive
         of the Company;

         FINANCIAL CONTROLLER means the chief financial officer or controller of
         the Company and its subsidiaries appointed under clause 15;

         FINANCIAL YEAR means:

         (a)      the  period  beginning  from  the  start  of  the term of this
                  agreement and ending on the following 30 June;

         (b)      after  the  first  financial  year,  each  period of 12 months
                  ending 30 June; and

         (c)      in  the  last  year  of  the term of this agreement the period
                  starting on the preceding  1 July and ending on the date  this
                  agreement ends;


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<PAGE>

         IIF MANAGEMENT LICENCE means an IIF Program management licence executed
         between the Industry  Research and  Development  Board on behalf of the
         Commonwealth of Australia and a party to this Agreement;

         IIF PROGRAM means the Innovation Investment Fund Program established by
         the   Commonwealth  of  Australia  under  the  Industry   Research  and
         Development Act 1986 (Cth);

         LICENCE AND  RESEARCH &  DEVELOPMENT  AGREEMENTS  means the Licence and
         Research &  Development  Agreement  entered  into  between  Anutech Pty
         Limited  and Praxis US dated 27 October  1997 and the  Addendum  to the
         Licence and Research & Development Agreement dated 8 October 1998;

         LICENSED FUND means a fund of whatever nature, and whether incorporated
         or not:

         (a)      which, or  the manager of which, is to be or  has been granted
                  an IIF Management Licence; and

         (b)      the  manager  or  trustee of  which is a  shareholder  of  the
                  Company;

         LIQUIDITY EVENT means:

         (a)      a  disposal of  the  whole or  substantially  the whole of the
                  property, business and undertaking of the Company;

         (b)      an order being made for the winding up or  dissolution  of the
                  Company;

         (c)      a  liquidator or provisional liquidator being appointed to the
                  Company; or

         the  Company  being  otherwise  wound up,  deregistered,  dissolved  or
         liquidated;

         NOMINEE  DIRECTOR means a nominee  Director  appointed by a Shareholder
         under clause 11.1.3, 11.1.4 or 11.1.5;

         ORDINARY  SHARES  means  ordinary  shares in the issued  capital of the
         Company;

         ORDINARY  SHAREHOLDER  means a person  that holds  Ordinary  Shares and
         includes a party who holds the beneficial  interest in Ordinary  Shares
         registered in the name of another person as nominee for that Party;

         SECRETARY means the secretary of the Company appointed under clause 15;

         SHAREHOLDER  means a person that holds  shares in the Company from time
         to time being either Ordinary Shares, ACP Shares or BCP Shares;

         SPECIAL MAJORITY means, in relation to a resolution of Shareholders,  a
         resolution passed by:

         (a)      more than 50% of the votes cast by Ordinary Shareholders; and

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<PAGE>

(b)      more than 80% of the votes that may be cast by ACP Shareholders and BCP
         Shareholders; and

         TRANSACTION   DOCUMENTS  means  this  agreement,   the  relevant  share
         subscription  agreement  dated on or around the date of this  agreement
         pursuant to which the each BCP  Shareholder  subscribes  for BCP Shares
         and the Company's constitution.

2.       INTERPRETATION

         In this agreement, unless the context otherwise requires:

         2.1      singular includes plural and plural includes singular;

         2.2      words of one gender include any gender;

         2.3      reference  to  legislation  includes  any amendment to it, any
                  legislation   substituted   for  it,   and   any   subordinate
                  legislation made under it;

         2.4      reference  to  a person  includes a  corporation, firm and any
                  other entity;

         2.5      reference  to  a  party   includes   that   party's   personal
                  representatives, successors and permitted assigns;

         2.6      headings do not affect interpretation;

         2.7      a  provision  must be read down to the extent  necessary to be
                  valid.  If  it cannot be read down to that extent, it must  be
                  severed;

         2.8      if a thing is to be done on a day which is not a Business Day,
                  it must be done on the Business Day after that day;

         2.9      another  grammatical  form  of  a  defined  expression  has  a
                  corresponding meaning;

         2.10     an  expression  defined in the  Corporations Act  2001 has the
                  meaning given by the Corporations Act 2001;

         2.11     a  reference to a capital  reconstruction includes a reference
                  to  a  consolidation,  subdivision,  reduction  or  return  of
                  return of capital; and

         2.12     no rule of construction applies to the disadvantage of a party
                  because that party put forward this document or any portion of
                  it.

3.       SHAREHOLDER AGREEMENT

         3.1      The  Shareholders  agree that the business  and affairs of the
                  Company are to be conducted in a manner  consistent  with  the
                  terms of this agreement.

         3.2      The  Company  will  procure that all holders of options in the
                  Company (as set out in Part 2 of Annexure A) agree to be bound
                  by the terms of this agreement as

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                  Shareholders  if  and  when  they  convert  those  options  to
                  Ordinary Shares. In that regard, it is noted that:

                  3.2.1   the  terms  of  the Employee Share Option Plan and the
                          issue terms of all options currently on issue, require
                          the  optionholders  to  enter  into  any  shareholders
                          agreement,  or  enter a  deed   of  accession  to  any
                          shareholders  agreement,  that is  in existence on the
                          date of exercise of those options; and

                  3.2.2   that  is  sufficient compliance with the terms of this
                          clause in respect  of  shares to be issued on exercise
                          of those options.

         3.3      Those of the parties to this agreement that are parties to the
                  shareholders   agreement   dated  15  October   1999  and  the
                  supplementary  shareholders  agreement  dated  4  April  2001,
                  hereby agree that those  agreements  are terminated and are of
                  no further  force or effect  without  prejudice to any accrued
                  rights of the parties to the date of termination.

         3.4      If the  Company  issues  additional  shares in accordance with
                  clause  21.2,  any party  that is not  already a party to this
                  agreement must accede to this agreement and  accordingly  must
                  agree  to be  bound  by the  terms  of  this  agreement,  such
                  accession  agreement to be in a form and substance  acceptable
                  to the Company.

4.       TERM

         4.1      The term of the arrangements between the  Shareholders set out
                  in this agreement starts on the date of this agreement.

         4.2      Subject  to  the  other  provisions  of this  agreement,  this
                  agreement terminates on the first to occur of the following:

                  4.2.1    one  Shareholder  owning  all  of  the shares in  the
                           Company  following  a  transfer(s)   under   and   in
                           accordance with this agreement;

                  4.2.2    the  Company is  wound up and its surplus  assets (if
                           any) distributed to the Shareholders;

                  4.2.3    the Shareholders agree  this agreement is  at an end;
                           or

                  4.2.4    an  initial  public  offering  of  the shares in  the
                           Company and a listing of those shares on a recognised
                           securities exchange.

         4.3      Unless  this  agreement  provides  to the  contrary, a  former
                  Shareholder  is not bound by this  agreement  from the time it
                  ceases to hold  shares in the  Company.  However,  the  former
                  Shareholder  still has the rights and obligations that accrued
                  before that time.

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5.       INCORPORATION

         5.1      The Company is incorporated as a proprietary company.

         5.2      The  Company  may  change  its  status to  a public company by
                  resolution passed in accordance with the Corporations Act 2001
                  and  subject to  approval  of  a  Directors  Special  Majority
                  resolution.

6.       NAME

         6.1      The name of the Company is Pharmaxis Pty Ltd.

         6.2      The  Company  may  change its  name by  resolution  passed  in
                  accordance  with the  Corporations  Act 2001  and  subject  to
                  approval of a Directors Special Majority resolution.

7.       CONSTITUTION

         7.1      The  Company's  internal   management   is   governed   by   a
                  constitution.

         7.2      Despite  clause  7.1  and  as  between  the Shareholders, this
                  agreement  prevails  over the  Company's  constitution  to the
                  extent of any  inconsistency.  The Shareholders must cause the
                  Company  to be  operated  in a  manner  consistent  with  this
                  agreement  despite any contrary rights they may otherwise have
                  under the Company's constitution.

         7.3      Each  Shareholder  agrees that it will not seek to enforce any
                  rights it  may have  under the  Company's  constitution to the
                  extent inconsistent with this agreement.

8.       REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

         8.1      Unless the Board otherwise  determines,  the registered office
                  of the Company is Level 7, 60 Marcus Clarke Street,  Canberra,
                  ACT 2600.

         8.2      Unless  the  Board  otherwise determines, the  principal place
                  from which the  Company conducts its  business  is Level 7, 60
                  Marcus Clarke Street, Canberra, ACT 2600.

9.       COMMERCIAL OBJECTIVES

         9.1      The commercial objectives of the Company are to:

                  9.1.1    carry on the Business;

                  9.1.2    develop and  expand the  Business in  accordance with
                           the Business Plan;

                  9.1.3    maximise   the   value   of  the   Company  and  each
                           Shareholder's interest in the Company; and

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                  9.1.4    do  everything else  the Shareholders  consider  will
                           attain or further these purposes.

         9.2      It  is the  intention of  the Shareholders  that  the  Company
                  undertake an initial public  offering  within 12 months of the
                  date of this agreement. If this is not achieved,  Shareholders
                  intend  that  the  Company  should   continue  to  attempt  to
                  undertake  an  initial  public  offering  or  any  other  exit
                  including a trade sale, amalgamation or merger (EXIT) within 4
                  years  of the date of this  agreement  (EXIT  DATE).  All Exit
                  opportunities are to be considered on their merits. If an Exit
                  is not achieved by the Exit Date,  any ACP  Shareholder or BCP
                  Shareholder  holding more than 10% (or ACP Shareholders or BCP
                  Shareholders  collectively  holding  more than 10%) of Diluted
                  Capital  will be  entitled  to give a notice in writing to the
                  Shareholders  (with  a copy  to  the  Company)  requiring  all
                  Shareholders in good faith to:

                  9.2.1   endeavour to agree to a strategy to achieve an Exit as
                          soon  as reasonably practicable that will maximise the
                          value of the Company (EXIT NOTICE); and

                  9.2.2   secure  the  Board's approval of that strategy insofar
                          as the implementation  of the strategy requires action
                          by the Company and the  Company can lawfully implement
                          it under the Corporations Act 2001.

