Service Contract between Mayne Group and Scott Richards dated May 21, 2003.



 EXHIBIT 16 
  

Private & Confidential 
  
 21 May 2002 
  
 Mr Scott Richards 
 Vice President Commercial Operations Asia Pacific 
 FH Faulding & Co Limited 
 Salisbury 
  
 Dear Scott, 
  
 I have pleasure in confirming my offer for your appointment to the position of President, Europe/Middle East & Africa, as an Australian
based expatriate under the following terms and conditions. This position will be located in the United Kingdom and you will report to Group General Manager, Pharmaceuticals. 
  
 Employer 
  
 Your contract of employment is with Mayne Group Limited ABN 56 004 073 410 (Mayne). As an employee of Mayne, you may be required to provide services to any company in the
Mayne Group and all entities which are subsidiaries of Mayne. 
  
 Contract
Terms 
  
 This contract shall take effect from 1 May 2002 and will supersede
in its entirety your current employment contract and arrangements, which shall be deemed to have terminated by mutual consent as from 30 April 2002. However, for the purposes of service-related benefits of employment, your service with Mayne will be
regarded as continuous from the 28 November 1988, the date you initially commenced employment with the Group or a related company. 
  
 Duties 
  
 Your responsibilities in this position are as outlined in the attached position description. You may however, be required to undertake other duties and responsibilities at a similar level from time to time in addition
to or in substitution for all or any duties of the position. As a consequence, or for other reasons, your reporting responsibility and/or position title may also be altered from time to time. In this event, your remuneration and other benefits under
this contract will not be altered without your consent, except to the extent that this contract permits. 
  
 Term of Assignment 
  
 This assignment is,
depending upon specific business requirements, for a period of 3 to 5 years commencing from 1 May 2002. On completion of the assignment you will be relocated to Australia or to an alternative mutually agreed location. 
  
 United Kingdom Visas 
  
 This offer of employment is conditional upon you obtaining the visas necessary for you to take up employment in the United Kingdom over the
proposed term of the assignment. 
  

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 Remuneration 
  
 Your remuneration in this position will be based on an Australian Total Employment Cost (TEC) of $300,000 per annum. For the purposes of expatriate remuneration build up,
your base salary will be $280,800 per annum, which represents the value of your TEC less Superannuation. 
  
 The nett value of your base salary is adjusted to account for the cost of living in the United Kingdom and the nature of expatriate secondments as set out in the attached Schedule A. 
  
 The effect of cost of living differentials and exchange rates on the remuneration paid in the
United Kingdom is reviewed regularly using information from an international consultancy, Employment Conditions Abroad (ECA), as well as on any occasion of major changes in relativities. 
  
 Your next remuneration review will be in June 2003. Thereafter, your remuneration will be reviewed annually, usually in June, with any
increase which may arise from each review being effective on 1 July. Mayne may alter the review and operative dates from time to time. 
  
 Short Term Incentive (Bonus) 
  
 You will be eligible to participate in the Mayne short term incentive scheme where a bonus of 20% of TEC may be awarded for the achievement of agreed target objectives,
related to the success factors of the Group. For outstanding performance, a higher bonus to a maximum of 50% of TEC may be awarded. Your target performance and parameters will be agreed at the commencement of each measurement period. 
  
 Retention Bonus 
  
 Subject to you remaining in continuous employment with FH Faulding Pty Ltd as at 31 December 2002, you will be entitled to a retention bonus
of $120,000 (less appropriate taxation). The payment will be made within 14 days of the qualifying date of 31 December 2002. Should your employment be terminated by the employer prior to 31 December 2002, other than for cause, you will be entitled
to payment of the retention bonus within 14 days of the termination date. 
  
 Superannuation 
  
 You will remain a member of the FH Faulding
Superannuation Fund. 
  
 Salary for Superannuation will be at the rate of 80% of
TEC, and the Company will contribute to the Fund at the rate that applies to that fund. 
  
 Your leaving service benefit will be the accumulated benefit in accordance with the rules of the fund. 
  
 Re-assignment 
  
 You may be reassigned to another position from time to time. Such reassignment will only occur after consultation with you, particularly as to your career development and your own circumstances. 
  

