EXHIBIT 4.15

                                                               Project Agreement

                                                  Neurosciences Victoria Limited
                                                                             and
                                                     Prana Biotechnology Limited

                                                          Allens Arthur Robinson
                                                           Stock Exchange Centre
                                                              530 Collins Street
                                                        Melbourne 3000 Australia
                                                              Tel 61 3 9614 1011
                                                              Fax 61 3 9614 4661

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Project Agreement
Neurosciences Victoria Ltd and Prana Biotechnology Ltd
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Table of Contents

<TABLE>
<C>                                                                                       <C>
1.   Definitions and interpretation                                                       2
     1.1   Definitions                                                                    2
     1.2   Interpretation                                                                 4

2.   Agreement to undertake Project                                                       5

3.   Appointment, management and retention of staff                                       5

4.   Condition Precedent and Term                                                         6
     4.1   Condition Precedent                                                            6
     4.2   Term                                                                           6

5.   Project Management Committee and Reporting Requirements                              7
     5.1   Appointment                                                                    7
     5.2   Operation of Project Management Committee                                      7
     5.3   Semi-annual reports                                                            7
     5.4   Annual reporting review                                                        8
     5.5   Records management                                                             8
     5.6   Final report                                                                   8

6.   Budget and GST                                                                       8

7.   Ownership and rights in relation to Intellectual Property                            9
     7.1   Background IP                                                                  9
     7.2   Project Results                                                               10
     7.3   NSV has no rights outside the Field                                           11

8.   Commercialisation of IP                                                             12
     8.1   Decline of First Right of Refusal                                             12
     8.2   Exercise of First Right of Refusal                                            12
     8.3   Share of Proceeds                                                             l3
     8.4   Use and Distribution of Proceeds                                              13

9.   Identification, maintenance, enforcement and defence of Intellectual
     Property                                                                            14
     9.1   Identification of Project Results                                             14
     9.2   Primary responsibility for Project Results                                    15
     9.3   Reversion of Project Results                                                  15
     9.4   Assistance                                                                    15
     9.5   Protection of Intellectual Property                                           16
     9.6   Proceeds of Infringement                                                      16

10.  Confidentiality                                                                     17
     10.1  Confidentiality Obligations                                                   17
     10.2  Publications                                                                  18
</TABLE>


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<TABLE>
<C>                                                                                         <C>
11.  Settlement of Disputes and Arbitration                                                 18
     11.1  Dispute Resolution                                                               18
     11.2  Arbitration                                                                      19

12.  Termination and Breach                                                                 20
     12.1  Breach by Prana                                                                  20
     12.2  Termination for unsatisfactory progress                                          21
     12.3  Termination of RCA with SCHERING                                                 21
     12.5  Breach by NSV                                                                    22

13.  Termination without prejudice                                                          24

14.  General Warranties and Indemnities                                                     24
     14.1  IP representations and warranties                                                24
     14.2  Indemnities in relation to the Project                                           24

15.  Assignment and Sub-Contracting                                                         25

16.  Force majeure                                                                          25

17.  Clause severance                                                                       26

18.  Waiver                                                                                 26

19.  Governing law                                                                          26

20.  Notices                                                                                27

21.  Entire Agreement                                                                       27

22.  Amendments                                                                             28

23.  Further assurances                                                                     28

24.  Counterparts                                                                           28

Schedule 1                                                                                  29
     Financial Terms                                                                        29
     Project Synopsis                                                                       29

Schedule 2                                                                                  33
     Project Management Committee                                                           33

Schedule 3                                                                                  34
     Addresses for Service of Notices                                                       34

Schedule 4                                                                                  35
     Budget, Shares of Project Results and Proceeds of Commercialisation                    35
</TABLE>


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Date
---------

Parties
---------

      1.    Neurosciences Victoria Limited (ABN 56 094 548 973) a company
            incorporated in the State of Victoria and having its registered
            office at The Gatehouse, 2 Park Drive, Parkville 3052, Australia
            (NSV).

      2.    Prana Biotechnology Limited (ABN 37 080 699 065) of 100 Dorcas St,
            Sth. Melbourne, Victoria (Prana)

Recitals
---------

A           NSV is a company limited by guarantee to enhance scientific and
            technological capabilities and support scientific research in
            Victoria in the Field) by, amongst other things, facilitating
            funding, as agent for its members and certain Victorian research
            institutes.

B           NSV has signed a research collaboration agreement ("RCA") with
            Schering Aktiengesellschaft, 13342 Berlin, Germany, ("SCHERING"),
            under which SCHERING is willing to provide financial funding to
            certain Projects in the Field and NSV agrees to provide certain
            rights to Project Results and Background IP to SCHERING.

C           In furtherance of recital A and B, the Parties wish to conduct a
            Project in the Field.

D           Prana hereby appoints NSV as agent for the purpose of receipt of
            Schering funding under the terms of the RCA between NSV and Schering
            and to facilitate the licensing of IP to Schering through NSV and
            for no other purposes.

E           In furtherance of Recital A and B

            (a)   Prana has prepared a Project Synopsis detailing a Project that
                  it and NSV wish to have conducted in the Field;

            (b)   the Project Synopsis has been discussed with and approved by
                  SCHERING; and

            the Parties wish to agree on the terms and conditions under which


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            the research and development project will be conducted.

It is agreed as follows.

1.    Definitions and interpretation
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1.1   Definitions


      In this Agreement, unless a contrary intention appears from the context:

      Account means an account opened in accordance with clause 6.

      Background IP shall mean the Intellectual Property owned or controlled by
      Prana which is already in existence prior to the Commencement Date or is
      created independently of the Agreement and which is made available under
      this Agreement by Prana for the Project. Patented Background IP is
      identified in the Project Synopsis.

      Budget means the budget for the Project set out in the Project Synopsis
      and amended by the Parties only upon approval by SCHERING.

      Commencement Date means the date of this Agreement.

      Commercialise, in relation to Intellectual Property, means to develop,
      manufacture, sell, hire or otherwise exploit a product or process, or to
      provide a service, incorporating that Intellectual Property, or to license
      SCHERING to do any of those things; and Commercialisation is similarly
      construed.

      Commercialisation Proceeds means any and all royalties, licence fees and
      other receipts derived from Commercialisation of Project Results with or
      without Background IP under a Sub-licence by SCHERING.

      Committee means the Project Management Committee established under clause
      5.1.

      Confidential Information means all trade secrets and know-how, financial
      information and other commercially valuable information of whatever
      description and in whatever form (whether written or oral, visible or
      invisible) made available as Background IP or otherwise or arising as a
      result of the Project, but excludes the interpretation, analysis and
      application of general information in the public domain.

      Core Criteria shall mean the general criteria as laid out in Appendix 1.5
      of the RCA, that need to be fulfilled independently of any specific
      Project Decision Criteria in order to enable SCHERING to make its decision
      as to the right of first negotiation granted by NSV to SCHERING under ss.
      7 of the RCA.


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      Decision Criteria means collectively the Core Criteria and the Project
      Decision Criteria.

      Earmarked Funds has the meaning given in the Members Agreement dated
      November 2, 2001 between NSV and its founding members, namely research
      funding which NSV has arranged for a particular project.

      Field means compounds which bind beta amyloid for the purpose of in vivo
      imaging of beta amyloid plaques in the human brain

                            [this space left blank]

      Intellectual Property includes all industrial and intellectual property,
      whether protected at common law or under statute and includes (without
      limitation) all inventions (both patentable and unpatentable), designs
      (both registered and unregistered), copyrights, circuit layouts, plant
      variety rights, trademarks (both registered and unregistered), samples,
      materials, data, know-how, results and Confidential Information.

      Key Alliance Manager - Research (KAMR) means the team established in
      accordance with ss. 10.4 of the RCA.

      Party means a party to this Agreement.

      Project means the research and development activities described in the
      Project Synopsis to be undertaken by Prana under this Agreement.

      Project Decision Criteria means the Project specific set of scientific
      criteria (including timelines) as listed in each Project Synopsis which
      have to be fulfilled and presented by NSV to SCHERING under the RCA in
      order to enable SCHERING to make its decision as to the right of first
      negotiation granted under the RCA.

