Document:

exv10w18

 

Exhibit 10.18

PHARMACEUTICALS PARTNERSHIPS PROGRAM

p3

FUNDING AGREEMENT

 

GENERAL CONDITIONS

 

Pharmaceuticals Partnerships Program General Conditions

Version 2.0 — Release Date: June 2005

 

 

(ii)

	 	 	 	 	 
	CONTENTS
	 
	 	 	 	 
	1 INTERPRETATION
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	1.2 Construction
	 	 	7	 
	1.3 Headings
	 	 	8	 
	 
	 	 	 	 
	2 PERFORMANCE AND UNDERTAKING
	 	 	8	 
	 
	 	 	 	 
	3 PAYMENT OF FUNDING
	 	 	9	 
	3.1 Payment by Commonwealth
	 	 	9	 
	3.2 Payment in respect of Actual Expenditure in a Payment Year
	 	 	9	 
	3.3 Underperformance in a Payment Year may be offset by Overperformance in Previous Financial Years
	 	 	9	 
	3.4 Payment in respect of Overperformance in a Payment Year
	 	 	10	 
	3.5 Overperformance in a Payment Year may offset Underperformance in the immediately preceding Financial Year
	 	 	10	 
	3.6 Conditions precedent to payment
	 	 	11	 
	3.7 Maximum payment
	 	 	11	 
	3.8 Process and time for payment
	 	 	12	 
	3.9 Taxable grant
	 	 	13	 
	3.10 Set-off
	 	 	14	 
	3.11 Recovery by Commonwealth
	 	 	14	 
	 
	 	 	 	 
	4 COMMONWEALTH’S DETERMINATION BINDING
	 	 	14	 
	4.1 Matters for binding determination
	 	 	14	 
	4.2 Procedure for binding determination
	 	 	14	 
	 
	 	 	 	 
	5 BASE EXPENDITURE
	 	 	15	 
	5.1 Audit Statement
	 	 	15	 
	5.2 Adjustment of Base Expenditure
	 	 	15	 
	5.3 Adjustment of maximum payments
	 	 	15	 
	 
	 	 	 	 
	6 MATTERS FOR REPORTING
	 	 	16	 
	6.1 Cessation of activity and change in corporate group
	 	 	16	 
	6.2 Government Grants
	 	 	17	 
	 
	 	 	 	 
	7 REPORTS
	 	 	17	 
	7.1 Reporting and estimating expenditure
	 	 	17	 
	7.2 Quarterly Reports
	 	 	17	 
	7.3 Annual Report
	 	 	18	 
	7.4 Requesting further information
	 	 	18	 
	7.5 Extension of time for Reports
	 	 	19	 
	7.6 Failure to submit Reports
	 	 	19	 
	7.7 Evaluation
	 	 	19	 
	 
	 	 	 	 
	8 REVIEW
	 	 	19	 
	8.1 Annual Assessment and Mid Term Review
	 	 	19	 
	8.2 Ad Hoc Review trigger
	 	 	19	 

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	8.3 Ad Hoc Review process
	 	 	20	 
	8.4 Effect of Ad Hoc Review
	 	 	20	 
	 
	 	 	 	 
	9 INTELLECTUAL PROPERTY
	 	 	22	 
	9.1 Vesting of Intellectual Property
	 	 	22	 
	9.2 Licence
	 	 	22	 
	9.3 Documentation
	 	 	22	 
	9.4 Warranty
	 	 	22	 
	 
	 	 	 	 
	10 CONFIDENTIALITY
	 	 	22	 
	10.1 Publicity
	 	 	22	 
	10.2 Confidential Information
	 	 	23	 
	 
	 	 	 	 
	11 RECORDS AND AUDIT
	 	 	23	 
	11.1 Records
	 	 	23	 
	11.2 Approvals and contract R&D
	 	 	24	 
	11.3 Inspection and audit
	 	 	24	 
	 
	 	 	 	 
	12 WARRANTIES
	 	 	25	 
	12.1 Corporate capacity
	 	 	25	 
	12.2 Application and Portfolio
	 	 	25	 
	12.3 Other warranties
	 	 	26	 
	12.4 Notification of breach
	 	 	27	 
	 