         9.3      If  Shareholders  agreement  and, to the extent required Board
                  approval,  does not occur  within 1 month of the date that the
                  Exit  Notice  was  issued,   the  Shareholders   may,  at  the
                  reasonable   expense  of  Company,   appoint  an   experienced
                  investment banker or stockbroker of good standing (ADVISER) to
                  recommend what the Adviser believes to be the most appropriate
                  Exit  strategy  and  timing  having  regard to all  applicable
                  circumstances  and the  objective  of  maximising  Shareholder
                  value.

         9.4      Each  shareholder  and,  so far as it is  lawfully  able to do
                  so, the Company must do all things  necessary to implement (as
                  applicable):

                  9.4.1    the  Exit strategy  approved by the  Board within the
                           timetable  set out in that approval under clause 9.2;
                           or

                  9.4.2    the  recommendations made by the Adviser under clause
                           9.3,

                  including, executing all necessary documents or agreements and
                  voting  in favour  of the  approved or recommended Exit at any
                  general meeting of the Company.

10.      SOLE COMMERCIAL VEHICLE

         10.1     The  Company  and its  subsidiaries  are to  be  the exclusive
                  vehicle  for  furthering  the  commercial  objectives  of  the
                  Company under clause 9.

         10.2     The Company and any subsidiaries of the Company are to own and
                  carry  on  the  business  for  which  they  were  respectively
                  incorporated   and  must  enter  into

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                  contracts   and  other obligations  in their  own name without
                  guarantees, security or other support from the Shareholders.

         10.3     The Company will carry on its business without any Shareholder
                  being  required to  give any guarantee, indemnity, mortgage or
                  other security in favour of financiers of the Company.

11.      DIRECTORS

         11.1     The Company is to have at least 5 Directors, comprising:

                  11.1.1   an independent Chairman;

                  11.1.2   the Chief Executive Officer;

                  11.1.3   one director appointed by Rothschild;

                  11.1.4   one director appointed by CM Capital; and

                  11.1.5   one  director appointed  by the founding Shareholder,
                           Praxis USA (as long as it is a Shareholder holding at
                           least 10% of Diluted Capital).

         11.2     The  Board may,  in  addition  to the  Directors  specified in
                  clause  11.1,  appoint one further  independent  director as a
                  Director  by  Directors  Special  Majority  resolution.   That
                  initial further  independent  director must first be approved,
                  such approval not to be unreasonably  withheld or delayed,  by
                  Mooroolbark.

         11.3     The initial Directors of the Company are to be:

                  11.3.1   Denis Hanley, as the independent Chairman;

                  11.3.2   Alan Robertson, as the Chief Executive Officer;

                  11.3.3   Brigitte Smith as the Rothschild nominee;

                  11.3.4   Carrie Judith Hillyard as the CM Capital nominee; and

                  11.3.5   Brett Charlton as Praxis US's nominee.

         11.4     Subject  to  clause  11.5,  a  Nominee  Director  may  only be
                  removed,  replaced,  or removed  and  replaced,  by his or her
                  appointor,  by notice given to the Company and the Board. Each
                  other  Director will be given the courtesy of approving  (such
                  approval not to be unreasonably withheld) a new or replacement
                  Nominee Director under this clause before their appointment is
                  made. The independent director appointed under clause 11.2 may
                  be replaced by Special Directors Resolution.

         11.5     A Director ceases to be a Director if:


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                  11.5.1   the  Director  is  a  Director  independent  of   any
                           Shareholders and the  Shareholders resolve  to remove
                           him or her;

                  11.5.2   the Corporations Act 2001 so provides;

                  11.5.3   the Director resigns by notice to the Company; or

                  11.5.4   the  Director  becomes  mentally  incapable  and  the
                           Director's  estate  or  property  has had  a personal
                           representative or trustee appointed to administer it.

         11.6     By prior notice in writing to the Company and to the Board,  a
                  Director  may appoint an  alternate  to act in the  Director's
                  place:

                  11.6.1   for a specific period or until a specified event; or

                  11.6.2   whenever  the  relevant appointing Director is unable
                           to attend to his  or her duties by reason of absence,
                           illness or otherwise.

                  Each other  Director  will be given the  courtesy of approving
                  (such approval not to be  unreasonably  withheld) an alternate
                  Director  under this clause before their  appointment is made.
                  An  alternative  Director  should be paid (if  applicable)  by
                  their appointee.

         11.7     Unless expressly prohibited from doing so by statute or law, a
                  Nominee Director may:

                  11.7.1   pay special  regard in  exercising  his or her powers
                           and  performing  his or her duties,  to the interests
                           of the Director's appointor; and

                  11.7.2   disclose  any  and  all  information  received by the
                           Director in his capacity as a Director of the Company
                           on  a 'needs to  know basis' to his or her appointing
                           Shareholder in connection with:

                           (a)   the  appointing  Shareholder's  involvement  in
                                 this agreement; or

                           (b)   mandatory  reporting  or disclosure obligations
                                 under statute or law to the extent the material
                                 to be  disclosed  cannot be kept 'commercial in
                                 confidence' or kept  confidential  on the basis
                                 of legal professional privilege.

         11.8     A Director need not be a member of the Company.

         11.9     Mooroolbark   is  entitled   for  so  long  as  it  is  a  BCP
                  Shareholder,  by notice given to the  Company,  to appoint one
                  person to attend  Board  meetings as an  observer  (at its own
                  cost).

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<PAGE>



12.      CHAIRMAN OF THE BOARD

         12.1     A person ceases to hold office as chairman if they cease to be
                  a Director of the Company for any reason.

         12.2     The chairman of the Board may be  removed, replaced or removed
                  and replaced by Directors Special Majority resolution.

         12.3     In the  event that the Chairman is absent from a meeting,  the
                  Chairman may  nominate another  director to act as chairman of
                  the meeting.

13.      BOARD MEETINGS

         13.1     The Directors may meet and  determine the place at which  they
                  meet  and the  manner  in which  meetings  are  coordinated as
                  they decide.

         13.2     Meetings may be held by any means of telecommunication.

         13.3     Unless  all  the  Directors  otherwise agree, there must be at
                  least 9 Board meetings in any calendar year.

         13.4     A Director  may at  any time, and  the Secretary  must at  the
                  request of a Director, call a Board meeting.

         13.5     Each Director must be given at least 7 days' written notice of
                  a  Board meeting and be provided with the agenda at that time.
                  This requirement may be waived for a particular meeting by all
                  Directors in office at the time.

         13.6     The  agenda  for  regular  Board  meetings  must  include  the
                  following  items which are to be sent to the  Directors  prior
                  to the meeting:

                  13.6.1  a  report  and  appropriate  commentary from the Chief
                          Executive Officer or other officer responsible for day
                          to day activities, operations  and  administration  of
                          the Company;

                  13.6.2  a financial report and appropriate commentary from the
                          financial  controller or  other officer of the Company
                          responsible for financial control  including a balance
                          sheet,  profit  and  loss  statement,  and  cash  flow
                          statement showing for the relevant month and Financial
                          Year:

                          (a)    actual  against  budget with an  explanation of
                                 variances; and

                          (b)    forecast  actual against  budget for  remaining
                                 months  with   an   explanation   of   forecast
                                 variances;

                          (c)    draft minutes  of Board meetings since the last
                                 regular Board meeting in accordance with clause
                                 13.12; and
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                                                                              11

<PAGE>


                          (d)    minutes  of any  Board committee  meetings held
                                 since the last regular Board meeting.

         13.7     The  Board may  require additional reports to be on the agenda
                  and be included in the accompanying Board papers.

         13.8     A  quorum for a Board meeting is 4 Directors, and must include
                  at least  one  Rothschild's Nominee Director , at least one CM
                  Capital Nominee Director , and at least one Praxis US Director
                  (as  long  as it  is a  Shareholder  holding  at least  10% of
                  Diluted Capital either in its own right or  together with  the
                  interests of any other BCP  Shareholders  whose proxy they may
                  hold).

         13.9     Each  Director (or  his or  her  alternate) has  one vote at a
                  Board meeting.

         13.10    Unless  this agreement  requires  otherwise, a decision of the
                  Board is made by a majority of the votes cast by the Directors
                  present  at the  meeting  (or  their  alternate  Directors  if
                  applicable).  If there is an equality of votes,  the  Chairman
                  does  not  have  a  casting  vote  in  addition  to his or her
                  deliberative vote.

         13.11    The  Secretary  must  be  present  at  and  take  minutes   of
                  proceedings at each Board meeting including:

                  13.11.1  all motions;

                  13.11.2  the result of each vote; and

                  13.11.3  any other formal action of the Board.

         13.12    The  Secretary  must send a copy of the draft  minutes to each
                  Director  no later  than 7 days  before the next Board meeting
                  for approval at that meeting.

         13.13    Once  approved by the  Board,  the minutes must be signed as a
                  correct record of proceedings by the chairman of the meeting.

         13.14    A  written  resolution signed  by each Director (or his or her
                  alternate)  has the same  effect as if it had been passed at a
                  Board  meeting  properly  called and held at the time when the
                  resolution  was  last  signed  by  a  Director  (or  alternate
                  Director).  The resolution may consist of several documents in
                  the  same  form,  each  signed  by one or more  Directors  (or
                  alternate Directors).