      Project Results means all Intellectual Property, whether patentable or
      not, in relation to the Project that has been created, discovered or
      brought into existence as a result of or in connection with the Project by
      Prana at any time, excluding the Background IP.


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      Project Leaders means the project leaders from Prana and SCHERING as
      appointed under clause 3 (a).

      Project Management Committee means the committee established in accordance
      with clause 5.

      Project Synopsis means the detailed description of a research project,
      including a detailed work-plan for the research and/or development for the
      Project (including the timeline, milestones and Decision Criteria) as set
      out in Schedule 1 amended as agreed between the Parties in writing from
      time to time.

      Raw Data means that part of the Project Results comprising the data
      contained in the lab books regardless of their form, allowing for the
      verification and validation of the scientific results produced during the
      performance of a Project

      Steering Committee means the decision body established in ss. 10.1 of the
      RCA and comprising of representatives of NSV and SCHERING.

      Sub-licence is defined in clause 8.2.

      Tax Invoice means a document that complies with the requirements of
      subsection 29-70(1) and (if applicable) section 54-50 of the A New Tax
      System (Goods and Services Tax) Act 1999 (Cwth).

1.2   Interpretation

      In this Agreement, unless the context indicates to the contrary:

      (a)   the expression person includes a natural person, an institution, a
            body corporate, an agency or other body;

      (b)   references to any Party to this Agreement will include the Party's
            legal successor (including executors and administrators) and
            permitted assigns;

      (c)   words importing the singular will include the plural (and vice
            versa) and words denoting a given gender will include all other
            genders;

      (d)   clause headings and notes in square brackets are inserted for
            convenience only, and have no effect in limiting or extending the
            language of provisions, except for the purpose of rectifying any
            erroneous cross reference;

      (e)   references to any document or agreement will be taken to include
            references to such document or agreement as amended, novated,
            supplemented, varied or replaced from time to time;

      (f)   references to any legislation or to any provision of any legislation
            will include any modification or re-enactment of such legislation or
            any legislative provision substituted for, and ail legislation and
            statutory instruments issued under such legislation;


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      (g)   all attachments to this Agreement form part of this Agreement;

      (h)   all monetary amounts referred to in this Agreement are in Australian
            currency.

2.    Agreement to undertake Project
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      In consideration of the mutual promises and undertakings set out in this
      Agreement, Prana hereby agrees to undertake the Project in accordance with
      the terms and conditions of this Agreement. Without limiting the
      generality of this clause 2.1, Prana must:

      (a)   Work to carry out and complete the Project in accordance with the
            Project Synopsis, the Budget and the terms and conditions of this
            Agreement and in a manner which is to the satisfaction of NSV; and

      (b)   obtain all licences, permits and authorities, and comply with all
            laws, by-laws and regulations, which may be required for the legal
            performance of its obligations under this Agreement.

3.    Appointment, management and retention of staff
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      Upon the start of a Project Prana must:

      (a)   appoint one key personnel to undertake the lead role on the Project
            on behalf of Prana (Project Leader), who will manage and monitor the
            day-to-day operations of the Project together with a Project Leader
            nominated by SCHERING. It is agreed that the Project Leader
            appointed by Prana may be a sub-contractor of Prana. Both Project
            Leaders shall be members of the Project Management Committee (see
            clause 5). All communication among Project Leaders shall be copied
            to the KAMR. If any Project Leader of Prana dies, becomes
            incapacitated or ceases to be employed by Prana, Prana will notify
            NSV immediately and nominate a suitable replacement to carry out and
            complete Prana`s obligations in respect of the Project under this
            Agreement. If NSV or SCHERING reasonably considers that the
            nominated replacement is not suitable to perform those functions,
            NSV may exercise its rights under clause 12.1(b);

      (b)   be solely responsible for all scientists and other staff involved in
            the Project on behalf of the Institute, and for all their
            entitlements, including, but not limited to, any superannuation and
            workers' compensation contributions, as may legally be required to
            be made in respect of the engagement of each of those scientists or
            other staff;


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      (c)   do all things reasonably within its power to ensure that all
            scientists and other staff engaged by Prana undertake the Project
            work and act to the best of their respective skills and abilities in
            a diligent, professional and honest manner; and

      (d)   neither during, nor for six months after the term of this Agreement,
            employ or attempt to employ any key personnel of another Party who
            has been involved in the Project without the prior written consent
            of that Party.

4.    Condition Precedent and Term
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4.1   Condition Precedent

      It is a condition precedent to this Agreement that NSV submits to Prana
      (or vice versa) and NSV (or Prana, as appropriate) approves, a Project
      Synopsis that fully defines the Project and includes the following in
      respect of the Project:

      (a)   a statement of aims;

      (b)   an outline of the strategy to be followed;

      (c)   potential outcomes;

      (d)   milestones;

      (e)   the financial terms applicable to the Project as laid out in
            Appendix 7.5 of the RCA.

      (f)   a budget for Prana's contribution to the Project;

      (g)   resource requirements for Prana's contribution to the Project;

      (h)   Background IP in existence as at the Commencement Date proposed to
            be used in the Project and the terms, if any, on which Prana will
            make its Background IP available for use in the conduct and
            Commercialisation of the Project.

      (i)   Prana's share of the Commercialisation Proceeds; and

      (j)   the Project Decision Criteria.

4.2   Term

      This Agreement will commence on the Commencement Date and will continue
      until the completion of the Project, unless terminated earlier in
      accordance with clause 12.


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5.    Project Management Committee and Reporting Requirements
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5.1   Appointment

      As soon as practicable after the Commencement Date, the Parties shall
      establish a project management committee to have overall management and
      evaluation of the Project (hereinafter "Project Management Committee" or
      simply "Committee").

5.2   Operation of Project Management Committee

      The Committee will operate as follows:

      (a)   it will comprise one representative from Prana as well as the
            Project Leaders of Prana and SCHERING. The initial representatives
            are listed in Schedule 2;

      (b)   it will meet monthly to review the progress of the Project and
            determine the programs of work to be undertaken under the Project
            Synopsis;

      (c)   it may determine its own procedures and may confer by telephone or
            other electronic means;

      (d)   a resolution of the Committee must be passed by all representatives;
            and

      (e)   each Party bears the cost and expenses incurred by its
            representatives in relation to their attendance at Committee
            meetings.

5.3   Semi-annual reports

      Prana's Project Leader, with support of the Schering Project Leader, must
      prepare and submit to the Committee and the KAMR a semi-annual report
      describing:

      (a)   work done and achievements made (including milestones and
            deliverables completed) during the 6 months to which the report
            relates;

      (b)   details of Project Results developed during the 6 months and steps
            taken to protect it;

      (c)   any departure from the Project Synopsis during those 6 months;

      (d)   current issues relating to the performance of the Project and
            recommendations as to their resolution;

      (e)   the amount of funding required for the next 6 months; and

      (f)   such other matters as each Party (or its representative or appointee
            an the Committee) considers appropriate.

      All reports have to be approved by the KAMR.


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5.4   Annual reporting review

      During each year of the Project, the KAMR will review the adequacy of the
      reporting requirements set out in clause 5.3,and decide whether, and if so
      how, they should be amended for the following year of the Project.

5.5   Records management

      The Committee must:

      (a)   maintain full and accurate data, information and records of and
            concerning work carried out in the Project; and

      (b)   disclose or make available all such data, information and records to
            the Parties as and when each Party requires;

      (c)   make sure that all Raw Data will be entered into a laboratory note
            book, dated, signed and witnessed.

      NSV and / or SCHERING has the right to review the handling of all
      documents, data, records and Raw Data produced for the Project during the
      term of this Agreement. Time and location of such review shall be
      coordinated with Prana.

5.6   Final report

      The Committee must submit through the Project Leaders to the KAMR and the
      Steering Committee a final report in writing within 30 days of completion
      of the Project. The final report will describe, in reasonably informative
      detail:

      (a)   the conduct of the Project;

      (b)   the results;

      (c)   Project Results obtained in the performance of the Project;

      (d)   Background IP used in the performance of the Project; and

      (e)   Background IP required for Commercialisation of the Project Results.