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 Termination of Employment 
  
 You may resign from your employment and terminate this contract by giving to Mayne no less than 3 months’ notice in writing. If you do
so, Mayne is not obliged to provide you with duties during the notice period. In the event, you resign to join a competitor which operated principally in the generic pharmaceutical industry, Mayne reserves the right to require you to serve the
notice period on an active or passive basis. 
  
 Similarly, Mayne may at any time,
terminate your employment by giving no less than 3 months’ notice in writing or payment in lieu. Payment in lieu of notice will be at the rate equivalent to your TEC for the period of notice. 
  
 In the case of serious misconduct (including disclosure of confidential information or other
serious or continuing breaches of this contract), Mayne may terminate your employment without notice. In this case, you will receive only accrued but untaken leave entitlements. 
  
 Retrenchment 
  
 If your employment is terminated on the grounds of redundancy, retrenchment benefits payable to you will accord with the terms of the retrenchment policy applicable to
Mayne staff at that time, except that, the payment in respect of notice will be not less than the notice period provided above. 
  
 Mayne Group Policies 
  
 You will be required to comply with Mayne Group policies and procedures generally, as established and varied from time to time. 
  

Confidentiality 
  
 It is agreed that, without limiting any express or implied obligation of confidentiality upon you under any statute (including the corporation law) you undertake that you will not divulge to any person or use any
trade secrets or confidential information concerning the business, financial arrangements or any further information belonging to the Mayne, except with the written authority of the undersigned. 
  
 Confidential information includes any information (written or verbal) of a commercial,
technical or financial type which is not publicly available. 
  
 Restriction on
Activities 
  
 It is agreed that you will not during your employment with
Mayne or within six months after cessation, either on your own account or for a jointly with any other person, or company, solicit interfere with or endeavour to entice away from Mayne or its subsidiaries any person firm or company who at any time
within one year prior to the date on which you cease to be employed by the Company was a customer, or employee of, or in the habit of dealing with Mayne or any of its subsidiaries. 
  
 Applicable Law 
  
 This contract of employment will be governed by the law of the State of Victoria. Nothing in this paragraph is to be taken to exclude any other applicable legislation,
either of a State or the Commonwealth. 
  

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 Schedule of Transfer Conditions and Benefits 
  
 The employment benefits applicable to you in this position are recorded in the attached Schedule B. 
  
 Please note that the procedures and provisions of benefits are subject to review from time to
time. 
  
 Attachments 
  
 The enclosed attachments to this letter form part of the terms and conditions of your
contract of employment. 
  
 Acceptance 
  
 To signify your acceptance of this offer of employment under the conditions outlined above,
please sign, date, and return the duplicate of this letter to me. 
  
 Yours
sincerely, 
  
 ALAN M REID 
 Group General Manager, Pharmaceuticals 
  

	 Att:
	  	 Expatriate Salary & Allowances
	  	 (Schedule A)

	 	  	 Schedule of Transfer and Benefits
	  	 (Schedule B)

	 	  	 Position Description
	  	 

  
 I acknowledge having received
and read this letter and each of its attachments, and I accept the offer of employment on the terms set out in this letter. 
  

	  


	Scott Richards
	
	Date:     /     /     


  

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 Schedule A 
  
 EXPATRIATE SALARY & ALLOWANCES 
  

	Name	  	 Scott Richards
	    	 	  	 
				
	Location	  	 United Kingdom
	    	Cost of living index	  	 148.2

				
	Marital status	  	 M+2
	    	Exchange rate	  	 0.3666

				
	Location factor	  	 0%
	    	Currency	  	 UK Pounds

				
	TEC	  	 300,000
	    	Effective Date	  	 1-Apr-2002

				
	SGC/company superannuation contribution percentage	  	 19,200
	    	Calculation Date	  	 20-Mar-2002

				
	Salary sacrifice for super contributions	  	 N/A
	    	Notes	  	 
				
	Base remuneration for buildup	  	 280,800
	    	 	  	 
			
	(TEC less company and salary sacrificed super)	    	 	  	 

  

  