	 	 	 	 
	13 TERM AND TERMINATION
	 	 	28	 
	13.1 Term
	 	 	28	 
	13.2 Termination at any time
	 	 	28	 
	13.3 Termination for default
	 	 	29	 
	13.4 Force majeure
	 	 	29	 
	13.5 Survival of obligations after terminations
	 	 	29	 
	 
	 	 	 	 
	14 COMMUNICATIONS
	 	 	29	 
	14.1 General
	 	 	29	 
	14.2 How to give a Communication
	 	 	29	 
	14.3 Email communication
	 	 	30	 
	14.4 Current address for delivery of Communications
	 	 	30	 
	14.5 Communications by post
	 	 	30	 
	14.6 Communications by facsimile
	 	 	30	 
	14.7 After hours communications
	 	 	30	 
	14.8 Process service
	 	 	31	 
	 
	 	 	 	 
	15 GST
	 	 	31	 
	15.1 Construction
	 	 	31	 
	15.2 Consideration GST exclusive
	 	 	31	 
	15.3 Payment of GST
	 	 	31	 
	15.4 Timing of GST payment
	 	 	31	 
	15.5 Tax invoice
	 	 	31	 
	15.6 Adjustment event
	 	 	31	 
	15.7 Reimbursements
	 	 	32	 
	15.8 Recipient created tax invoice
	 	 	32	 
	15.9 Acknowledgment by Commonwealth
	 	 	32	 

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	15.10 Acknowledgment by Participant
	 	 	32	 
	 
	 	 	 	 
	16 SUBSTITUTION, VARIATION, ASSIGNMENT AND WAIVER
	 	 	32	 
	16.1 Substitution and variation
	 	 	32	 
	16.2 Assignment and dealing
	 	 	33	 
	16.3 Waiver and exercise of rights
	 	 	33	 
	 
	 	 	 	 
	17 GENERAL
	 	 	33	 
	17.1 Further steps
	 	 	33	 
	17.2 Governing law and jurisdiction
	 	 	33	 
	17.3 Liability
	 	 	33	 
	17.4 Good faith and reasonableness
	 	 	33	 
	17.5 Relationship of parties
	 	 	34	 

Pharmaceuticals Partnerships Program General Conditions

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OPERATIVE PROVISIONS

	1	 	INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In this Funding Agreement:
	 
	 	 	“Accrued Overperformance” means any part of Overperformance in Previous
Financial Years which has not been used previously to offset Underperformance
under clause 3.3 or clause 3.5 and has not been the subject of a payment under
clause 3.4(b).
	 
	 	 	“Accrued Underperformance”, in relation to a Payment Year, means any part of
Underperformance in the Financial Year immediately preceding the Payment Year
which has not been previously offset by Overperformance under clause 3.3.
	 
	 	 	“Actual Activity”, in relation to a Financial Year, means the Eligible
Pharmaceutical R&D Activity performed by the Participant and Members, or performed for or on behalf
of the Participant or a Member by any person under a contract with the Participant or
a Member, during that Financial Year.
	 
	 	 	“Actual Expenditure”, in relation to a Financial Year, means the Eligible
Expenditure which the Participant and Members have spent on the Actual Activity in that Financial Year.
	 
	 	 	“Ad Hoc Review” means an assessment under clause 8.3(a).
	 
	 	 	“Annual Report” means a report in accordance with clause 7.3.
	 
	 	 	“Application” means the application to participate in the Round of the Program
submitted by the Participant.
	 
	 	 	“Approvals” means all legislative, ethical, government and regulatory approvals
required in relation to the Portfolio and includes Ethical and Regulatory
Approvals.
	 