6.    Budget and GST
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      (a)   The initial Budget for the Project is set out in Schedule 4 and
            shows:

            (i)   the amount of funds allocated to Prana to undertake and
                  perform its responsibilities under the Project Synopsis
                  (Research Funds); and

            (ii)  the proportion, if any, to which NSV is entitled as its
                  administration fee in consideration of fulfilling its
                  obligations under this Agreement, (NSV Proportion) provided
                  that the NSV Proportion will be zero where an allocation has
                  already been made in respect of the Project under the
                  arrangements set out in the Members' Agreement.


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      (b)   On, before, or as soon as practicable after, the Commencement Date,
            NSV will, if it does not already have an appropriate account, open
            an account and will deposit into that existing or new account such
            funds as it has received from SCHERING as agent for Prana to enable
            the Project to be conducted.

      (c)   In consideration of Prana undertaking the Project, NSV will draw on
            the Account to provide Prana the amount set out in sub-paragraph
            (a)(i) above as quarterly installments.

      (d)   If GST is payable on a Taxable Supply made under, by reference to or
            in connection with this Agreement, the party providing the
            Consideration for that Taxable Supply must also pay the GST Amount
            as additional Consideration. In this Agreement 'Consideration' and
            'Taxable Supply' each has the meaning given by the A New Tax System
            (Goods and Services Tax) Act 1999 (Cth) and 'GST Amount' means in
            relation to a Taxable Supply the amount of GST payable in respect of
            that Taxable Supply.

      (e)   No Party is required to provide any amount of GST to any other (and
            may withhold any amount required at law) unless the other issues a
            Tax Invoice to that Party.

      (f)   NSV is not required to provide any amounts under this Agreement to
            the extent that SCHERING who has committed to provide research
            funding to NSV in respect of the Project defaults on those
            commitments leaving insufficient funds in the Account to enable NSV
            to provide such amounts.

      (g)   NSV must use all reasonable endeavours to enforce its rights against
            SCHERING if SCHERING defaults on the commitments referred to in
            paragraph (f).

7.    Ownership and rights in relation to Intellectual Property
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7.1   Background IP

      (a)   For the specific purposes of allowing the Project to proceed and for
            commercialisation of Project Results (and only for those
            purposes), Prana will make available to the Project the Background
            IP (as defined) in respect of Prana whether directly as a result of
            Prana's ownership of that Background IP or as a result of agreements
            entered into with the owner(s) of that Background IP.

      (b)   The Parties acknowledge and agree that the Background IP will remain
            the property of Prana or the owner(s) referred to in paragraph (a).


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      (c)   The Project Leader will endeavour to maintain a register recording
            such Background IP as is made available by Prana for the Project,
            provided that failure to include an item of Background IP on this
            register does not preclude the Parties from using Background IP as
            permitted under this Agreement where that Background IP is made
            available under this Agreement or is included in the definition of
            'Background IP'.

      (d)   Prana grants to NSV, a worldwide, non-exclusive, royalty-free, sub-
            licensable licence to Commercialise the Background IP but only to
            the extent required for NSV to exercise its rights to Commercialise
            the Project Results granted under clause 7.2.

7.2   Project Results

      (a)   All Project Results created in relation to the Project, upon
            creation, vest in and will become and remain the property of Prana,
            only subject to Prana's contractual agreements with the University
            of Melbourne in relation to this Agreement. Prana is free to deal
            with, Commercialise, dispose of or encumber any interest which it
            might hold in Project Results outside the Field as it sees fit.

      (b)   Subject to clause 8.1, no Party will deal with, Commercialise,
            dispose of or encumber any interest which it might hold in Project
            Results in the Field, except as authorised in this Agreement, or
            with the written consent of the other Party to this Agreement.

      (c)   Each Party will co-operate with each other Party and promptly do all
            acts and things and execute all documents which may be necessary for
            the purpose of vesting ownership of the Project Results in Prana as
            contemplated by this clause 7.2.

      (d)   Prana grants to NSV, a first right of refusal to negotiate a
            worldwide exclusive royalty-bearing sub-licensable licence to
            Commercialise the Project Results in the Field in accordance with
            clause 8 of this Agreement.

      (e)   As soon as the Project Leaders are notified under clause 9.1(a) of
            the creation of any Project Results then, if that Project Results
            alone or together with any Background IP, meets the Project Decision
            Criteria, the Project Leaders will within 14 days notify all Parties
            and the Steering Committee in writing that, from the date of
            notification, NSV may exercise its right of first refusal to license
            such Project Results and any relevant Background IP and present NSV
            with sufficient data to make a decision on the exercise of its right
            of first refusal.


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      (f)   The Parties are aware of the fact that after NSV has received such
            notification and data in accordance with clause 7.2(e), NSV has the
            obligation under the RCA to immediately notify SCHERING which has an
            exclusive right of first negotiation for a sublicence to ail Project
            Results and Background IP notified to NSV under this Agreement.

      (g)   Under the RCA SCHERING has the right to evaluate the relevant
            Project Results and Background IP during a period of 90 days after
            notification and presentation of sufficient data by NSV. The Parties
            hereby acknowledge and agree to this right.

      (h)   SCHERING has further the right under the RCA, at its cost, to
            scientifically check the data, including, where necessary and
            applicable, a re-evaluation of the experiments or tests. In such
            case the above mentioned period of 90 days may be extended by
            another 60 days to allow for such tests. If SCHERING requires access
            to Project Results in order to decide if the Project Decision
            Criteria have been met, Prana hereby agree (i) to SCHERING's right
            under ss. 8.2 of the RCA to perform a due diligence on the
            Project Results and the Background IP and (ii) to apply reasonable
            efforts to execute, support and facilitate such access for SCHERING.

      (i)   After SCHERING has informed NSV within the timelines mentioned in
            7.2 (g) and (h) respectively above by written notice whether the
            Decision Criteria have been met and whether SCHERING wishes to
            obtain a sub-license from NSV, NSV will immediately notify Prana
            accordingly whether NSV wants to exercise its right of first refusal
            to negotiate a licence to the relevant Project Results and
            Background IP.

      (j)   The Decision Criteria may only be amended in accordance with the
            RCA. Any amendment of the Decision Criteria will be notified to
            Prana in writing and will become an integral part of this Agreement
            and the Project Synopsis on the date of that notification.

            (i)   The rights granted to NSV or SCHERING in respect of Project
                  Results are subject to a right in favour of Prana to use and
                  disclose for educational and research purposes to the extent
                  allowed by Clause 10 (Confidentiality and Publications)

7.3   NSV has no rights outside the Field

      NSV specifically acknowledges that it has no rights to use Project Results
      or Background IP outside the field. Without limiting the generality of the
      foregoing, NSV specifically acknowledges that it has no rights to use
      Project IP or Background IP to develop products for therapeutic use or
      have any right of first


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      refusal to negotiate any rights to Commercialise any Project Results or
      Background IP for therapeutic purposes outside the scope of this
      Agreement.

8.    Commercialisation of IP
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8.1   Decline of First Right of Refusal

      If NSV does not exercise its first right of refusal in accordance with
      clause 7.2, unless the Parties agree otherwise, NSV's rights under clauses
      7.1 and 7.2 will terminate and its rights to the Project Results and
      Background IP will revert to Prana who, subject to clause 9.3, will be
      free to commercialise and otherwise deal in that Intellectual Property as
      they see fit.

8.2   Exercise of First Right of Refusal

      If NSV does exercise its first right of refusal in accordance with clause
      7.2 (i), Prana appoints NSV as its agent to negotiate a sub-licence in the
      Field, (Sub-licence) with SCHERING to Commercialise the Project Results
      and (as necessary to Commercialise the Project Results) the Background IP,
      and the following provisions will apply:

      (a)   NSV will use all reasonable endeavours to negotiate the Sub-licence,
            according to the following:

            (i)   the Sub-licence will be world-wide and exclusive in respect of
                  Project Results only, and non-exclusive in respect of
                  Background IP,

            (ii)  the Sub-licence will be royalty-bearing, with royalty rates
                  and any licence fees and milestone payments set out in
                  Appendix 7.5 [(financial terms)] of the RCA and royalty
                  payments calculated by reference to Net Sales as defined in
                  the RCA;

            (iii) the term of the Sub-licence will be for the duration of the
                  last to expire anywhere in the world of the patents generated
                  in respect of the Project Results, provided that the royalty
                  obligations may expire on a country-by-country basis as patent
                  protection in respect of the Commercialisation of the Project
                  Results expires in each country; and

            (iv)  NSV may not enter into any binding Sub-licence without Prana's
                  written approval, which may not be unreasonably withheld.