				
	Expatriate remuneration calculation	  	 	    	 	  	 
				
	 	  	 $A
	    	 	  	 $A

				
	 Base remuneration
	  	 280,800
	    	 	  	 
				
	 Hypothetical tax deduction (KPMG) 1
	  	 123,568
	    	 	  	 
				
	 Dependent rebate
	  	 1,452
	    	 	  	 
				
	 Net remuneration
	  	 158,684
	    	 	  	 
				
	Spendable split (ECA)	  	 	    	 Net spendable 2
	  	 98,323

				
	 	  	 	    	 Housings and savings
	  	 60,361

				
	 	  	 	    	 Net remuneration
	  	 158,684

				
	 Cost of living allowance 3
	  	 47,392
	    	 	  	 
				
	 Location allowance 4
	  	 0
	    	 	  	 
				
	Expatriate remuneration (pa)	  	 206,076
	    	Monthly	  	 17,173


  

  

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 Remuneration split: 
  
 Host location (spendable) portion (as
per policy clause 4.9) 
  

	 In home currency
	  	 Net spendable plus cost of living allowance
	  	145,715
			
	 Converted to host currency
	  	UK Pounds	  	53,419
			
	Home location portion	  	 	  	 
			
	 In home currency
	  	 Housing & savings plus location allowance
	  	60,361

  

  

	Notes:	  	 	  	 
		
	 1) Hypothetical tax calculation
	  	 Medicare levy of 1.5% assumed

	 	  	 Dependent rebate included in hypothetical tax deduction

		
	 2) Net Spendable
	  	 net remuneration x Aust.Bureau of statistics formula for family size.

		
	 3) Cost of living allowance formula
	  	 net spendable x (cost of living index-100)/100

			
	 4) Location allowance formula
	  	 base remuneration x location factor
	  	 

  

  

	 Prepared by:
	  	 G. Wheelahan
	  	 
			
	 Reviewed by:
	  	 J. Camer
	  	 
			
	 Date approved:
	  	 	  	 

  

  

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 Schedule B 
  
 SCHEDULE OF TRANSFER CONDITIONS AND BENEFITS 
  

	 Name:
	  	 Scott Richards

		
	 Position:
	  	 President & Chief Operating Officer, Europe/Middle East & Africa

		
	 Date:
	  	 1 May 2002


  

  
 These benefits apply subject to variation as advised in the covering letter. Full details of the benefits and conditions are available from
the Group General Manager – Personnel. 
  
 Dependent Family

  
 The provisions within this schedule and the expatriate remuneration are
based on a dependent family consisting of 3 dependants. 
  
 RELOCATION

  
 Travel 
  
 On commencement of the expatriation assignment you will be entitled to: - 
  

	 	•	 	Business class travel for you and your immediate family, via the most direct route available between Australia and the United Kingdom 

  
 Relocation Allowance 
  
 You will be entitled to a lump sum tax free relocation allowance equivalent to 1 month’s Superannuation salary, paid as nett, to cover
the incidental costs of relocation at the commencement of your assignment. 
  
 LEAVE AND ASSOCIATED TRAVEL 
  
 Annual Leave 

 
 Annual leave credits will continue to accrue at the rate of 20 working days per annum.
Any annual leave credit accumulated during the assignment shall be taken prior to return to Australia or paid out upon repatriation. 
  
 Leave Air Travel 
  
 You are entitled to one normal return Business Class Airfare from the United Kingdom to Australia for you and your immediate accompanying family for each full year of service in the United Kingdom. 
  
 Should you wish to travel to other destinations this is acceptable provided the total cost in
any year does not exceed the equivalent to returning to Australia. 
  

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 Sick Leave 
  
 Sick Leave will continue to accrue at the rate of 10 days per annum. 
  
 Discretion will apply to the payment of sick leave taken beyond the available credits. 
  
 Long Service Leave 
  
 Long Service Leave will continue to accrue under Australian conditions for the duration of this assignment. 
  
 Compassionate Leave 
  
 Whilst on assignment, in the event of death or serious illness of any immediate family member, on approval of the Group General Manager, Pharmaceuticals or his/her
delegate, you (and your immediate accompanying family) will be entitled to compassionate leave and business class travel to Australia. 
  