	 	 	“Audit Statement” means a statement which:

	 	(a)	 	is prepared and personally signed by a registered company auditor or
an authorised audit company, neither being an associate, employee, shareholder,
director or other officeholder of the Participant or a member of the Group;
	 
	 	(b)	 	contains a declaration that the Program Guidelines have been
complied with by
the Participant in the calculation of expenditure;
	 
	 	(c)	 	is prepared in accordance with the Program Guidelines; and
	 
	 	(d)	 	is prepared in accordance with auditing standard AUS902 “Review of
Financial
Reports” issued by the Australian Accounting Research Foundation.

	 	 	“Audited Third Base Year Expenditure” means the Eligible Expenditure spent on
the Portfolio in the Third Base Year by the Participant and people who were
members of the

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     Group at the closing date for submission of applications to participate in the
Round, as verified by the Audit Statement under clause 5.1.

     “Base Expenditure” means:

	 	(a)	 	where the Commonwealth has not issued a notice under clause 5.2, the
amount set
out in Item 2(d) of the Schedule; or
	 
	 	(b)	 	where the Commonwealth has issued a notice under clause 5.2, the
amount of
Base Expenditure set out in the notice or, if no amount of Base Expenditure
is set
out in the notice, the Base Expenditure calculated in accordance with clause 5.2.

	 	 	“Business Day” means a day which is not a Saturday, Sunday or public holiday in
Canberra.
	 
	 	 	“Commonwealth” means the Commonwealth of Australia and includes the Minister (as
defined in the Directions), the delegate of the Minister as defined in the
Directions), the Industry Research and Development Board and the Pharmaceuticals
Committee of the Industry Research and Development Board. “Communication” means a
notice, demand, certification, process, approval, consent, proposal or other
communication from one party to the other party relating to this Funding
Agreement.
	 
	 	 	“Confidential Information” means all information belonging to the Participant, a
Member or any person who performs Eligible Pharmaceutical R&D Activity under a
contract with the Participant or a Member that is by its nature confidential, and
includes to the extent that it is confidential:

	 	(a)	 	information forming part of or relating to the Application;
	 
	 	(b)	 	subject to this Funding Agreement, information relating to a specific
Eligible Pharmaceutical R&D Activity; and
	 
	 	(c)	 	Contract Material;

	 	 	but does not include information that:

	 	(a)	 	is in or becomes part of the public domain other than through breach of this
Funding Agreement or an obligation of confidence owed to the owner of the
information; or
	 
	 	(b)	 	the Commonwealth acquires from another source entitled to
disclose it.

	 	 	“Contract Material” means all Material:

	 	(a)	 	brought into existence by the Participant for the purpose of reporting
on the
performance of its obligations under this Funding Agreement;
	 
	 	(b)	 	incorporated in, supplied or required to be supplied with the Material
referred to
in paragraph (a).

	 	 	“Control”, in relation to an entity, means:

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	 	(a)	 	legally or beneficially owning more than 50% of any distribution of
capital or
income from the entity; or
	 
	 	(b)	 	having the right to exercise more than 50% of the voting power in
respect of the
entity.

	 	 	“Directions” means the Pharmaceutical Partnerships Program Directions No. 1 of 2004
given by the Minister for Industry, Tourism and Resources under subsections 19(1)
and
20(1) of the Industry Research and Development Act 1986 (Cth).
	 
	 	 	“Eligibility Criteria” means the eligibility criteria for the Program as set out
in Section 3 of the Program Guidelines.
	 
	 	 	“Eligible Expenditure” has the meaning given in section 6 of the Program Guidelines.
	 
	 	 	“Eligible Pharmaceutical R&D Activity” means an eligible pharmaceutical research
and development (R&D) activity as defined in the Directions and the Program
Guidelines which is performed by the Participant or a Member or performed for or
on behalf of the Participant or a Member by any person under a contract with the
Participant or a Member,
in connection with the Portfolio.
	 
	 	 	“Estimated Third Base Year Expenditure” means the estimated Eligible Expenditure
spent or to be spent on the Portfolio in the Third Base Year by the Participant
and people who were members of the Group at the closing date for submission of
applications to participate in the Round, as set out in the Application.
	 