      (b)   If any Sub-licence is entered into, Prana will be deemed to have
            immediately:


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            (i)   granted to NSV a reciprocal licence to Commercialise the
                  Project Results and Background IP as necessary to enable NSV
                  to fulfill its obligations to SCHERING under the Sub-licence;
                  and

            (ii)  appointed NSV its agent to receive Commercialisation Proceeds
                  under the Sub-licence on their behalf.

      (c)   If NSV and SCHERING, after good faith negotiations, are unable to
            agree on the terms of a Sublicense within 6 months of NSV exercising
            its first right of refusal under clause 7.2,unless the Parties agree
            otherwise, NSVs rights under clauses 7.1 and 7.2 will terminate and
            its rights to the Project Results and Background IP will revert to
            Prana who, subject to clause 9.3, will be free to commercialise and
            otherwise deal in that Intellectual Property as they see fit.

8.3   Share of Proceeds

      NSV will receive and hold the Commercialisation Proceeds in accordance
      with clause 8.4 as agent for Prana in the proportions specified in Item 3
      of Schedule 4. If no such proportions are specified, then the proportions
      specified in Item 2 of Schedule 4 will apply.

8.4   Use and Distribution of Proceeds

      NSV will:

      (a)   collect and pay all Commercialisation Proceeds and any funds NSV
            receives from SCHERING for the purposes of identifying, maintaining,
            enforcing or defending Intellectual Property into the Account;

      (b)   draw on the Account to meet its agreed administration fee payable in
            connection with Commercialising the Project Results, which fee will
            be 12.5% of all Commercialisation Proceeds, unless otherwise
            specified in Item 3 of Schedule 4 or agreed in writing by all
            Parties;

      (c)   draw on the Account as permitted under clause 9.2; and

      (d)   draw on the Account to pay any money due to the owners of Background
            IP as a result of the Commercialisation.

      (e)   distribute the balance to Prana in accordance with the proportions
            determined under clause 8.3.


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9.    Identification, maintenance, enforcement and defence of Intellectual
      Property
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9.1   Indentification of Project Results

      (a)   Prana must notify the Project Leaders of the creation of any Project
            Results as soon as practicable after such creation.

      (b)   Prana will use its best efforts to ensure that its employees, agents
            and sub-contractors under its supervision or other persons
            participating in the Project:

            (i)   will identify Project Results generated or developed by them;

            (ii)  will promptly communicate details of it to the Project
                  Leaders; and

            (iii) will promptly do all acts and things and execute all documents
                  necessary for the purpose of vesting ownership of the Project
                  Results in Prana as contemplated by clause 7.2.

      (c)   If Prana considers that a particular development arising from that
            Project may be patentable or the subject of other forms of
            Intellectual Property protection, Prana will promptly communicate
            details of that development to the Project Leaders.

      (d)   The Project Leaders will advise the KAMR whether the development
            warrants pursuing patent protection, or other forms of Intellectual
            Property protection, and if it does, of what nature and in which
            countries protection should be sought.

      (e)   If required by the KAMR, the Committee will discuss with SCHERING
            the matters referred to in paragraph (d) and the question which
            party shall have the obligation to file, maintain, prosecute,
            enforce and defend such Intellectual Property. The Committee will
            allow any final decision under this clause to be solely up to
            SCHERING.

      (f)   All registrable Project Results will be applied for in the name of
            the owner of that Project Results as determined under clause 7.2.

      (g)   Except as expressly stated otherwise in this Agreement:

            (i)   Prana will be responsible for application, prosecution,
                  maintenance, enforcement or defence of any form of
                  Intellectual Property protection in respect of its Background
                  IP and will keep NSV reasonably informed of, and co-operate,
                  at NSV's cost, with any reasonable request of NSV in
                  connection with, such matters; and

            (ii)  nothing will require Prana to apply its own funds (other than
                  those held by NSV on its behalf) towards the application,
                  prosecution,


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                  maintenance, enforcement or defence of any form of
                  Intellectual Property protection in respect of Project
                  Results.

9.2   Primary responsibility for Project Results

      (a)   NSV, subject to the rights of SCHERING and Prana referred to in
            clause 7.1 above and ss. 9 of the RCA, will be responsible for
            applying, maintaining, prosecuting, enforcing and defending any form
            of Intellectual Property protection in respect of Project Results in
            close consultation with SCHERING.

      (b)   NSV may meet any expenses incurred under this clause 9 out of any
            funds NSV receives from SCHERING dedicated explicitly to the
            purposes of maintaining, enforcing or defending any Intellectual
            Property and which NSV deposits into the Project Account.

9.3   Reversion of Project Results

      If:

      (a)   SCHERING does not take reasonably adequate steps to protect the
            Project Results; or

      (b)   an NSV request under clause 9.2 for funds to obtain protection of
            Project Results is refused,

            Prana may protect the Project Results and/or incur the expense (as
            the case may be) and all rights thereafter obtained as a result of
            those funds will be excluded from the first right of refusal under
            clause 7.2(d).

9.4   Assistance

      Prana will, at its cost, provide all information to NSV and SCHERING (as
      the case may be) and execute all documents and do all acts and things
      necessary or desirable to enable the adequate and timely preparation of
      all documents necessary or desirable for the application, prosecution,
      maintenance, enforcement or defence of any registrations or other
      protection of the Project Results, including, without limitation:

      (a)   signing, and procuring all inventors to sign, all powers of attorney
            and other forms required for the orderly prosecution of said patent
            applications; and

      (b)   lending its name to any infringement or defence action either as a
            direct party or a third party.

      Other than the obligations in this 9.4, Prana will not be liable for any
      costs associated with an infringement or defence action initiated by NSV
      or SCHERING.


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9.5   Protection of Intellectual Property

      (a)   Prana will disclose to NSV immediately it becomes aware, details of:

            (i)   any infringement or alleged infringement by any person of any
                  Project Results, Background IP of a third party relevant to
                  the Project or relevant to the Commercialisation of the
                  Project Results and Background IP, in the Field; and

            (ii)  any claim or alleged claim by any person that
                  Commercialisation of the Project Results, Background IP or any
                  Intellectual Property of a third party relevant to the
                  Commercialisation of the Project Results and Background IP
                  constitutes an infringement of the rights of that person, in
                  the Field.

      (b)   Unless the Parties otherwise agree, NSV will, in accordance with the
            terms of the Sub-licence (if any) take all reasonable steps to
            enforce and defend the Project Results, in the Field, as it sees
            fit, in consultation with Prana, but subject to any rights of
            SCHERING. At NSV's request, Prana agrees to give NSV all assistance
            which may be reasonably required in order to enforce and defend the
            Project Results.

      (c)   Prana will maintain, enforce and defend any Background IP which is
            the subject of a Schering sub-license under this Agreement, at
            Prana's own expense;

      (d)   If NSV decides not to initiate proceedings against any alleged
            infringer in relation to alleged infringement of Project IP in the
            Field, Prana will not do so without NSV's prior written consent,
            such consent to be given at NSV's discretion and on such conditions
            as NSV sees fit, including, without limitation, satisfaction of
            issues such as apportionment of proceeds, recovery of NSV's costs
            and indemnification of NSV against adverse judgment.

      (e)   NSV has the right to assign all rights vested in NSV under this
            Agreement with regard to filing, maintenance, prosecution,
            enforcement and defence of Project Results to SCHERING.