         13.15    Independent Directors may be paid reasonable Directors' fees.

         13.16    The  initial Directors' fees payable in aggregate under clause
                  13.15 will be:

                  13.16.1  $50,000  p.a, to be paid to the independent chairman;
                           and

                  13.16.2  $25,000 p.a. for each other independent Director.


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                                                                              12


<PAGE>


         13.17    The amount  of  Directors'  fees  payable  under  clause 13.16
                  may  be  increased  from  time to  time by a Directors Special
                  Majority resolution.

         13.18    Nominee  Directors and Executive Directors are not entitled to
                  any Directors' fees.  The appointing Shareholders must pay any
                  costs associated with  its  respective Nominee Director acting
                  as a Director, apart from those costs set out in clause 13.19.

         13.19    The  Company  must  reimburse all Directors (including Nominee
                  Directors)   for  their  reasonable  receipted   expenses   in
                  attending  Board meetings  and  general meetings that are held
                  outside their city of residence.

         13.20    The  Company  must  offer  each  person  who  consents to be a
                  Director, a deed  of access  to  documents,  and  indemnity in
                  substantially the same form as the deed of access to documents
                  and indemnity  granted to  the other  Directors at the date of
                  this  agreement or other  similar form  approved by  the Board
                  from  time  to  time  having  regard   to   applicable   legal
                  constraints.

14.      CHIEF EXECUTIVE OFFICER

         14.1     Subject  to  prior  approval  by  Directors  Special  Majority
                  resolution,  the Board may  appoint,  and remove and  replace,
                  from time to time a person to be the Chief  Executive  Officer
                  of  the  Company  and  any  subsidiaries  on  such  terms  and
                  conditions  as the Board  may by  Directors  Special  Majority
                  resolution approve.

         14.2     The Chief Executive Officer will be responsible for:

                  14.2.1   the day to day conduct of the business and affairs of
                           the Company;

                  14.2.2   any  matters for which the Chief Executive Officer is
                           responsible under this agreement; and

                  14.2.3   any  other  matters  the Board decides  should be the
                           responsibility of the Chief Executive Officer.

15.      FINANCIAL CONTROLLER AND SECRETARY

         15.1     Subject  to  prior  approval  by a  Directors Special Majority
                  resolution,  the Chief  Executive  Officer  may  appoint,  and
                  remove  and  replace,  one or  more  persons  to be the  chief
                  financial  officer  or  controller  of  the  Company  and  its
                  subsidiaries  on  such  terms  and  conditions  as  the  Chief
                  Executive Officer may recommend and the Board may approve.

         15.2     The  Financial Controller is also the Company Secretary and is
                  responsible  for general bookkeeping, accounting and financial
                  control with respect to the Company and its subsidiaries.

         15.3     The  Secretary is  responsible for  all clerical  and  company
                  secretarial duties.

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                                                                              13

<PAGE>



         15.4     The Financial  Controller is also to be the  public officer of
                  the Company for the purpose of taxation legislation.

16.      AUDITORS

         16.1     The  Company  must  appoint  a  registered   company   auditor
                  independent of  the Shareholders to  be  the  auditor  of  the
                  Company on terms that include the following:

                  16.1.1   the  auditor  will  deliver  copies  of  the  audited
                           financial statements  and  accompanying audit  report
                           for  each  Financial  Year to each  Shareholder on or
                           about the time they are delivered to the Company; and

                  16.1.2   the auditor will  be available  for discussions  with
                           the Shareholders in relation to the audited financial
                           statements  and  accompanying  audit report  for each
                           Financial  Year or any  matters  arising  during  the
                           course  of the  audit (whether or not raised with the
                           Board).

         16.2     The Company may remove and replace the appointed  auditor with
                  the approval of a Directors Special Majority resolution.

         16.3     For  the purpose of this clause 16, the initial auditor of the
                  Company is Duesburys.

17.      ACCOUNTING AND INFORMATION

         17.1     The Company's financial year ends on 30 June in each year.

         17.2     Unless  the  Shareholders  otherwise  agree,  the   management
                  accounts  and  financial  statements  of the  Company  must be
                  prepared in  accordance  with  Australian  generally  accepted
                  accounting principles and practices consistently applied.

         17.3     The Company must provide Shareholders with the following:

                  17.3.1   the  audited  financial  statements  of  the  Company
                           within  two  months  after the end of  each Financial
                           Year;

                  17.3.2   unaudited and unreviewed monthly management  accounts
                           of the Company,  within 21 days after the end of each
                           month; and

                  17.3.3   a  draft annual business plan and related budgets for
                           each  Financial  Year  for  approval,  prior  to  the
                           commencement of that Financial Year.

         17.4     The  Company must  also provide  to each Shareholder copies of
                  all quarterly technical and  key  financial indicator  reports
                  prepared by management, within  14 days after  the end of  the
                  quarter to which they relate.

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                                                                              14


<PAGE>


18.      CONDUCT OF BUSINESS

         18.1     The  Business  is to be conducted in accordance with an annual
                  business  plan adopted by the Board prior to the  commencement
                  of each  Financial  Year  with  the  approval  of a  Directors
                  Special Majority resolution.

         18.2     The  Business Plan for the  period to 30 June 2002 is to be as
                  set out in Annexure B.

         18.3     Subject to clause 19, the Board is responsible for:

                  18.3.1   the  overall  implementation  and  monitoring  of the
                           Business  Plan as well as the business and affairs of
                           the Company generally; and

                  18.3.2   generally   setting   the  strategic  direction   and
                           policies of the Company.

         18.4     The  Company  will  procure  from  time  to time  that all key
                  executives enter into an appropriate employment agreement, and
                  option agreement (if applicable), acceptable to the Board.

         18.5     The  Company  must  maintain  with  a  well  established   and
                  reputable insurer:

                  18.5.1   directors and officers liability insurance; and

                  18.5.2   adequate insurance coverage in relation to its assets
                           and  business  against all  risks and for amounts for
                           which  a  prudent  company  carrying  on the  same or
                           similar business would insure,

                  on terms acceptable to the Board.

19.      CRITICAL BUSINESS MATTERS AND CRITICAL SHAREHOLDER MATTERS

         19.1     Despite any  other provision  of this agreement, a decision by
                  the Board or the Company  in relation to the critical business
                  matters set  out in Annexure C must be approved by a Directors
                  Special Majority resolution.

         19.2     If a  matter requiring a Directors Special Majority resolution
                  under  clause  19.1 or  any other provision of this agreement,
                  also requires approval of  Shareholders under the Corporations
                  Act 2001, the  Director's Special  Majority  requirement is in
                  addition to the required majority under that Act.

         19.3     Despite  any  other  provision  of  this  agreement (excluding
                  clause  21.7 and  25.4), the  Board  must  refer  the critical
                  shareholder matters set out in Annexure D to  the Shareholders
                  of the Company.

         19.4     Subject to  clause 9,  in  addition  to  any  requirement  for
                  shareholder  approval  under  the  Corporations  Act 2001, the
                  critical shareholder matters set out in Annexure D

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                                                                              15


<PAGE>



                  must be approved by  ACP and BCP Shareholders holding at least
                  80% of the votes that may be cast by ACP and BCP Shareholders.

20.      GENERAL MEETINGS

         20.1     A  quorum  for a  general  meeting is 1 representative of each
                  Shareholder  that holds at least 10% of Diluted Capital either
                  in its own right  or together  with the interests of any other
                  Shareholders whose proxy they may hold.

         20.2     Each  Shareholder  has  one  vote  for  every  Share it holds,
                  whether they be ordinary shares, ACP Shares or BCP Shares.

         20.3     The  chairman  of  the  Board  is  the  chairman of a  general
                  meeting.

         20.4     The  chairman of  a  general meeting  does not  have a casting
                  vote.

         20.5     Unless  this  agreement or  the Corporations Act 2001 requires
                  otherwise,  resolutions considered  at a  meeting are ordinary
                  resolutions determined by simple majority of votes.

         20.6     If  there  is  an  equality  of votes  on  a  resolution,  the
                  resolution is not passed.

         20.7     A  proxy,  attorney or  other representative of  a member at a
                  general meeting need not be a member of the Company.

         20.8     In  accordance with the  Corporations  Act 2001,  the  Company
                  must  give at  least 21  days  notice of  any general  meeting
                  unless otherwise unanimously agreed by Shareholders.

21.      CAPITAL STRUCTURE

         21.1     The  initial share capital  of the Company is to be as set out
                  in part 1 of Annexure A.

         21.2     Subject  to  clauses 21.3, 21.6 and 21.7, the Company must not
                  issue  additional  shares,  or  grant a  right  or  option  to
                  subscribe for additional shares unless approved by ACP and BCP
                  Shareholders  holding  at least 80% of the  votes  that may be
                  cast by ACP and BCP Shareholders.

         21.3     If  the  Company  with  the  approval  of a  Directors Special
                  Majority  resolution,  wishes at any time to issue  additional
                  ordinary shares or securities convertible into ordinary shares
                  (SECURITIES)  (other than under the Employee Share Option Plan
                  or as  consideration  for  an  acquisition  of a  business  or
                  business  entity),  the  Company  must  first  offer  to  each
                  shareholder  a  percentage  of those  securities  equal to the
                  ordinary  shares,  ACP  Shares  or  BCP  Shares  held  by  the
                  Shareholder as a percentage of Diluted Capital. In the case of
                  CM  Capital  the  offer can be  accepted  by CM  Capital  or a
                  nominee of CM Capital.
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                                                                              16


<PAGE>


         21.4     If  any  securities  remain  after  applying  clause 21.3, the
                  Company may offer the remaining  securities  to such person(s)
                  as the Board think  fit subject to the subscribers agreeing to
                  be bound by  this agreement by an instrument acceptable to the
                  Board.