	 	 	“Ethical and Regulatory Approval” means, in relation to an activity, prior formal
approval by a qualified regulatory body or committee that the activity complies
with all relevant ethics codes and guidelines adopted by the National Health and
Medical Research Council, the Office of the Gene Technology Regulator, the
Therapeutic Goods Administration and all other relevant regulatory agencies
operating in Australia.
	 
	 	 	“Exit Date” means the date set out in Item 1(b) of the Schedule.
	 
	 	 	“Financial Year” means the 12 month period beginning on 1 July in one calendar year
and ending on 30 June in the following calendar year. 
	 
	 	 	 “First Base Year”  means the
Financial Year set out in Item 2(a) of the Schedule.
	 
	 	 	“Forecast Activity”, in relation to a Financial Year, means the Eligible
Pharmaceutical R&D Activity which the Participant proposes that the Participant
and Members will perform, or will procure a person to perform for or on behalf of
the Participant or a Member under a contract with the Participant or a Member, in
that Financial Year, being the activity set out in Item 5 of the Schedule.
	 
	 	 	“Forecast Expenditure”, in relation to a Financial Year, means the Eligible
Expenditure which the Participant proposes that the Participant and Members will
spend on the Portfolio in that Financial Year, being:

	 	(a)	 	where the Commonwealth has not issued a notice under clause 8.4, the
amount of Forecast Expenditure set out in Item 3 of the Schedule in respect
of that Financial
Year; or 

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	 	(b)	 	where the Commonwealth has issued one or more notices under clause
8.4, the amount set out in the most recent notice in respect of that
Financial Year or, if no amount is set out in the most recent notice, the
amount calculated in accordance with clause 8.4 for that Financial Year as
at the date of the most recent notice.

	 	 	“Funding” means the funding provided to the Participant under this Funding Agreement.
	 
	 	 	“Funding Agreement” means this deed.
	 
	 	 	“Government Grant” means any financial assistance, other than by way of equity
injection, from a Commonwealth, State or Territory government source in respect of the
Portfolio excluding funding under this Funding Agreement.
	 
	 	 	“Group” means all:

	 	(a)	 	persons who Control the Participant;
	 
	 	(b)	 	persons who are Controlled by the Participant; and
	 
	 	(c)	 	persons who are Controlled by a person referred in paragraph (a) or (b).

	 	 	“GST Law” has the meaning given to that expression in the GST Act.
	 
	 	 	“GST Act” means the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
	 
	 	 	“Insolvency Event”  means in relation to a person, any of the following:

	 	(a)	 	a person is or states the person is unable to pay from the person’s own
money
all the person’s debts as and when they become due and payable;
	 
	 	(b)	 	a person is taken or must be presumed to be insolvent or unable to pay its
debts
under any applicable legislation;
	 
	 	(c)	 	an application or order is made for the winding up or dissolution or a
resolution is
passed or any steps are taken to pass a resolution for the winding up or
dissolution
of a person;
	 
	 	(d)	 	an administrator, provisional liquidator, liquidator or person having a similar or
analogous function under the laws of any relevant jurisdiction is appointed in
respect of the corporation or any action is taken to appoint any such person;
	 
	 	(e)	 	a receiver or receiver and manager is appointed in respect of any property
of a
person;
	 
	 	(f)	 	a corporation is deregistered under the Corporations Act 2001 (Cth) or
notice of
its proposed deregistration is given to the corporation;
	 
	 	(g)	 	a distress, attachment or execution is levied or becomes enforceable
against any
property of a person;
	 
	 	(h)	 	a person enters into or takes any action to enter into an
arrangement (including a scheme of arrangement or a deed of company arrangement),
composition or

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	 	 	 	compromise with, or assignment for the benefit of, all or any class of the
person’s creditors or members or a moratorium involving any of them; or
	 
	 	(i)	 	anything analogous to or of a similar effect to anything described above under the
law of any relevant jurisdiction occurs in respect of a person.

	 	 	“Intellectual Property” includes all copyright and neighbouring rights, all rights
in relation to inventions (including patent rights), plant breeder’s rights,
registered and unregistered trade marks (including service marks), registered
designs, confidential information (including trade secrets and know how) and
circuit layouts and all other rights resulting from intellectual activity in the
industrial, scientific, literary or artistic fields.
	 