9.6   Proceeds of infringement

      If NSV recovers any damages or accounts of profits in taking any action
      against any alleged infringer of Project Results, in the Field, the
      amounts of any such judgment and any costs recovered by NSV will be first
      applied to reimburse reasonable external costs and expenses (including
      external legal costs) incurred by NSV, Prana and SCHERING. The balance, if
      any, will be apportioned in accordance


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      with the terms of the Sub-licence (if any) and then to Prana in accordance
      with this Agreement as if it were Commercialisation Proceeds.

10.   Confidentiality

--------------------------------------------------------------------------------

10.1  Confidentiality Obligations

      (a)   Each Party agrees that it will keep secret and confidential and not
            use or disclose to any other legal entity all Confidential
            Information made available by another Party other than as necessary
            for the purposes of this Agreement, save that NSV may disclose
            Confidential Information to third parties in confidence as
            reasonably necessary for the Commercialisation of the Project
            Results.

      (b)   The obligations imposed on a Party by this clause will not apply to
            Confidential Information which:

            (i)   prior to disclosure is in the public domain or in published
                  literature or subsequent to disclosure to the Party becomes
                  part of the public domain or is published other than as a
                  result of an unauthorised act or failure to act by that Party;

            (ii)  is received by a Party from a third party without any
                  obligation to hold in confidence and which has not been
                  obtained by that third party directly or indirectly from any
                  Party;

            (iii) is independently developed by an employee or officer of the
                  Party owing the obligation of confidentiality while having no
                  knowledge of the other Party's Confidential Information; or

            (iv)  the Party claiming confidentiality has identified in writing
                  as being released from the obligation of confidentiality.

      (c)   A combination of information will not be taken to be in the public
            domain merely because it contains information in the public domain.

      (d)   Confidential Information will not be taken to be in the public
            domain merely because it is embraced by a general disclosure in the
            public domain.

      (e)   The receiving Party has the onus of showing that any of the above
            exceptions apply.

      (f)   Each Party will ensure that:

            (i)   its respective employees who participate in the Project or
                  acquire access to Confidential Information, will comply with
                  the obligations of confidentiality as though parties to this
                  Agreement; and


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            (ii)  any of the above mentioned employees who cease to be employed
                  by the Party will continue to be bound by such obligations of
                  confidentiality.

      (g)   The obligations of confidentiality imposed on a Party will survive
            termination of this Agreement.

10.2  Publications

      (a)   The Parties will use their best endeavours to ensure nothing is done
            which might prejudice the subsistence or Commercialisation of
            Confidential Information or Project Results. In particular, the
            Parties will not publish or disclose any such Confidential
            Information or Intellectual Property to any third person so as to
            preclude the grant of a patent in respect of the Project Results or
            cause the loss of any Intellectual Property in any Confidential
            Information.

      (b)   Prior to any publication the Party wishing to publish material (the
            Requesting Party) must forward a request in writing to NSV and/or
            SCHERING seeking permission to publish the material.

      (c)   The Requesting Party may not publish results of the Project without
            the consent of SCHERING. If the Requesting Party requests in writing
            that SCHERING consent to a publication, SCHERING may not withhold
            that consent unless in its reasonable view the publication includes
            Confidential Information being part of Project Results and within
            the Field and the publication would adversely affect protection or
            Commercialisation of the Project Results within the Field. If the
            Requesting Party makes such a written request and receives no
            response from SCHERING within 90 days, SCHERING will be deemed to
            have consented to the proposed publication.

11.   Settlement of Disputes and Arbitration

--------------------------------------------------------------------------------

11.1     Dispute Resolution

      (a)   If a dispute arises between the Parties in connection with the
            Agreement, the Parties undertake in good faith to settle the
            dispute.

      (b)   Any dispute or difference arising between the Parties which cannot
            be resolved between them will be resolved in accordance with the
            following procedure:

            (i)   the Party claiming that a dispute exists will notify the other
                  Party that a dispute exists and forthwith submit such dispute
                  or difference to

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                  the Committee for resolution. The Committee shall decide under
                  consultation of the KAMR.

            (ii)  if the Committee and the KAMR are unable to resolve the
                  dispute or difference within a reasonable time, a meeting will
                  be convened forthwith between senior representatives of the
                  disputing Parties not being members of the Committee for
                  resolution of the dispute or difference. If the dispute or
                  difference concerns any matter being of material interest for
                  SCHERING (e.g. such as rights to Background IP or Project
                  Results, or publication issues) the senior representatives
                  shall also confer with the SCHERING member(s) of the Steering
                  Committee to resolve the dispute or difference.

      (c)   Each Party acknowledges that the compliance with these provisions is
            a condition precedent to any entitlement to a claim, relief or
            remedy, whether by way of proceedings in a court of competent
            jurisdiction or by arbitration proceedings under this Agreement or
            otherwise in respect of such dispute or difference. However this
            will not preclude any Party from seeking urgent interlocutory relief
            in a court of competent jurisdiction.

11.2  Arbitration

      If any dispute or difference arises between the Parties to this Agreement
      which cannot be resolved between them in accordance with clause 11.1, and
      which does not impinge upon a question of law or call for the
      rectification of this Agreement, such dispute will forthwith be referred
      for determination at Melbourne, by an arbitrator agreed on by the Parties
      to the dispute or difference. If such Parties are unable to agree upon an
      arbitrator the matter will be dealt with in accordance with the laws
      relating to expedited commercial arbitration for the time being in force
      in Victoria.

11.3  SCHERING as Intended Third Party Beneficiary

      Reference is hereby made to the RCA between SCHERING and NSV. The Parties
      recognize that as a result of the above-referenced agreement SCHERING has
      a material interest in the performance of this Agreement by the Parties
      hereto. Accordingly, to the extent that this Agreement grants to NSV any
      right, remedy or claim under or by reason of this Agreement, SCHERING may
      also enforce any such right, remedy or claim against Prana on its own
      behalf. Where this Agreement refers to a provision of the RCA under which
      SCHERING has a right, remedy or claim against Prana, SCHERING may enforce
      that right, remedy or claim directly against Prana under this Agreement.


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12.   Termination and Breach

--------------------------------------------------------------------------------

12.1  Breach by Prana

      (a)   If Prana breaches or fails to perform any material term of this
            Agreement, and the breach is capable of remedy by performance or
            otherwise, NSV may serve on Prana a notice requiring it to remedy
            that breach. Prana must, at its cost, use its best endeavours and
            take all reasonable steps to remedy the breach within 90 days of
            receipt of the notice.

      (b)   Subject to NSV's rights under clause 3(a) Prana's inability or
            failure to carry out or complete the Project due to the loss of the
            services of key personnel (whether by way of resignation, dismissal,
            loss of tenure or otherwise) is considered to be a breach that is
            capable of remedy for the purposes of this clause 12.

      (c)   If Prana has not remedied the breach to NSV's reasonable
            satisfaction within 90 days of receipt of the notice, NSV may, in
            addition to any other rights it may have under this Agreement, take
            one or more of the following steps:

            (i)   require Prana to continue to make available to NSV (by way of
                  licence, mutually agreed assignment, or otherwise), as
                  necessary to enable NSV to fulfill its obligations to
                  SCHERING, all of Prana's interest in any Project Results and
                  any associated Background IP on terms to be agreed in good
                  faith having regard to the nature of the material breach, the
                  nature of the Intellectual Property, the nature of NSV's
                  obligations to SCHERING and any other relevant factors;

            (ii)  if NSV enforces its right under paragraph (i) to have the
                  Project Results and Background IP continue to be made
                  available, require Prana to continue to comply with its
                  obligations under clause 9 of this Agreement in relation to
                  that Project Results and Background IP and not do anything in
                  relation to that Project Results and Background IP which may
                  prejudice NSV's ongoing rights in that Project Results and
                  Background IP;

            (iii) terminate Prana's participation in the Project;

            (iv)  require Prana to assist, at Prana's cost, NSV to find a
                  suitable substitute to conduct any or all of Prana's
                  outstanding role in the Project;

            (v)   require Prana to fully indemnify NSV in respect of all
                  liabilities and expenses incurred by any of them in respect of
                  Prana's default


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                  under this Agreement, including the costs associated with
                  finding a suitable substitute under paragraph (iv) above; and

            (vi)  terminate this Agreement in respect of Prana or in respect of
                  all Parties without prejudice to the rights granted under
                  clauses 7 and 8.