         21.5     The  parties  will  negotiate  in  good  faith changes to this
                  agreement to accommodate  an  issue of  any  securities  under
                  clauses 21.3 and 21.4.

         21.6     The  Company may from time to time issue options over Ordinary
                  Shares  under the  Employee  Share  Option Plan adopted by the
                  Board (as  amended  by the Board  from time to time),  without
                  complying with clauses 21.2 to 21.5.

         21.7     Despite  any other provision in this agreement, if agreed as a
                  Directors Special Majority  resolution,  the Company may issue
                  securities to such persons as the Board thinks fit, subject to
                  the  subscriber  agreeing to be bound by this  agreement by an
                  instrument acceptable to the Board, if the issue of securities
                  is required to  undertake  an initial  public  offering  which
                  would  allow  conversion  of ACP and BCP  Shares  pursuant  to
                  clause 25.2.

         21.8     The  number  of ordinary  shares  over which options have been
                  issued as at the date of this agreement,  is set out in Part 2
                  of  Annexure  A. In  addition,  approval  to  issue a  further
                  212,000  options to  acquire  ordinary  shares of the  Company
                  under the terms of the  Company's  Employee  Share Option Plan
                  has been granted by the  Shareholders.  Those unissued options
                  may be  issued  at any  times  determined  by the Board and in
                  accordance with the Employee Share Option Plan.

22.      PRE-EMPTIVE RIGHTS

         22.1     Unless  otherwise  agreed  by  Special  Majority resolution of
                  Shareholders, a Shareholder  may only  transfer  the legal  or
                  beneficial interest in its shares in the Company in accordance
                  with this clause.

         22.2     If  a  Shareholder  wishes to  transfer its shares at any time
                  (OFFEROR),  it  must  first  give  to all  other  Shareholders
                  (OFFEREES) a notice (PRE-EMPTION  NOTICE),  specifying that it
                  wishes to sell some or all of its shares in the Company at the
                  price per share nominated by the offeror (OFFER PRICE).

         22.3     A pre-emption notice must include:

                  22.3.1   a copy of any available valuation (where one has been
                           prepared)  of  the  shares  obtained  by  the offeror
                           in the preceding 12 months; and

                  22.3.2   details  of  any  third  party  offer,   proposal  or
                           invitation  the offeror has received in the preceding
                           12 months:

                           (a)   that  another party is interested in or willing
                                 to acquire the shares;

                           (b)   that indicates a willingness to:


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                                                                              17


<PAGE>



                                 (i)    acquire  in  a trade sale the Company or
                                        its Business;

                                 (ii)   cause  the  Company  to  be  merged   or
                                        otherwise acquired; or

                                 (iii)  cause   the  Company  to  be  floated or
                                        otherwise   the   subject   of  a public
                                        offering; or

                           (c)   that   states  or  implies  a  value  for   the
                                 Company's shares.

         22.4     Within 14 days after the giving of the pre-emption notice, the
                  offerees  may notify the  offeror  whether or not they wish to
                  buy the  offeror's  shares in the  Company  the subject of the
                  pre-emption notice at the offer price and the number of shares
                  they are willing to acquire.

         22.5     If  any  of the offerees fail to give any notice of acceptance
                  or  rejection  within the 14 days  permitted  by clause  22.4,
                  those offerees are deemed to have rejected the offeror's offer
                  on the  14th  day of the  period  allowed  for  acceptance  or
                  rejection.

         22.6     If  any  offerees accept the offerors' offer, the offeror must
                  sell the offerors'  shares to the accepting  offerees who wish
                  to buy them. If two or more offerees are willing to buy shares
                  and there are not  enough  shares  available  to  satisfy  all
                  acceptances,  then  each of the  accepting  offerees  is to be
                  allocated  (in the first  instance) a number of the  offeror's
                  shares that is the lesser of:

                  22.6.1   the  maximum  number  of shares each of  the offerees
                           indicated they are willing to accept; and

                  22.6.2   the  same  proportion  that  each accepting offeree's
                           existing shareholding in Diluted Capital bears to the
                           total   of   all   accepting    offerees'    existing
                           shareholdings in the Diluted Capital (as the case may
                           be).

         22.7     Clause  22.6 is  to  be  reapplied  until  either there are no
                  further  shares   to  allocate  or   all  accepting   offerees
                  acceptances are filled.

         22.8     Subject  to clause  23, to the extent the offeror's shares are
                  not sold under the above procedures, the offeror may then sell
                  the remaining Shares referred to in the pre-emption notice:

                  22.8.1   within  6 months after  the end of the procedure (and
                           if not  sold within that  time, the  shares cannot be
                           transferred without recomplying with this clause 22);
                           and

                  22.8.2   at  a price no  more favourable to the buyer than the
                           offer  price and provided the transferee agrees to be
                           bound by this  agreement by an instrument in form and
                           substance acceptable to the Board.

         22.9     A sale  and transfer  of shares  between the  Shareholders  to
                  which this clause applies occur on the following terms:


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                                                                              18


<PAGE>

                  22.9.1   the  legal  and beneficial  interest in the shares is
                           sold free of encumbrances;

                  22.9.2   closing  takes place at the registered  office of the
                           Company 30  days  after the sale  contract is made or
                           deemed made;

                  22.9.3   title   to   the   shares   passes from  the  selling
                           Shareholder to the buying Shareholder at closing; and

                  22.9.4   the  purchase  price  is  payable at  closing by  the
                           buying Shareholder to the selling Shareholder by bank
                           cheque or other in immediately available funds.

         22.10    On  receipt of all moneys due in  accordance  with clause 22.9
                  the  selling  Shareholder   must   deliver   to   the   buying
                  Shareholder:

                  22.10.1  the  share  certificates  for  the  shares sold and a
                           transfer  in  common  form  executed  by  the selling
                           Shareholder in  favour of the buying Shareholder with
                           an irrevocable proxy or power of attorney to vote the
                           shares at  any general  meeting  with the name of the
                           proxy or attorney blank; and

                  22.10.2  if the selling Shareholder no longer holds any shares
                           in the Company or is no longer entitled to nominate a
                           Director,  the  resignation of any Director that is a
                           nominee of the selling Shareholder.

         22.11    Despite  the  preceding  provisions  of  this  clause  22,   a
                  Shareholder  may  transfer  all of its shares to the  ultimate
                  beneficial  owner of the  shares  without  complying  with the
                  pre-emptive rights provisions in this clause 22, provided that
                  the transfer is the  transfer of the entire legal  interest in
                  the  shares  free  from all  encumbrances  and the  transferee
                  agrees to be bound by this  agreement by an instrument in form
                  and substance acceptable to the Board.

         22.12    Despite  the  preceding  provisions  of  this  clause  22,   a
                  Shareholder  may transfer  all of its shares to an  Associated
                  Entity   without   complying  with  the   pre-emptive   rights
                  provisions  in this clause 22,  provided  that the  Associated
                  Entity:

                  22.12.1  agrees  in  writing to  be bound by the terms of this
                           agreement  by  an  instrument  in  form and substance
                           satisfactory to the Board; and

                  22.12.2  in  the  case  of  corporate transferring shareholder
                           continues  at all times to be an Associated Entity of
                           the   transferring   Shareholder   so   that  if  the
                           Associated Entity ceases to be  an Associated  Entity
                           of the  transferring  Shareholder,  then  it will  be
                           deemed  to  have  given a  pre-emption  notice  under
                           clause 22.3 for  sale  of  its shares at fair  market
                           value which will then be deemed to be the offer price
                           for the purpose of clause 22.3.

         22.13    Despite the preceding provisions of this clause 22.2-22.10, CM
                  Capital  and  AVCF may each transfer all or some of its shares
                  to the other, or a nominee, without

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                                                                              19


<PAGE>



                  complying  with  the  pre-emptive  rights  provisions  in this
                  clause 22, provided that the transferee  continues to be bound
                  by this agreement.

         22.14    Despite  the  preceding provisions of this clause 22, AVCF may
                  transfer  some  or all  of  its  shares  to a  partner  in the
                  Australia Venture Capital Fund L.P. without complying with the
                  pre-emptive  rights provisions in clause 22, provided that the
                  transfer is the transfer of the entire  legal  interest in the
                  shares free from all encumbrances and the transferee agrees to
                  be  bound  by  this  agreement  by  an  instrument  in a  form
                  acceptable to the Board.

         22.15    For  so long as AVCF holds shares in the Company, no change in
                  the  partners  of AVCF shall be  regarded  as a transfer of an
                  interest in shares in the Company and the  pre-emptive  rights
                  provision  in this clause 22 shall not apply in the event of a
                  change in the partner of AVCF.

         22.16    If  a  Shareholder  who  is  not  an  ACP Shareholder or a BCP
                  Shareholder  acquires ACP Shares or BCP Shares  (other than an
                  Associated  Entity of an ACP  Shareholder  or BCP  Shareholder
                  respectively)  under this clause 22, that  Shareholder must on
                  acquisition of those shares  immediately elect to convert them
                  to ordinary shares.