	 	 	“Interest” means an amount of interest calculated:

	 	(a)	 	at the rate set out in Item 7 of the Schedule;
	 
	 	(b)	 	on a daily basis upon the amount that was and is outstanding (as the case
may be)
in respect of each amount required to-be repaid;
	 
	 	(c)	 	from and including the day when any part of the moneys upon which interest
is
payable was first paid to the Participant by the Commonwealth under this
Funding Agreement until but excluding the day of payment of those moneys; and
	 
	 	(d)	 	on the actual number of days elapsed on the basis of a 365 day year.

	 	 	“Material” includes document, equipment, software, information and data stored by
any means.
	 
	 	 	“Maximum Annual Payment”, in respect of a Financial Year, means:

	 	(a)	 	where the Commonwealth has not issued a notice under clause 5.3(d) or
clause
8.4, the Maximum Annual Payment set out in respect of that Financial Year in
Item 3 of the Schedule; or
	 
	 	(b)	 	where the Commonwealth has issued one or more notices under clause 5.3(d) or
clause 8.4, the Maximum Annual Payment in respect of that Financial Year set
out in the most recent notice or, if no Maximum Annual Payment is set out in the most
recent notice, the amount calculated in accordance with clause 5.3(d) or clause 8.4
(as appropriate) as at the date of the notice.

	 	 	“Maximum Payment” means:

	 	(a)	 	where the Commonwealth has not issued a notice under clause 5.3(d) or
clause
8.4, the Maximum Payment set out in Item 3 of the Schedule; or
	 
	 	(b)	 	where the Commonwealth has issued one or more notices under clause
5.3(d) or
clause 8.4, the Maximum Payment set out in the most recent notice or, if no
Maximum Payment is set out in the most recent notice, the Maximum Payment
calculated in accordance with clause 5.3(d) or clause 8.4 (as appropriate) as
at the
date of the notice.

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	 	 	“Member” means a person set out in Item 6 of the Schedule, being a person who is
a member of the Group and who either performs Eligible Pharmaceutical R&D
Activity, or procures any person to perform Eligible Pharmaceutical R&D Activity
for or on behalf of the Member under a contract with the Member, or both.
	 
	 	 	“Merit Criteria” means the merit criteria set out in section 5 of the Program
Guidelines and in the Directions.
	 
	 	 	“Mid Term Review” means the review set out in clause 8.1(a)(ii).
	 
	 	 	“Overperformance” means, in relation to a Financial Year, the amount by which the
Actual Expenditure in respect of that Financial Year exceeds Forecast
Expenditure in
respect of that Financial Year.
	 
	 	 	“Participant” means the company identified as the Participant in the
Particular Conditions.
	 
	 	 	“Particular Conditions” means the Particular Conditions entered into by the
Participant and the Commonwealth which refer to these General Conditions.
	 
	 	 	“Payment Calculation Guide” means the payment calculation guide for the Program
provided by the Commonwealth to the Participant on or about the date of this
deed, and as amended from time to time by the Commonwealth by notice in writing
to the Participant.
	 
	 	 	“Payment Year” means a Financial Year during the term of this Funding Agreement.
	 
	 	 	“Performance Milestones” means the performance milestones set out in Item 5 of the Schedule.
	 
	 	 	“Preceding Year” means the Financial Year immediately preceding the relevant
Payment year.
	 
	 	 	“Portfolio” means the agreed portfolio of R&D activities set out in Item 4 of the Schedule.
	 
	 	 	“Previous Financial Years”, in relation to a Financial Year, means the Financial
Years occurring in the period from the Start Date to the beginning of that Financial
Year.
	 
	 	 	“Program” means the Pharmaceuticals Partnerships Program, known as P3,
administered by the Department of Industry, Tourism and Resources.
	 
	 	 	“Program Funding” means the funding made available by the Parliament of the
Commonwealth of Australia for the Program in any given Financial Year, being the
funding specified in the Portfolio Budget Statement (as varied by any Portfolio
Additional Estimates Statement).
	 