      (d)   If NSV terminates this Agreement under this clause then the
            following provisions shall apply to any funds still held by NSV as
            agent for Prana:

            (i)   Prana hereby authorises and directs NSV to transfer the funds
                  as agent for Prana to another project or new projects(s) (the
                  new project or projects) as determined by NSV;

            (ii)  the participating institutes in respect of the new project or
                  projects may include Prana;

            (iii) funds so transferred shall become 'Earmarked Funds' for the
                  new project or projects; and

            (iv)  upon NSV determining to transfer funds to a project or new
                  projects under this clause, NSV shall cease holding the
                  transferred funds as agent (and, to the extent that those
                  funds were also being held as agent on trust, on trust) for
                  Prana and commence holding them as agent (and, to the extent
                  that those funds will also be held as agent on trust, on
                  trust) for the participating institutes in respect of the
                  project or new projects.

12.2  Termination for unsatisfactory progress

      The KAMR will regularly review the progress of the Project with the
      Project Leaders and if the KAMR considers the Project is not progressing
      to its reasonable satisfaction, NSV may terminate this Agreement by 6
      months prior written notice to the Institute(s). If NSV terminates this
      Agreement under this clause then NSV will have no further obligation to
      provide funds after the effective date of termination and the provisions
      of Section 12.1(d) shall apply to any funds still held by NSV.

12.3  Termination of RCA with SCHERING

      If in case of termination or expiry of the RCA the Project under this
      Agreement is not completed, the Project may be continued until finished in
      this Agreement

12.4  Termination for Insolvency etc.

      Unless the Parties agree otherwise, this Agreement will terminate if NSV:


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      (a)   stops or suspends or threatens to stop or suspend payment of all or
            a class of its debts;

      (b)   is insolvent within the meaning of section 95A of the Corporations
            Act;

      (c)   must be presumed by a court to be insolvent by reason of section
            459C(2) of the Corporations Act;

      (d)   fails to comply with a statutory demand (within the meaning of
            section 459F(1) of the Corporations Act);

      (e)   has an administrator appointed over all or any of its assets or
            undertaking or any step preliminary to the appointment of an
            administrator is taken;

      (f)   has a controller within the meaning of section 9 of the Corporations
            Act or similar officer appointed to all or any of its assets or
            undertaking; or

      (g)   has an application or order made, proceedings commenced, a
            resolution passed or proposed in a notice of meeting, an application
            to a court made or other steps taken against or in respect of it
            (other than frivolous or vexatious applications, proceedings,
            notices or steps or voluntary applications or proceedings for the
            purposes of reconstruction) but specifically excluding voluntary
            applications related to bankruptcy or insolvency for its winding up,
            deregistration or dissolution or for it to enter an arrangement,
            compromise or composition with or assignment for the benefit of its
            creditors, a class of them or any of them.

12.5  Breach by NSV

      (a)   If NSV breaches or fails to perform any material term of this
            Agreement, and the breach is capable of remedy by performance or
            otherwise, Prana may serve on NSV a notice requiring it to remedy
            that breach.

      (b)   NSV must, at its cost, use its best endeavours and take all
            reasonable steps to remedy the breach within 90 days of receipt of
            the notice.

      (c)   If NSV has not remedied the breach to Prana's reasonable
            satisfaction within 90 days of receipt of the notice, Prana may, in
            addition to any other rights it may have under this Agreement, take
            one or more of the following steps:

            (i)   require NSV to cease representing that it is an agent for
                  Prana in relation to the Project;

            (ii)  require NSV to pay all monies held in the Project Account and
                  any Commercial Proceeds to Prana in the proportions applicable
                  under clause 8.3;


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            (iii) require NSV to assign or co-operate in procuring the
                  assignment to Prana of the benefit of any arrangements NSV has
                  with SCHERING; and

            (iv)  require NSV to fully indemnify Prana in respect of all
                  liabilities and expenses incurred by it in respect of NSV's
                  default under this Agreement, including the costs associated
                  with the assignment referred to in paragraph (iii) above.

      (d)   In case of Section 12.5(c) Prana agrees to SCHERING having the
            right, at its option, to replace NSV as a contract partner to this
            Agreement to the extent that all indemnification obligations of NSV
            towards Prana, which are borne prior to such substitution by
            SCHERING will remain with NSV. All indemnification obligations of
            SCHERING towards Prana, which are borne after such substitution of
            NSV, will remain with SCHERING.

12.6  Termination report

      (a)   In all cases of termination of this Agreement under this clause 12,
            Prana will compose a termination report containing all Project
            Results created up to the date of termination of this Agreement,
            clause 5.6 shall apply to the termination report accordingly. The
            termination report shall be signed by the Project Leader of Prana
            and the Head of Prana as well as countersigned by the KAMR. The
            termination report shall be promptly submitted to the Steering
            Committee which shall be considered as notification of relevant
            Project Results under clause 7.2(e) giving NSV and SCHERING the
            right to evaluate their interest in the Project Results and, if the
            case may be, to exercise their options, in accordance with the
            provisions of Project Results 7.2 and 8.

      (b)   If NSV has notified Prana in accordance with clause 7.2 that NSV and
            SCHERING do not want to exercise their rights of first refusal,
            Prana shall will be free to continue the Project at its own expense;
            provided however that Prana will not raise funding from a third
            party for a period of 12 months after SCHERING has declined its
            option. Prana will notify NSV and SCHERING before they solicit third
            party funding after the 12 months period in order to give NSV and
            SCHERING the opportunity to reintegrate the Project into the Project
            portfolio under the RCA and to provide the funding under the RCA.
            NSV and SCHERING shall have 30 days to decide whether the Project
            shall be integrated into the portfolio and the funding requested by
            Prana. NSV shall notify Prana in writing upon the decision. The
            Parties hereby acknowledge that Prana will have the opportunity to
            demonstrate any added value created in the Project during the 12
            months


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            period and to re-negotiate the commercial terms which would apply to
            reintegration of the Project, to reflect the added value that Prana
            has created during the 12 months period.

13.   Termination without prejudice

--------------------------------------------------------------------------------

      Termination or expiry of this Agreement for any reason, does not affect:

      (a)   any rights and obligations of the Parties which have accrued prior
            to such termination or expiry; and

      (b)   any rights and obligations of the Party which by their nature
            survive termination including without limitation rights and
            obligations under clauses 10 and 14.2.

14.   General Warranties and Indemnities

--------------------------------------------------------------------------------

14.1  IP representations and warranties

      Prana represents and warrants that:

      (a)   it is the owner of, or is otherwise entitled to provide, the
            Background IP which it makes available under this Agreement; and

      (b)   it has adequate arrangements in place with its employees, agents and
            sub-contractors to enable it to grant the licences to its Project
            Results under this Agreement.

      (c)   to the best of its knowledge as at the Commencement Date any
            Commercialisation of its Background IP and Project Results as
            permitted this Agreement does not (and, unless it notifies NSV in
            writing to the contrary during the term of this Agreement, will not)
            infringe the rights of any third party.

14.2  Indemnities in relation to the Project

      Each Party will indemnify (Indemnifying Party) each other Party and the
      officers, employees and any scientists engaged by it (Those Indemnified)
      against all claims, liability, loss, damage, costs and expenses (including
      but not limited to legal costs on a solicitor and own client basis) which
      may be incurred by Those Indemnified arising out of or in connection with:

      (a)   any personal injury suffered by or the death of Those Indemnified or
            any loss or damage to property, real or personal, of Those
            Indemnified caused by any negligent act or omission of the
            Indemnifying Party or


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            officers, employees and any scientists engaged by it in the course
            of carrying out the Project;

      (b)   any claims, actions or proceedings by any third party against Those
            Indemnified for any personal injury suffered by or the death of that
            third party, or any loss or damage to property, real or personal, of
            that third party caused by any negligent act or omission of the
            Indemnifying Party or officers, employees and any scientists engaged
            by it in the course of carrying out the Project; and

      (c)   any breach of any representation or warranty provided by
            Indemnifying Party under this Agreement.