         22.17    The Founders agree with the other  Shareholders, in respect of
                  their  shareholding  in Praxis  US at any time, that they will
                  not:

                  22.17.1 directly  or  indirectly  dispose  of  the  legal   or
                          beneficial title to those stock or other securities in
                          Praxis US  (whether by  way of  transfer,  assignment,
                          encumbrance,  declaration   of  trust   or   otherwise
                          whatever) without the unanimous consent of the Nominee
                          Directors for  the time  being of the ACP Shareholders
                          and  BCP  Shareholders, which  consent may be given or
                          withheld in  the absolute  discretion of those Nominee
                          Directors; or

                  22.17.2 initiate,  approve  of,  consent  to  or  acquiesce in
                          (whether in  their  capacity as  security  holders  in
                          Praxis  US,  as  officers of Praxis US or in any other
                          capacity whatever) any transaction:

                          (a)    with or involving Praxis US;

                          (b)    involving   their   stock  or  other   security
                                 holdings at any time in Praxis US;

                          (c)    involving  any  other  instruments  convertible
                                 into  securities of  any  kind (issued or to be
                                 issued) in Praxis US; or

                          (d)    otherwise  involving  the  assets,  business or
                                 undertaking  of  Praxis  US  including  without
                                 limitation, Praxis US shares in the Company,

                           with the intent, that has the purpose or that has the
                           effect (whether or not intended or with purpose),  of
                           circumventing the  pre-emptive rights

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                                                                              20

<PAGE>


                           provisions  of this  agreement  with a view to giving
                           third parties control  or influence over the  Company
                           contrary to the  intent  of  the  pre-emptive  rights
                           provisions of this agreement.

         22.18    In  order  to  ensure part  compliance with  clause 22.14, the
                  Founders agree to either:

                  22.18.1  irrevocably  deliver  the  original certificates  for
                           their  stock and other securities in Praxis US to the
                           Company for  the  purpose  of  holding  them  in safe
                           custody to ensure compliance with clause 22.14; or

                  22.18.2  provide  evidence to  the Board, in a form acceptable
                           to the Board, that the original stock, other security
                           certificates   or   other   applicable   arrangements
                           relating  to  securities  convertible  into Praxis US
                           stock or other Praxis US securities, have appropriate
                           legends  setting  or  referring to  the  restrictions
                           contained in clause 22.14 of this agreement.

23.      TAG-ALONG RIGHTS

         23.1     If  a  Shareholder  (SELLING SHAREHOLDER)  is  entitled to and
                  wishes to sell  shares  to a third  party as  permitted  under
                  clause  22.8  (THIRD  PARTY),  it must  before  that sale give
                  notice to each other Shareholder  (TAG-ALONG  OFFEREES) of its
                  intention  to sell  (TAG-ALONG  NOTICE) and the price at which
                  they are to be sold to the third party.

         23.2     Within 14 days of receipt of a tag-along notice, the tag-along
                  offerees may notify the selling  shareholder that they wish to
                  sell a percentage of their shares that is the same  percentage
                  as the shares to be sold by the selling  shareholder  bears to
                  the total number of shares held by the selling  shareholder at
                  the same price as the selling  shareholder intends to sell its
                  shares.

         23.3     If  any tag-along offerees give the selling shareholder notice
                  under clause 23.2,  the selling  shareholder  may not sell its
                  shares to the third party  unless it  procures  that the third
                  party also  acquires the relevant  percentage of the shares of
                  the  notifying  tag-along  offerees  at the same  price as the
                  third party is to buy the selling shareholder's Shares.

24.      DRAG-ALONG RIGHTS

         24.1     If a bona fide third party (THIRD PARTY) offer (OFFER) is made
                  for all of the Ordinary  Shares,  ACP Shares and BCP Shares on
                  issue (ie for the  Company  as a whole),  the party  receiving
                  that  offer  must  communicate  the offer and its terms to all
                  Shareholders.

         24.2     Subject  to  clauses  24.4 and 24.5, if Shareholders holding a
                  total  number of  Ordinary  Shares,  ACP  Shares or BCP Shares
                  representing  more than 50% of Diluted  Capital wish to accept
                  the offer by the third  party  (ACCEPTING  SHAREHOLDERS),  the
                  accepting  shareholders  may notify  (DRAG-ALONG  NOTICE)  the
                  remaining Shareholders (DISSENTING SHAREHOLDERS) accordingly.

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                                                                              21


<PAGE>




         24.3     Subject  to  clauses 24.4 and 24.5, on receipt of a drag-along
                  notice, the dissenting shareholders become conditionally bound
                  to accept  the offer of the third  party in  respect  of their
                  Ordinary Shares, ACP Shares or BCP Shares (as the case may be)
                  on the same terms as the accepting shareholders.

         24.4     Within  14  days  of  receipt  of  a  drag-along  notice,  the
                  dissenting   shareholders  may  by  notice  to  the  accepting
                  shareholders require the accepting  shareholders to sell their
                  Ordinary Shares, ACP Shares or BCP Shares (as the case may be)
                  to an alternative buyer that is ready, willing and able to buy
                  those shares on the same terms as the third party was prepared
                  to buy them under the offer (ALTERNATIVE BUYER).

         24.5     If notice is given under clause 24.4:

                  24.5.1   the right of the accepting shareholders to accept the
                           offer by the third party ends;

                  24.5.2   the  obligation  of  the  dissenting  shareholders to
                           accept the offer by the third party is rescinded;

                  24.5.3   the  accepting shareholders are obliged to sell their
                           ordinary  shares,  ACP  Shares or  BCP Shares (as the
                           case  may  be)  to the  alternative buyer on the same
                           terms as were applicable under the offer;

                  24.5.4   the  dissenting  shareholders  must  procure that the
                           alternative buyer:

                           (a)  buys   the   accepting   shareholders'  ordinary
                                shares,  ACP Shares  or BCP  Shares (as the case
                                may  be)  within  14  days  of  the  giving   of
                                notice under clause  24.4 on  the same terms  as
                                were  applicable  under  the  offer by the third
                                party; and

                           (b)  agrees  to  be  bound  by  this  agreement by an
                                instrument  in form and  substance acceptable to
                                the Board.

         24.6     If no notice is given under clause 24.4:

                  24.6.1   the  accepting shareholders may accept the offer made
                           by the third party within 14 days after the expiry of
                           the period for giving notice under clause 24.4;

                  24.6.2   the  dissenting shareholders are deemed to accept the
                           offer  made  by  the  third  party  as  soon  as  the
                           acceptance  by  all  accepting  shareholders is  made
                           under clause 24.6.1.

         24.7     On a  Shareholder  becoming bound to transfer ordinary shares,
                  ACP  Shares or BCP  Shares  (as the case may be) under  clause
                  24.5 or 24.6,  the  Shareholder  must  transfer  the  relevant
                  shares  accordingly,  subject to and conditional on payment of
                  the transfer consideration in accordance with the terms of the
                  relevant offer.


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                                                                              22


<PAGE>

25.      CONVERSION OF ACP AND BCP SHARES

         25.1     The  ACP  Shareholders  and  the BCP  Shareholders may convert
                  their  ACP  Shares  or BCP  Shares  (as  the  case  may be) to
                  Ordinary  Shares  at any  time,  as set  out in the  Company's
                  constitution.

         25.2     The  Company may compulsorily require the ACP Shareholders and
                  the BCP  Shareholders  to  convert  their ACP  Shares  and BCP
                  Shares  (respectively)  to  Ordinary  Shares  if  the  Company
                  undertakes an initial public offering of Ordinary Shares which
                  raises at least $10  million at a minimum  price per  publicly
                  offered share that equals or exceeds the aggregate of:

                  25.2.1  $2.50; plus

                  25.2.2  such amount that ensures a 25% internal rate of return
                          on  $2.50  for  a period  equal to the period from the
                          date of  this  agreement  to  the  date of the initial
                          public offering,

                  adjusted  as  necessary  for capital reconstructions since the
                  date of this agreement.

         25.3     The  conversion  ratio for the  purpose of this clause 25 is 1
                  ACP Share  or 1 BCP  Share (as the case may be) for 1 Ordinary
                  Share, subject to adjustment of that ratio for:

                  25.3.1   capital reconstructions; and

                  25.3.2   issue  of any Shares at an issue  price less than the
                           issue  price  of the ACP Shares or BCP Shares (as the
                           case may be),

                  in  accordance  with  the adjustment mechanisms or formula set
                  out in the Company's constitution.

         25.4     Despite  any  other provision of this agreement, the Board may
                  by  Directors Special  Majority decide to undertake an initial
                  public offering of the Company which would allow conversion of
                  ACP and BCP Shares pursuant to clause 25.2.

26.      REDEMPTION OF ACP AND BCP SHARES

         26.1     Both  the ACP Shareholders and the BCP Shareholders may redeem
                  their ACP Shares and BCP Shares (respectively):

                  26.1.1  after the 6th anniversary of the issue date of the ACP
                          Shares, if  the Company has not listed on a securities
                          exchange in Australia or elsewhere;

                  26.1.2  on the occurrence of a Liquidity Event; or

                  26.1.3  on a voluntary merger or amalgamation of the Company.

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                                                                              23

<PAGE>


         26.2     If  the  ACP  Shares  or  BCP  Shares  are  redeemed,  the ACP
                  Shareholders and BCP Shareholders (as the case may be) will be
                  entitled to receive the following  amount  for each ACP  Share
                  and BCP Share  they hold  (REDEMPTION Amount) in the following
                  order of priority:

                  26.2.1  the original issue price paid for the BCP Shares; and

                  26.2.2  any  accrued  cumulative  dividend not paid on the BCP
                          Shares under clause 27:

                  26.2.3  the original issue price paid for the ACP Shares; and

                  26.2.4  any  accrued  cumulative  dividend not paid on the ACP
                          Shares under clause 27,

                  adjusted as necessary for capital reconstructions; and

                  26.2.5  a pro rata proportion of surplus assets and profits of
                          the  Company  (as determined by an independent valuer)
                          calculated as  if  the  ACP Shares  and BCP Shares had
                          been converted into ordinary shares in accordance with
                          clause 25 at that time.