	 	 	“Program Guidelines” means the Pharmaceuticals Partnerships Program Guidelines
for Round Two published by the Department of Industry, Tourism and Resources,
dated August 2004.
	 
	 	 	“Quarter” means a period of 3 months beginning on 1 July, 1 October, 1 January or
1 April of any Financial Year.

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	 	 	“Quarterly Report” means a report in accordance with clause 7.2.
	 
	 	 	“Report” means any report required to be submitted to the Commonwealth by the
Participant under this Funding Agreement and includes the Audit Statement under
clause 5.1, Quarterly Reports and the Annual Report.
	 
	 	 	“Round” means the funding round for the Program which starts on the Start Date.
	 
	 	 	“Second Base Year” means the Financial Year set out in Item 2(b) of the Schedule.
	 
	 	 	“Schedule” means the schedule to the Particular Conditions.
	 
	 	 	“Start Date” means the date set out in Item 1(a) of the Schedule.
	 
	 	 	“Third Base Year” means the Financial Year set out in Item 2(c) of the Schedule.
	 
	 	 	“Underperformance” means, in relation to a Financial (Year, the amount by which
Forecast Expenditure in respect of that Financial Year exceeds Actual Expenditure
in respect of that Financial Year.
	 
	1.2	 	Construction
	 
	 	 	Unless expressed to the contrary, in this Funding Agreement:

	 	(a)	 	words in the singular include the plural and vice versa;
	 
	 	(b)	 	any gender includes the other genders;
	 
	 	(c)	 	if a word or phrase is defined its other grammatical forms have
corresponding
meanings;
	 
	 	(d)	 	“includes” means includes without limitation;
	 
	 	(e)	 	no rule of construction will apply to a clause to the disadvantage of
a party merely
because that party put forward the clause or would otherwise benefit from it;
	 
	 	(f)	 	a reference to:

	 	(i)	 	a person includes a partnership, joint venture, unincorporated association,
corporation and a government or statutory body or authority;
	 
	 	(ii)	 	a person includes the person’s legal personal
representatives, successors and permitted assigns and persons
substituted by novation, if permitted;
	 
	 	(iii)	 	an organization includes a body which replaces or
substitutes for that organization, having substantially the same
functions as that organization;
	 
	 	(iv)	 	any legislation includes subordinate legislation
under it and includes that legislation and subordinate legislation
as modified or replaced;
	 
	 	(v)	 	an obligation includes a warranty or representation
and a reference to a
failure to comply with an obligation includes a breach of
warranty or representation;

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	 	(vi)	 	a right includes a benefit, remedy, discretion or power;

	 
	 	(vii)	 	time is to local time in Canberra;
	 
	 	(viii)	 	“$” or “dollars” is a reference to Australian currency;
	 
	 	(ix)	 	this or any other document includes the document
as novated, varied or replaced and despite any change in the identity
of the parties, and
	 
	 	(x)	 	a clause, schedule or annexure is a reference to a clause schedule or
annexure, as the case may be, of this Funding Agreement,

	 	(g)	 	if the date on or by which any act must be done under this Finding
Agreement is not a Business Day, the act must be done on or by the next
Business Day; and
	 
	 	(h)	 	where time is to be calculated by reference to a day or event, that day or the
day of that event is excluded.

	1.3	 	Headings
	 
	 	 	Headings do not affect the interpretation of this Funding Agreement.
	 
	2	 	PERFORMANCE AND UNDERTAKING

	 	(a)	 	Subject to this Funding Agreement, the Participant must, or must
procure
Members (either personally or through other persons) to perform the
Forecast
Activity and undertake the Forecast Expenditure.
	 
	 	(b)	 	In performing, undertaking and procuring the performance and
undertaking of the
Forecast Activity and the Forecast Expenditure, the Participant must make
every
effort to ensure that the Performance Milestones are met.
	 