15.   Assignment and Sub-Contracting

--------------------------------------------------------------------------------

            Prana may not assign or transfer any of its rights or obligations
            under this Agreement, nor sub-contract a substantial part of its
            obligations under the Project, without the prior written consent of
            NSV such consent not to be unreasonably withheld. NSV may not assign
            or transfer any of its rights or obligations under this Agreement
            without the prior written consent of Prana such consent not to be
            unreasonably withheld.

16.   Force majeure

--------------------------------------------------------------------------------

      (a)   Where a Party is unable, wholly or in part, by reason of force
            majeure, to carry out any obligation under this Agreement, and that
            Party:

            (i)   gives each other Party prompt notice of that force majeure
                  including reasonable particulars, and, in so far as known, the
                  probable extent to which it will be unable to perform or be
                  delayed in performing that obligation; and

            (ii)  uses all possible diligence to remove that force majeure as
                  quickly as possible,

            that obligation is suspended so far as it is affected by force
            majeure during the continuance of that force majeure and that Party
            will be allowed a reasonable extension of time to perform its
            obligations.

      (b)   If, after 30 days, the force majeure has not ceased, the Parties
            will meet in good faith to discuss the situation and endeavour to
            achieve a mutually satisfactory resolution to the problem.

      (c)   The requirement that any force majeure must be removed with all
            possible diligence does not require that the settlement of strikes,
            lockouts or other labour


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            disputes or claims or demands by any government on terms contrary to
            the wishes of the Party affected.

      In this clause, force majeure means an act of God, strike, lockout or
      other interference with work, war (declared or undeclared), blockade,
      disturbance, lightning, fire, earthquake, storm, flood, explosion,
      governmental or quasi governmental restraint, expropriation, prohibition,
      intervention, direction or embargo, unavailability or delay in obtaining
      governmental or quasi governmental approvals, consents, permits, licenses,
      authorities or allocations, and any other cause, whether of the kind
      specifically enumerated above or otherwise which is not reasonably within
      the control of the Party affected.

17.   Clause severance

--------------------------------------------------------------------------------

      Any provision of this Agreement that is held void by a court of competent
      jurisdiction or is voidable by a Party or is or becomes at that time
      unlawful or unenforceable will, to the extent to which it is void or
      voidable or is unlawful or unenforceable, be deemed to be exercised from
      and not form part of this Agreement, without affecting the validity or
      enforceability of the remaining provisions to the fullest extent permitted
      by law or in equity.

18.   Waiver

--------------------------------------------------------------------------------

      A waiver by a Party of any rights arising from a breach or non-observance
      by any other breach of a term of this Agreement will not be taken to
      operate in any way as a waiver of any rights arising from any subsequent
      continuation of that breach or non-observance, or any further or other
      breach or non-observance of the same or any other term.

19.   Governing law

--------------------------------------------------------------------------------

      (a)   This Agreement will be governed by and construed in accordance with
            the law for the time being in force in Victoria.

      (b)   With respect to any legal action or proceedings which may be brought
            in relation to this Agreement or any transaction contemplated by
            this Agreement, each Party irrevocably submits to the non-exclusive
            jurisdiction of courts exercising jurisdiction in Victoria.


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20.   Notices

--------------------------------------------------------------------------------

      (a)   Any notice, request, consent or other communication in connection
            with this Agreement must be in writing and:

            (i)   left at the address of the addressee;

            (ii)  sent by prepaid-ordinary post (airmail if posted to or from a
                  place outside Australia) to the address of the addressee;

            (iii) sent by facsimile to the facsimile number of the addressee; or

            (iv)  if the addressee has given written notice of another address
                  or facsimile number, sent to that address or facsimile number.

      (b)   The address and facsimile number of each Party is as specified in
            Schedule 3.

      (c)   A notice, request, consent or other communication takes effect from
            the time it is received unless a later time is specified in it.

      (d)   A notification of change of address will not take effect until each
            other Party notifies the Party changing its address that the notice
            of change of address has been received.

      (e)   A letter or facsimile is taken to be received:

            (i)   for a posted letter, on the third (seventh, if posted to or
                  from a place outside Australia) day after posting; and

            (ii)  for a facsimile, on production of a transmission report by the
                  machine from which the facsimile was sent which indicates that
                  the facsimile was sent in its entirety to the facsimile number
                  of the recipient. However, if the transmission is completed
                  after 5.00pm on a business day or is sent on a day that is not
                  a business day, the message is taken to have been received at
                  8.00am on the next business day.

21.   Entire Agreement

--------------------------------------------------------------------------------

      This Agreement and the Agency Agreement between NSV and Prana contain the
      entire agreement between the Parties with respect to their subject matter
      and supersede all prior agreements and understandings between the Parties
      in connection with it. In case that the Agency Agreement contradicts any
      provision contained in this Agreement, the provisions of this Agreement
      shall prevail.


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22.   Amendments

--------------------------------------------------------------------------------

      No agreement or understanding varying or extending this Agreement will be
      legally binding unless it is in writing signed by all Parties.

23.   Further assurances

--------------------------------------------------------------------------------

      Each Party agrees to do all things and execute all deeds, instruments,
      transfers or other documents as may be necessary or desirable to give full
      effect to the provisions of this Agreement and the transactions
      contemplated by it.

24.   Counterparts

--------------------------------------------------------------------------------

      This Agreement may be executed in any number of counterparts. All
      counterparts together will be taken to constitute one instrument.


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Schedule 1

Financial Terms

--------------------------------------------------------------------------------

This is a Financial Category 4 Project (Appendix 7.5 of the Research
Collaboration Agreement)

--------------------------------------------------------------------------------
Payments                           Category 4

                                   (Set of Lead Components plus issued patents)
--------------------------------------------------------------------------------

Down-Payment                       $AUD 400,000

New Leads from High                none

Throughput Screening

IND (or equivalent)                $AUD 1,000,000

Commencement of Phase III          $AUD 2,000,000

Study

First Market Approval in each      US $AUD 2,000,000

of US, EU or JAP                   EURO $AUD 1,000,000

                                   JAP $AUD 1,000,000

Royalties                          4%
--------------------------------------------------------------------------------

Project Synopsis

--------------------------------------------------------------------------------

Name of Research Project: Aa binding ligands for imaging of Alzheimer's Disease
(AD)

Appendix 2.2i of the Research Collaboration Agreement

NSV-PROJECT CODE: VI

PROJECT TEAM: MASTERS. C. (PROJECT LEADER/MELBOURNE); CAPPAI, R.:
R.CAPPAI@UNIMELB.EDU DINKELBORG, L.: LUDGER.DINKELBORG@SCHERING.DE; DYRKS, T.:
THOMAS.DYRKS@SCHERING.DE; FRIEBE, M.: MATTHAIS.FRIEBE@SCHERING.DE

START OF PROJECT: AT SIGNATURE OF NSV/SAG RESEARCH CONTRACT

RESOURCES (FOR THE FIRST RESEARCH YEAR):

NSV: TOTAL NUMBER OF FTES / POST DOCS AND TAS INVOLVED: 3

SAG: Involvement of FTEs within the first 15 month collaboration period: 0


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RATIONALE: Prove the concept that radiolabeled specific AB binding ligands allow
in vivo imaging of AD.

--------------------------------------------------------------------------------

SCIENTIFIC BACKGROUND:

Alzheimer's Disease usually comes along with progressive neurodegenerative
symptoms e.g. memory loss, confusion, apraxia and dementia. Currently no
scientific imaging method is available, since MRI, [F-18]-FDG PET and SPECT only
visualize defects which can also occur in other brain diseases. These other
causes need to be ruled out. However, this can only be achieved histologically
on post-mortem material. The deposition of amyloid plaques in an AD brain is a
key pathological marker of the disease. The ability to image plaques in a living
brain would provide an enormously powerful tool to diagnose the disease and to
monitor success of potential therapeutic strategies. Recently, various
approaches emerged aiming on detection and visualization of ab-plaques.
Compounds such as ZK810630 targeting the CCR1 are under investigation at the
moment in terms of PET imaging.
2-[4'-(4"-methylpiperazin-1-yl)phenyl]-6-iodobenzothiazole (TZPI) (Kung et al.,
J.Med.Chem., 2001, 12, 1841-2038) displayed promising results in vitro and in
vivo.