         26.3     Amounts  payable on a redemption of BCP Shares must be paid in
                  priority  to  any  payments  or  dividends to ACP Shareholders
                  (other  than amounts  pursuant to  clause 26.2.5) and Ordinary
                  Shareholders.  As  between  the  BCP  Shareholders,  the   BCP
                  Shareholders will participate pro rata among themselves.

         26.4     Amounts  payable on a redemption of ACP Shares must be paid in
                  priority to any payments or dividends to Ordinary Shareholders
                  but after  payment  of all amounts due to the BCP Shareholders
                  (other than amounts pursuant to clause 26.2.5). As between the
                  ACP Shareholders, those Shareholders will participate pro rata
                  among themselves.

         26.5     If  and to the extent the Company is unable to pay all or part
                  of the  Redemption Amount on the date ACP Shares or BCP Shares
                  are properly  redeemed,  then  the Redemption Amount will be a
                  debt due to each affected ACP or  BCP  Shareholder on terms to
                  be agreed by each such ACP or BCP  Shareholder and the Company
                  and failing agreement,  payable  in priority from surplus cash
                  flows of the Company  as and when such surpluses arise and, on
                  a liquidation of the Company, payable from a provable debt due
                  by the Company.

27.      ACP AND BCP SHARE DIVIDENDS

         27.1     Subject to clauses 27.4 and 27.5,  the  holders of ACP  Shares
                  and BCP shares are  entitled  to a 10% cumulative preferential
                  dividend  per  annum (based upon the issue price of that share
                  respectively).

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                                                                              24


<PAGE>


         27.2     The  dividend  is  payable  in  priority to  any  dividends to
                  Ordinary Shareholders. The BCP Shareholders rank first and the
                  ACP Shareholders rank second in the order  of priority for the
                  payment of dividends.

         27.3     The dividend will not be payable on any ACP Share or BCP Share
                  if:

                  27.3.1  an  ACP  Shareholder  or  BCP Shareholder  voluntarily
                          converts  such  ACP  Share or BCP Share to an Ordinary
                          Share;

                  27.3.2  the  Company compulsorily requires the ACP Shareholder
                          or BCP  Shareholder  to  convert such ACP Share or BCP
                          Share to an Ordinary Share under clause 25.2.

         27.4     The  dividend  is  only  payable  (unless  the  Board  decides
                  otherwise by Directors Special Majority resolution) if:

                  27.4.1  a Liquidity Event occurs; or

                  27.4.2  there  is  a  voluntary  merger or amalgamation of the
                          Company.

                  The dividend will be payable on the date on which any of those
                  events occurs.

         27.5     The  ACP  Shareholders  waive any  right to require payment of
                  accumulated  dividends  to  which  they  might  otherwise   be
                  entitled  under  the  Company's  constitution  to  the  extent
                  inconsistent with clause 27.

28.      FREEDOM TO ACT

         Except  as expressly set out in this agreement, this agreement does not
         restrict  the  freedom  of  an  ACP  Shareholder or  BCP Shareholder to
         conduct any business or activity  in any  place  or in  any other field
         without accounting to the other Shareholders or to the Company.

29.      RELEASE AND INDEMNITY

         Praxis  US  warrants  that  it  makes no  claims now in connection with
         Licence and  Research &  Development  Agreements  entered into  between
         Pharmaxis and the Australian National University.

30.      DISPUTE RESOLUTION

         30.1     If  a  dispute  or  deadlock  between  Shareholders  cannot be
                  resolved within 30 days of the dispute arising,  the matter is
                  to be submitted to mediation  administered  by the  Australian
                  Commercial Disputes Center Limited (ACDC). The conciliation is
                  to be conducted and held in accordance  with the  conciliation
                  rules of ACDC in force at the time. Any  conciliation  meeting
                  will be held in the  Australian  Capital  Territory  and  each
                  party is to bear its own costs in  relation  to the holding of
                  the hearing.

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                                                                              25


<PAGE>


         30.2     If dispute or deadlock has not been resolved under clause 30.1
                  within  30  days of the matter being first heard for mediation
                  by ACDC,  the  Shareholders  are  free to exercise their legal
                  rights (if any).

31.      CONFIDENTIAL INFORMATION AND PUBLICITY

         31.1     A Shareholder must:

                  31.1.1   keep confidential all information about:

                           (a)   this agreement and its subject matter; and

                           (b)   the Company's Business and affairs,

                           except to  the extent it comes into the public domain
                           (other  than by way of breach of a duty or obligation
                           of confidentiality by any person);

                  31.1.2   not  disclose  that  information  or  make any public
                           statements  about  this  agreement  or  its   subject
                           matter to third parties unless:

                           (a)   the third party is an officer, employee,  agent
                                 or   contractor   of,   or   adviser   to,  the
                                 Shareholder 'with a  need to  know' and who  is
                                 bound  to,  or  agrees  to,  likewise  keep the
                                 information confidential;

                           (b)   the third party is a related body corporate  of
                                 the Shareholder or a shareholder or beneficiary
                                 of  the  Shareholder  where  that  related body
                                 corporate   or   shareholder   or   beneficiary
                                 likewise  agrees   to  keep   the   information
                                 confidential;

                           (c)   the Board consents in writing;

                           (d)   required  for  the purposes of or in connection
                                 with  any  actual  pending or  threatened legal
                                 proceedings or  any advice  in  connection with
                                 any possible  legal  proceedings  involving the
                                 Shareholder  or  any of its officers, employees
                                 or agents;

                           (e)   required by the mandatory provisions of:

                                 (i)      the  listing  rules of  any securities
                                          exchange;

                                 (ii)     statute or law; or

                                 (iii)    a  regulatory  body  having  authority
                                          over it,

                                 and  to  the  extent  there  is  no  applicable
                                 `commercial   in   confidence'  (or  equivalent
                                 exception) applicable; or

                           (f)   permitted by clause 11.6.

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                                                                              26


<PAGE>



         31.2     A  Shareholder's obligations  under this clause 31 survive the
                  Shareholder ceasing to be a Shareholder of the Company.

32.      ACCESS

         Subject  to  clause  31, each Director and each Shareholder through its
         officers, employees and agents:

         32.1     may  have  free  access to  the  property,  employees, agents,
                  consultants and facilities of the Company; and

         32.2     may at  their own  expense  inspect,  copy and audit the books
                  and  records  of the Company at any time during usual business
                  hours.

33.      NATURE OF RELATIONS

         33.1     The  Shareholders  are  not  in  a fiduciary  relationship  in
                  relation to the other.

         33.2     A Shareholder:

                  33.2.1   is  not liable  for the acts or defaults of any other
                           Shareholder; and

                  33.2.2   may  act  on its  own behalf but not on behalf of any
                           other Shareholder.

34.      AGREEMENT PREVAILS

         This  agreement  supersedes and prevails over any term sheets, heads of
         agreement  or  similar  documents  relating  to  investment  by the ACP
         Shareholders and the BCP Shareholders in the Company.  The Shareholders
         agree that the Company's constitution will be updated and amended so as
         to conform with this agreement as soon as practicable after the date of
         this agreement.

35.      ASSIGNMENT

         A Shareholder must not:

         35.1     assign the benefit of this agreement;

         35.2     mortgage,  charge or otherwise encumber to the benefit of this
                  agreement; or

         35.3     cause  its obligations under this agreement to be assumed by a
                  third party,

         without the prior written consent of the other Shareholders.

36.      NOTICE

         36.1     Any communication (including notice) under this agreement must
                  be in writing.

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                                                                              27


<PAGE>



         36.2     A  communication  may be given to a party by sending it to the
                  party's  address  as  notified  on  the  first  page  of  this
                  agreement  (or such  other  address as  notified  from time to
                  time) or by sending it by facsimile  to the party's  facsimile
                  number.

         36.3     A  communication is deemed to be received by a party, if given
                  by facsimile, at the time and on the day shown in the sender's
                  transmission  report, if it shows that the whole communication
                  was sent to the party's facsimile number.

         36.4     A communication given by post is to be taken to be received if
                  posted  within  Australia  to an  Australian  address  on  the
                  business day after posting and in any other case, on the third
                  business day after posting.

37.      COSTS

         37.1     The  reasonable  costs  and  expenses  incurred  by  the   BCP
                  Shareholder   in   connection   with   their   due   diligence
                  investigations on the Company, the negotiations leading up to,
                  and negotiation,  preparation and execution of the Transaction
                  Documents  and any  instrument or other  document  executed to
                  give effect to any  provisions  of the  Transaction  Documents
                  (including  reasonable  legal,  patent  and other  consultants
                  costs) will be borne by the Company up to a maximum of $10,000
                  for each BCP  Shareholder  that  subscribes  for more  than $1
                  million  worth of BCP Shares.  The combined  BCP  Shareholders
                  legal costs are not to exceed $25,000.

         37.2     Subject  to clause 37.1, each party to this agreement will pay
                  its own  costs  and  expenses  incurred in connection with the
                  preparation and execution of the Transaction Documents and any
                  instrument  or  other  document executed to give effect to any
                  provisions of the Transaction Documents.

         37.3     The Company must pay all stamp or other duty on this Agreement
                  and  on  any  instrument  or  other  document executed to give
                  effect to any provisions of this Agreement.

38.      GOVERNING LAW

         38.1     This  agreement  is  governed  by  the  laws of the Australian
                  Capital Territory.

         38.2     The  Shareholders  irrevocably  submit  to  the  non-exclusive
                  jurisdiction of the courts of the Australian Capital Territory
                  and the courts of appeal from them.

         38.3     A  Shareholder  may  not object to the  jurisdiction of any of
                  those courts on the ground that it is an inconvenient forum or
                  that it does not have jurisdiction.

39.      COUNTERPARTS

         This  agreement  may  be  executed  in any  number of counterparts.   A
         counterpart  may be a facsimile.  Together all counterparts make up one
         instrument.