 HOUSING AND BENEFITS 
  
 Housing 
  
 You will be entitled to
furnished housing for the duration of your secondment in the United Kingdom, as approved by the Group General Manager, Pharmaceuticals. 
  
 Mayne will meet utility costs related to your accommodation. 
  
 Sale of Adelaide Residence 
  
 Mayne will reimburse the cost of advertising, agents fees and legal fees associated with the sale of your Adelaide residence. 
  
 Telephone 
  
 A house telephone will be provided in the United Kingdom. The company will reimburse rental charges and all calls. 
  
 Company Vehicle 
  
 You will be provided with an appropriate vehicle whilst in the United Kingdom, as approved by the Group General Manager, Pharmaceuticals.
The Company will cover the cost of maintenance, registration, insurance and petrol; however, the payment of any fines incurred by yourself, or others you authorize to drive the vehicle, is your responsibility. 
  
 Children’s Education 
  
 Mayne will meet the cost of full-time education for your 2 children in the United Kingdom.
Fees for extra-curricular activities will not be reimbursed. 
  
 Health
Insurance 
  
 Mayne will provide health and evacuation cover for the duration
of your secondment. Marsh Ltd, health cover brokers will provide you with full details of the cover. 
  

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 Personal Tax Affairs 
  
 Whilst on assignment you will be subject to Mayne Tax Equalisation Policy. This policy ensures that your overall income tax liability on income you earn from Mayne during
your assignment, including tax on expatriate benefits, is approximately the same as it would have been had the assignment not been undertaken. Tax equalisation will not apply to non-Mayne related income and Mayne will not meet any tax liabilities on
any income derived outside of remuneration related to your employment. 
  
 To
assist you to comply with both your home country and host country taxation filing obligations, Mayne will arrange and pay for pre-departure and post-arrival tax consultations with KPMG. The consultation will be restricted to personal taxation
matters associated with the international secondment. 
  
 Mayne will meet the
costs of completion and filing of taxation returns in the United Kingdom for the duration of the assignment. The company will also pay for the completion and filing of the first taxation return required in your new domicile after the assignment has
concluded. 
  
 Club Membership 
  
 Subject to availability, Mayne will meet the cost of initial entry and annual subscription
for one family membership of a sporting or social club for the duration of this assignment. Incidental non-business expenses associated with the club membership are your responsibility. 
  
 Contract and Entertainment Expenses 
  
 Contract and entertainment expenses, which are business related and of benefit to the company will be reimbursed through the process of claim and approval by the Group
General Manager, Pharmaceuticals. 
  
 COMPLETION OF ASSIGNMENT 

 
 Travel 
  
 On completion of the expatriation assignment you will be entitled to: - 
  

	 	•	 	Business class travel for your and your immediate family, via the most direct route available between the United Kingdom and Australia. 

  
 Relocation Allowance 
  
 You will be entitled to a lump sum tax free relocation allowance equivalent to 1 month’s Superannuation salary, paid as nett, to cover
the incidental costs of relocation upon completion of your assignment. This allowance is not available should you resign prior to the end of the assignment or be dismissed for reasons of misconduct. 
  
 Transportation of Personal Effects 
  
 Mayne will meet the cost of: 
  

	 	•	 	Removal of household effects, including packing, transport and insurance, to a maximum of one full container load. 

  

	 	•	 	Transport by air of clothes and personal items required on an ongoing basis. 

  

	 	•	 	Continuing storage of household items for a maximum of 60 days after arriving in the home location. 

  

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 Temporary Living Expenses 
  
 You may be reimbursed for temporary living expenses for yourself and your immediate family, such as accommodation, laundry and meals, for up
to three days before departure from the United Kingdom and to a maximum of 30 days on arrival in Australia. 
  
 Housing 
  
 Reimbursement of costs
associated with the purchase of a house or return to Australia (or elsewhere if agreed). Costs covered would be: 

	 	•	Legal fees for purchase contract (including Title search) 

  

	 	•	Stamp Duty 

  
 Repatriation 
  
 Should you be dismissed
for reasons other than misconduct Mayne will meet the costs of repatriation to Australia. In this instance air travel will be Economy Class. 
  
 Mayne will not meet the cost of repatriation should you resign prior to the end of the assignment. 
  
 * * * * * * 
  

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