Transition metals such as copper, zinc, nickel or iron are proposed to induce
the formation process of insoluble AB-sheets. Two principal approaches for
therapy have been suggested by Victoria Neuroscience. They either intend to
remove the metals, described vide supra, out of the respective brain regions by
complexation (Clioquinol) in order to prevent the formation of AB-sheets or to
block the amyloid peptide's metal binding moieties by administration of
different structured metal bearing complex molecules that bind to the same
moiety without inducing the formation of AB-sheets.

--------------------------------------------------------------------------------
MAIN INDICATION: AD

IN VIVO IMAGING OF AB IN THE BRAIN FOR DIAGNOSIS AND MONITORING OF THERAPY.

--------------------------------------------------------------------------------
COMPETITOR SITUATION:

Congo red (CR) or Chrysamine G (CG) analogs such as 2-[4'-(4"-
methylpiperazin-1-yl)phenyl]-6-iodobenzothiazole (TZPI) were labeled with
I-123/I-125 for imaging. [F-18] radiofluorinated probes e.g.
1,1-dicyano-2-[6-(dimethyl-amino)naphtalen-2-yl]propene (FDDNP) (U.S.
Provisional Patent Application No.60/097,320, UCLA) were labeled for PET imaging

--------------------------------------------------------------------------------
PROPRIETARY POSITION:

US PATENT: Use of clioquinol for the therapy of Alzheimer's disease PATENT
NO.09/224,953, WO 9310459, WO 200107442

--------------------------------------------------------------------------------
RESEARCH PLAN FOR THE COMING 15 MONTHS:
Most of the described activities have to be done at NSV/Prana.

Clioquinol labeled with I-123/I-125

      -     radiolabeling of clioquinol with I-125 and I-123 at the "cold"
            iodine position

      -     determine binding capabilities of clioquinol to AB-plaques in vitro
            (Kd)

      -     determine blood-brain barrier passage of the labeled clioquinol in
            vivo (rat/mouse)

      -     do an autoradiography on AD's brain samples ex vivo


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      -     perform imaging experiment in the animal model of AD's (established
            by Victoria NS)

Phtalocyanine labeled with In-111 and Co-57, respectively

      -     Indium-111 and Co-57 labeling of phtalocyanine

      -     determine binding capabilities of indium (III) and Co(II)
            phtalocyanine labeled/"cold") to AB-plaques in vitro (Kd)

      -     determine blood-brain barrier passage of the labeled [In-111]indium
            (III) and [Co-57] cobalt(II) phtalocyanine in vivo (rat/mouse)

      -     do an autoradiography on AD's brain samples ex vivo

      -     perform imaging experiment in the animal model employing of AD's
            (established by Victoria NS)

As a reference:
TZPI (Kung et al.) targeting AB-plaques

      -     radiolabeling of TZPI with I-123/I-125 (established by Kung et al.)

      -     determine binding capabilities of [I-125]TZPI to AD plaques in vitro
            (Kd)

      -     determine blood-brain barrier passage of the labeled [I-125]TZPI in
            vivo (rat/mouse)

      -     do an autoradiography on AD's brain samples ex vivo

      -     perform imaging experiment in the animal model employing [I-123]TZPI
            (established by Victoria NS)

--------------------------------------------------------------------------------
Milestones:

1.    radiolabeling of clioquinol and cobalt(II) phtalocyanine (to be determined
      3month)

2.    establishment of in-vitro assay (Prana/NSV 3 month)

3.    show in vitro binding (Prana/NSV 6 month)

4.    biodistribution studies (Prana/NSV 6 month)

5.    autoradiography ex vivo (Prana/NSV 9 month)

6.    imaging experiment in vivo (Prana/NSV 12 month)

PROJECT FEASIBILITY:

THE PROJECT'S FEASIBILITY IS GOVERNED BY THE EXPERTISE OF THE GROUP AND THEIR
CLAIM TO HAVE SUITABLE IN-VITRO AND IN-VIVO MODELS

--------------------------------------------------------------------------------
CRITICAL ISSUES:

THE ABILITY OF THE COMPOUNDS TO CROSS THE BLOOD-BRAIN BARRIER. PATHOLOGICAL
SIGNIFICANCE OF THE BINDING-PRINCIPLE/STAINED STRUCTURES/LABELLED MOLECULES.
IP-SITUATION WITH PRANA

--------------------------------------------------------------------------------
NO-GO CRITERIA:

No proof of concept in vitro with one of the two compounds within 9 months
(compound synthesis and blood-brain barrier passage).

CURRENT PROJECT STATUS: (TO BE FILLED OUT BY SAG AND TO BE DEFINED ACCORDING TO
SAG CRITERIA)

HIT TO LEAD PROCESS

--------------------------------------------------------------------------------


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DEFINITION OF PROJECT STATUS / PROJECT CRITERIA(S) NECESSARY FOR EXERCISING THE
NEGOTIATION RIGHT:

--------------------------------------------------------------------------------

To exercise the Option the Lead compounds should fulfill the following criteria:

      >     Proven specificity in secondary in vitro (binding capabilities to
            AB-plaques in vitro and to AD's brain samples ex vivo) and basic in
            vivo models (transgenic AD mice) (12 month)

      >     Proven suitable physicochemical and toxicological properties (3
            month (subsequent to proven specificity (vide supra)))

      >     Proven suitable pharmacokinetic properties (blood-brain barrier
            passage) (6 month)

      >     Preliminary SAR

      >     Patentability: Clear patent strategy

Earliest time to exercise the option will be 15 months after the collaboration
started.


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Schedule 2

Project Management Committee

--------------------------------------------------------------------------------

Project Management Committee for Project described in Appendix 2.2i of the RCA
and entitled AB binding ligands for imaging of Alzheimer's Disease (AD)

Institute Representative:  Professor Edward Byrne

Project Leader Institute:  Professor Colin Masters

Project Leader SCHERING:  Dr. Ludger Dinkelborg


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Schedule 3

Addresses for Service of Notices

--------------------------------------------------------------------------------

Prana Biotechnology (ACN 080 699 065)

Attention: Chief Operating Officer

Fax No.: +61 3 9690 8587

Address:  Suite 2, 1233 High Street, Armadale, Victoria, 3143, Australia

Neurosciences Victoria Ltd

Attention: Chief Executive Officer

Fax No.: +61 3 3443832

Address:  The Gatehouse, 2 Park Drive, Parkville, Victoria, Australia, 3052


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Schedule 4

Budget, Shares of Project Results and Proceeds of Commercialisation

--------------------------------------------------------------------------------

Item 1: Budget (clause 6(a))

With respect to this Project, NSV is providing AUD $450,000 per annum to Prana
Biotechnology. Total funds are shown for the anticipated 12-month period of this
Project.

        Research Funds

        The University of Melbourne                 $405,000

        Prana Proportion                            $45,000(10%)

        TOTAL                                       $450,000

Item 2: Parties' ownership share of Project Results (clause 7.2)

        Prana                               100%

        SCHERING                              0%

        TOTAL                               100%

Item 3: Parties' entitlement to Commercialisation Proceeds (clauses 8.3 & 8.4)

        NSV                                12.5%

        Prana                              87.5%

        Total                               100%

Item 4: Restrictions on NSV's right to Commercialise Background IP (clause 7.1)

        Rights to Commercialise Background IP are non-exclusive

--------------------------------------------------------------------------------


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Project Agreement
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Executed in Melbourne, Victoria, Australia

Signatories to This Project Agreement:

Mr Geoffrey Kempler                 Executive Chairman,

                                    Prana Biotechnology Limited

                                                            Date 11/03/2003
/s/ Geoffrey Kempler
--------------------------------

A/Prof William Hart                 Chief Executive Officer,

                                    Neurosciences Victoria Limited

                                                            Date 11/03/2003

/s/ William Hart
--------------------------------

Professor Edward Byrne              Deputy Chair

                                    Neurosciences Victoria Limited

                                                            Date  3/03/2003


/s/ Edward Byrne
--------------------------------


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