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                                                                              28


<PAGE>

40.      LICENSED FUNDS

         40.1     Each  of  the  Shareholders, other  than  Rothschild  and  the
                  Trustee:

                  40.1.1  represents  and  warrants to the other Parties that it
                          enters this Agreement not in the capacity as a manager
                          or trustee of a Licensed Fund; and

                  40.1.2  if it is or becomes a manager or trustee of a Licensed
                          Fund must notify the other parties immediately upon it
                          becoming  a  party or becoming a manager or trustee of
                          the Licensed Fund (whichever is the latter).

         40.2     The Company must:

                  40.2.1  proactively  inform  the manager of each Licensed Fund
                          and  respond  to  any  requests  from  a  manager of a
                          Licensed Fund in a timely and  expeditious  manner, of
                          any  information  concerning the status of the Company
                          as an  Eligible  Investee Company  or  a change in the
                          status of an  associate or  related  body corporate of
                          the  Company, and  any information that a manager of a
                          Licensed  Fund may  reasonably  require to comply with
                          its  obligations  under  the  relevant  IIF Management
                          Licence;

                  40.2.2  provide  to  the  manager of each Licensed Fund on the
                          date of this agreement and subsequently within 14 days
                          of receiving a  request  from  a manager of a Licensed
                          Fund so to provide (on at least  an  annual basis) the
                          following information:

                          (a)   the names  of all officers and senior executives
                                of the Company and its related bodies corporate;

                          (b)   the  names  of  all the Company's related bodies
                                corporate;

                          (c)   confirmation that no moneys invested  by, or  on
                                behalf  of,  a  Licensed  Fund  will  be used to
                                discharge a debt to, or acquire an asset from,
                                the manager or trustee of a Licensed Fund or any
                                of their officers or related bodies corporate;

                          (d)   confirmation  that  the  Company  will  not   be
                                acquiring   any  goods   or  services  from  the
                                manager  or  trustee  of  the  Licensed  Fund or
                                any  of   their   officers   or  related  bodies
                                corporate;

                          (e)   confirmation that the  Company  does not owe any
                                money on any  account  whatever  to the  manager
                                or trustee of a Licensed  Fund  or  any of their
                                officers or related bodies corporate; and

                          (f)   confirmation that in respect of any other holder
                                of a IIF Management Licence or another  Licensed
                                Fund  (in  this clause called an OTHER  RELEVANT
                                PARTY), the Company:
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                                                                              29


<PAGE>



                                (i)     cannot Control, or influence materially,
                                        the Other Relevant Party's activities or
                                        internal affairs;

                                (ii)    is  not  a  member or  beneficiary of or
                                        partner in the Other Relevant Party;

                                (iii)   is  not  in  a  position  to cast, or to
                                        Control  the  casting  of,  a  vote at a
                                        meeting  of  the  equity  holders in the
                                        Other  Relevant  Party  or  to   Control
                                        or   influence   materially   the  Other
                                        Relevant Party's internal affairs;

                                (iv)    has  no  power  to  dispose  of,  or  to
                                        exercise Control  over the  disposal of,
                                        a security in or issued by the Other
                                        Relevant Party;

                                (v)     is not  owed a  debt  by  and is  not  a
                                        creditor of the Other Relevant Party; or

                                (vi)    does  not  act  as  agent  for the Other
                                        Relevant  Party  in  any  transaction or
                                        dealing;

                  40.2.3   represent  and warrant that the information  provided
                           by  the Company pursuant to clause 40.2.2 is true and
                           correct; and

                  40.2.4   ensure  that  it  does  all matters and things as are
                           confirmed in the information  provided by the Company
                           pursuant to clause 40.2.2.

                  40.2.5   A  reference  in  this  Clause 40.2 to "Control" of a
                           corporation is a reference to the possession directly
                           or  indirectly  of  the  power whether  or not having
                           statutory, legal or equitable  force,  and whether or
                           not  based  on  statutory, legal or equitable rights,
                           directly or indirectly to:

                           (a)    control more than 50% of the membership of the
                                  board of directors of that corporation; or

                           (b)    control more than 50% of its voting shares; or

                           (c)    direct  or   cause   the   direction   of  the
                                  management and policies of the manager,

                          whether  by means of trusts, agreements, arrangements,
                          understandings,  practices,  the   ownership  of   any
                          interest  in  shares  or  stock  of  that  company  or
                          otherwise.

                  40.2.6  A  reference  in  this  Clause  40.2 to "Control" of a
                          corporation or other person who is  or proposes to act
                          as a trustee is a reference to the possession directly
                          or indirectly of the power to:

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                                                                              30

<PAGE>

                          (a)    control the trustee;

                          (b)    control any decisions of the trustee as trustee
                                 of the relevant trust;

                          (c)    appoint, remove or replace the trustee;

                          (d)    appoint,  remove  or  replace a majority of the
                                 directors of the trustee; or

                          (e)    direct the allocation of any benefits under the
                                 relevant trust.

                  40.2.7  A  reference  in  this  Clause 40.2 to "Control" of an
                          event, outcome or result  or  the exercise of a right,
                          power,  authority,  discretion  or  remedy  means  the
                          possession, directly  or  indirectly, of the  power to
                          bring about or direct  that event outcome or result or
                          direct the  exercise  of that right, power, authority,
                          discretion or remedy.

41.      LIMITATIONS OF LIABILITY

         41.1     All parties acknowledge and agree that:

                  41.1.1  Rothschild  has  entered  into  this  agreement in its
                          capacity as manager of the Australian Bioscience Trust
                          and trustee of the Rothschild  Bioscience  Ventures II
                          fund, as the case may be, and in no other capacity;

                  41.1.2  Rothschild  is not liable to satisfy or pay any of its
                          obligations  under  this  agreement, and  will have no
                          liability to any other party, except to  the extent of
                          Rothschild's right of  indemnity out  of the assets of
                          the  Australian  Bioscience  Trust  or  the Rothschild
                          Bioscience Ventures II fund as the case may be; and

                  41.1.3  if  those  assets are insufficient, no party will seek
                          to  recover any  shortfall  by  bringing   proceedings
                          against  Rothschild  personally  or  applying to  have
                          Rothschild wound up.

         41.2     Unless  otherwise agreed, the other parties release Rothschild
                  from any  personal liability whatsoever in respect of any loss
                  or damage which  cannot be paid or satisfied out of the assets
                  of  the  Australian  Bioscience   Trust  or   the   Rothschild
                  Bioscience Ventures II fund, as the case may be.

         41.3     Clauses  41.1 and 41.2 above do not apply to any obligation or
                  liability of Rothschild to the extent that it is not satisfied
                  because there  is a  reduction in  the  extent of Rothschild's
                  indemnification out of the assets of the Australian Bioscience
                  Trust or the Rothschild  Bioscience  Ventures  II fund, as the
                  case may be, as a result of Rothschild's own fraud, negligence
                  or wilful breach of trust.

         41.4     Perpetual Trustees Nominees Limited enters into this agreement
                  only  in its  capacity as trustee of the Australian Bioscience
                  Trust and in no  other  capacity. A

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                                                                              31
<PAGE>


                  liability  arising under or in connection  with this agreement
                  is limited to and can be enforced against  Perpetual  Trustees
                  Nominees  Limited  only  to  the  extent  to  which  it can be
                  satisfied out of property of the Australian  Bioscience  Trust
                  out of which Perpetual  Trustees  Nominees Limited is actually
                  indemnified  for the  liabilty.  This  limitation of Perpetual
                  Trustees  Nominees  Limited's  liability  applies  despite any
                  other   provision  of  this   agreement  and  extends  to  all
                  liabilities  and  obligations of Perpetual  Trustees  Nominees
                  Limited  in  any  way  connected   with  any   representation,
                  warranty, conduct, omission,  agreement or transaction related
                  to this agreement.

         41.5     The  other  parties  may  not  sue Perpetual Trustees Nominees
                  Limited  in  any  capacity   other  than  as  trustee  of  the
                  Australian Bioscience Trust, including seek the appointment of
                  a receiver  (except in relation to property of the  Australian
                  Bioscience  Trust),  a  liquidator,  an  administrator  or any
                  similar person to Perpetual Trustees Nominees Limited or prove
                  in  any  liquidation,  administration  or  arrangement  of  or
                  affecting  Perpetual  Trustees  Nominees  Limited  (except  in
                  relation to property of the Australian Bioscience Trust).

         41.6     The provisions of clauses 41.4 and 41.5 shall not apply to any
                  obligation or liability of Perpetual Trustees Nominees Limited
                  to the extent that it is not satisfied because under the trust
                  deed  establishing  the  Australian  Bioscience  Trust  or  by
                  operation  of  law  there  is a  reduction  in the  extent  of
                  Perpetual Trustees Nominees Limited's  indemnification  out of
                  the assets of the Australian  Bioscience Trust, as a result of
                  Perpetual  Trustees  Nominees  Limited's fraud,  negligence or
                  breach of trust.

         41.7     It  is  acknowledged  that  the  manager  of  the   Australian
                  Bioscience   Trust  is   responsible   under  the  trust  deed
                  establishing the Australian  Bioscience Trust for performing a
                  variety of obligations  relating to the Australian  Bioscience
                  Trust,  including under this agreement.  No act or omission of
                  Perpetual  Trustees  Nominees  Limited  (including any related
                  failure to satisfy its obligations or breach of representation
                  or warranty under this  agreement)  will be considered  fraud,
                  negligence or breach of trust of Perpetual  Trustees  Nominees
                  Limited for the purposes of clause 41.6 to the extent to which
                  the  act or  omission  was  caused  or  contributed  to by any
                  failure  by  the  manager  or any  other  person  (other  than
                  Perpetual Trustees Nominees Limited, or a person whose acts or
                  omissions Perptetual Trustees Nominees is liable for under the
                  deed  establishing the Australian  Bioscience Trust) to fulfil
                  its obligations relating to the Australian Bioscience Trust or
                  by any  other  act or  omission  of the  manager  or any other
                  person (other than Perpetual  Trustees Nominees Limited,  or a
                  person whose acts or omissions Perptetual Trustees Nominees is
                  liable  for  under  the  deed   establishing   the  Australian
                  Bioscience Trust).

         41.8     Perpetual  Trustee  Nominees  Limited  is not obliged to do or
                  refrain from doing anything  under  this  agreement (including
                  incur  any  liability)  unless  Perpetual  Trustees   Nominees
                  Limited's liability is limited in the same  manner as  set out
                  in clauses 41.4 to 41.6.

         41.9     Mooroolbark enters into this agreement only in its capacity as
                  trustee  of the  Pharmaxis  Investment  Trust  and in no other
                  capacity. A liability arising under or in connection with this
                  agreement   is  limited  to  and  can  be   enforced   against


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<PAGE>
                  Mooroolbark  only to the  extent to which it can be  satisfied
                  out of the property of the Pharmaxis  Investment  Trust.  This
                  limitation  of  Mooroolbark's  liability  applies  despite any
                  other   provision  of  this   agreement  and  extends  to  all
                  liabilities   and   obligations  of  Mooroolbark  in  any  way
                  connected   with  any   representation,   warranty,   conduct,
                  omission, agreement or transaction related to this agreement.


         41.10    The other parties to this agreement may not sue Mooroolbark in
                  any capacity other than as trustee of the Pharmaxis Investment
                  Trust, including seeking the appointment of a receiver (except
                  in  relation to property of the Pharmaxis Investment Trust), a
                  liquidator,  an  administrator  or  any  similar  persons   to
                  Mooroolbark   or  prove  any  liquidation,  administration  or
                  arrangement of or affecting Mooroolbark (except in relation to
                  property of the Pharmaxis Investment Trust).


         41.11    The  provisions  of  clauses 41.9 and 41.10 shall not apply to
                  any obligation or liability  of Mooroolbark to the extent that
                  it is not satisfied because under  the Trust Deed establishing
                  the Pharmaxis Investment Trust or by operation of law there is
                  a reduction in the extent of Mooroolbark's indemnification out
                  of those  assets of  the Pharmaxis Investment Trust, as result
                  of Mooroolbark's fraud, negligence or breach of trust.

         41.12    CM  Capital enters into this agreement only in its capacity as
                  trustee of the CM Venture Trust No.3 and in no other capacity.
                  A liability arising under or in connection with this agreement
                  is  limited to  and can be enforced against CM Capital only to
                  the extent to which it can be satisfied out of the property of
                  the CM  Venture  Trust No.3.  This  limitation of CM Capital's
                  liability  applies  despite  any  other   provision  of   this
                  agreement and extends to all liabilities and obligations of CM
                  Capital  in  any  way  connected   with  any   representation,
                  warranty, conduct,  omission, agreement or transaction related
                  to this agreement.


         41.13    The other parties may not sue CM Capital in any capacity other
                  than  as  trustee  of  the  CM Venture  Trust No.3,  including
                  seeking the appointment of a receiver  (except in  relation to
                  property of  the  CM  Venture  Trust  No.3), a  liquidator, an
                  administrator  or  any similar  persons to CM Capital or prove
                  any liquidation, administration or arrangement of or affecting
                  CM  Capital (except  in relation to property of the CM Venture
                  Trust No.3).


         41.14    The  provisions  of clauses 41.12 and 41.13 shall not apply to
                  any  obligation  or liability of CM Capital to the extent that
                  it is not satisfied  because under the Trust Deed establishing
                  the CM Venture  Trust No.3 or by  operation  of law there is a
                  reduction in the extent of CM Capital's indemnification out of
                  those  assets of the CM Venture  Trust  No.3,  as result of CM
                  Capital's fraud, negligence or breach of trust.

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                                                                              33


<PAGE>


         41.15    AVCF   enters  into  this  agreement  only in  its capacity as
                  general partner of Australia Venture Capital Fund LP and in no
                  other capacity.  A liability  arising  under or  in connection
                  with this  agreement is limited to and can be enforced against
                  AVCF  only to  the extent  to which it can be satisfied out of
                  the  property of  Australia  Venture  Capital  Fund  LP.  This
                  limitation of  AVCF's  liability  applies  despite  any  other
                  provision of this agreement and extends to all liabilities and
                  obligations  of   AVCF  in   any   way  connected   with   any
                  representation,  warranty,  conduct,  omission,  agreement  or
                  transaction related to this agreement.


         41.16    The  other parties may not sue AVCF in any capacity other than
                  as  general  partner  of  Australia  Venture  Capital Fund LP,
                  including  seeking the  appointment of  a receiver  (except in
                  relation  to  property of  the  Australia Venture Capital Fund
                  LP), a liquidator, an administrator  or any similar persons to
                  AVCF or prove any  liquidation,  administration or arrangement
                  of  or  affecting  AVCF  (except  in  relation  to property of
                  Australia Venture Capital Fund LP).


         41.17    The  provisions  of clauses 41.15 and 41.16 shall not apply to
                  any obligation or  liability  of AVCF to the extent that it is
                  not satisfied because under the  Partnership Deed establishing
                  Australia Venture Capital Fund LP or by operation of law there
                  is a reduction in the extent of AVCF's indemnification out of
                  those assets of Australia Venture  Capital Fund LP, as result
                  of AVCF's fraud, negligence or breach of trust.

DATED      AUGUST 23RD                        2002


Signed for and on behalf of
PRAXIS PHARMACEUTICALS INC by:

/s/ WILLIAM B. COWDEN                     /s/ BRETT CHARLTON
-----------------------------------       --------------------------------------
Director                                  Director/Secretary

WILLIAM B. COWDEN                         BRETT CHARLTON
-----------------------------------       --------------------------------------
Name (please print)                       Name (please print)



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                                                                              34

<PAGE>



Signed for and on behalf of PERPETUAL TRUSTEES
NOMINEES LIMITED by its attorneys who declare
that they have no notice of revocation of the
Power of Attorney under which this document
is signed:


/s/ PETER BARRY HOCKING                   /s/ MARCELLE PIVOTTO
-----------------------------------       --------------------------------------


PETER BARRY HOCKING -SENIOR MANAGER       MARCELLE PIVOTTO - ASSISTANT MANAGER
-----------------------------------       --------------------------------------
Name (please print)                       Name (please print)

Signed for and on behalf of
ROTHSCHILD BIOSCIENCE MANAGERS
LIMITED by:

/s/ G. BROOKE                             /s/  S.D. JONES
-----------------------------------       --------------------------------------
Director                                  Director / Company Secretary

G. BROOKE                                   S.D. JONES
-----------------------------------       --------------------------------------
Name (please print)                       Name (please print)

Signed by the authorised representative of
CM CAPITAL INVESTMENTS PTY LTD as
trustee for CM Capital Venture Trust No. 3:


/s/ CARMEL HILLYARD
----------------------------------
Authorised Representative


CARMEL (CARRIE) HILLYARD
----------------------------------
Name (please print)


EXECUTED by an authorised representative
of CIBC AUSTRALIA VC FUND LLC. on behalf
of the Australia Venture Capital Fund L.P.
in the presence of

/s/ MICHELE J. BUCHLIGNANI
------------------------------------
Signature of Authorised Representative


MICHELE J. BUCHIGNANI
MANAGING DIRECTOR
------------------------------------
Name of Authorised Representative
(print)

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                                                                              35

<PAGE>


Signed for and on behalf of
MOOROOLBARK TECHNOLOGY PTY LTD by:


/s/ K J HAMMONS                             /s/ SCOTT MUNRO
------------------------------------        ------------------------------------
Director                                    Company Secretary

K J HAMMONS                                 SCOTT MUNRO
------------------------------------        ------------------------------------
Name (please print)                         Name (please print)



EXECUTED by THE AUSTRALIAN NATIONAL UNIVERSITY by.its Attorney under Power
pursuant to Power of Attorney Registered No.103308 who states that he is the Pro
Vice-Chancellor (Administration)/Director, Finance & Business Services of the
Australian National University and that he has no notice of revocation of the
Power in the presence of:

/s/ ALAN RAYMOND BUNSELL                     /s/ JUSTIN LYNCA
-----------------------------------          -----------------------------------
                                             Witness


ALAN RAYMOND BUNSELL                         JUSTIN LYNCA
-----------------------------------          -----------------------------------
Name (please print)                          Name (please print)



Signed for and on behalf of
PHARMAXIS PTY LTD by:

/s/ ALAN D. ROBERTSON                         DENIS HANLEY
-----------------------------------           ----------------------------------
Director                                      Director / Company Secretary
Alan Robertson                                Denis Hanley


Signed by DR WILLIAM COWDEN:


/s/ GAVIN BARTELL                              /s/ WILLIAM B. COWDEN
-----------------------------------            ---------------------------------
Witness                                        Dr William Cowden

GAVIN BARTELL                                  WILLIAM B. COWDEN
-----------------------------------            ---------------------------------
Name (please print)                            Name (please print)

--------------------------------------------------------------------------------
                                                                              36

<PAGE>

Signed by DR BRETT CHARLTON:


/s/ DOUGLAS FRANCIS                             /s/ BRETT CHARLTON
-----------------------------------             --------------------------------
Witness                                         Dr Brett Charlton


DOUGLAS FRANCIS                                 BRETT CHARLTON
-----------------------------------             --------------------------------
Name (please print)                             Name (please print)













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