	 	(c)	 	The Participant must procure that all Eligible Pharmaceutical R&D Activity
performed by a person other than the Participant or a Member is the subject of a
prior contract between that person and the Participant or the Member (as the case may
be) which specifies the nature of the work to be performed.
	 
	 	(d)	 	The Participant acknowledges and agrees that although all or any part of the
Forecast Activity or the Forecast Expenditure may be performed or undertaken by
a person other than the Participant, the Participant remains responsible for
ensuring that all obligations of the Participant under this Funding Agreement are met.
	 
	 	(e)	 	In performing, undertaking and procuring the performance and
undertaking of the Forecast Activity and the Forecast Expenditure, the
Participant must, and must procure all persons performing or undertaking the
Forecast Activity and the Forecast Expenditure to:

	 	(i)	 	obtain and comply with all Approvals;
	 
	 	(ii)	 	comply with all applicable laws, legislation
and regulations of the Commonwealth or of any State, Territory or
local authority, including the

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	 	 	 	Crimes Act 1914 (Cth), Privacy Act 1998 (Cth), Racial
Discrimination Act 1975 (Cth), Sex Discrimination Act 1984 (Cth) and
Disability Discrimination Act 1992 (Cth); and
	 
	 	(iii)	 	comply with all relevant obligations under the Equal Opportunity
for Women in the Workplace Act 1999 (Cth).

	3	 	PAYMENT OF FUNDING
	 
	3.1	 	Payment by Commonwealth
	 
	 	 	Subject to this Funding Agreement, for each Payment Year, the Commonwealth
must pay
to the Participant the aggregate of:

	 	(a)	 	if clause 3.2 applies, the amount calculated in accordance with clause
3.2 in
respect of the Payment Year;
	 
	 	(b)	 	if clause 3.3 applies, the amount calculated in accordance with clause 3.3 in
respect of the Payment Year;
	 
	 	(c)	 	if clause 3.4 applies, the amount which the Commonwealth elects to pay
in
respect of the Payment Year in accordance with clause 3.4; and
	 
	 	(d)	 	if clause 3.5 applies, the amount calculated in accordance with clause
3.5 in
respect of the Payment Year,

	 	 	less the amount of any Government Grant receivable in respect of the Payment Year,
and otherwise in accordance with the payment Calculation Guide.
	 
	3.2	 	Payment in respect of Actual Expenditure in a Payment Year
	 
	 	 	Where the Actual Expenditure in the Payment Year exceeds Base Expenditure, the
amount to be paid under clause 3.1(a) in respect of the Payment Year is the lower
of:

	 	(a)	 	the Maximum Annual Payment for the Payment Year; and
	 
	 	(b)	 	an amount calculated in accordance with the formula:
	 
	 	 	 	(AE  – BE) x 30%
	 
	 	 	 	where:

	 	(i)	 	AE means Actual Expenditure for the Payment Year; and
	 
	 	(ii)	 	BE means Base Expenditure.

	3.3	 	Underperformance in a Payment Year may be offset by Overperformance in Previous Financial Years
	 
	 	 	Subject to this Funding Agreement, where:

	 	(a)	 	there is Underperformance in the Payment Year;

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	 	(b)	 	an amount of Accrued Overperformance remains at the end of the Payment Year;

	 
	 	(c)	 	[the Participant meets the 75% test] the aggregate of:

	 	(i)	 	the Actual Expenditure incurred in the Payment Year; and
	 
	 	(ii)	 	any Accrued Overperformance that will be used to offset Underperformance in the Payment Year
under this clause 3.3,

	 	 	 	is not less than 75% of the Forecast Expenditure for the Payment Year, and
	 
	 	(d)	 	[the Participant meets the 50% test] the amount calculated in
accordance with clause 3.2(b) in respect of the Payment Year is not less than
50% of the Maximum Annual Payment for the Payment Year,

	 	 	then the amount to be paid under clause 3.1(b) in respect of the Payment Year is
the lower of:

	 	(e)	 	30% of the Underperformance in the Payment Year, and
	 
	 	(f)	 	30% of the Accrued Overperformance

	3.4	 	Payment in respect of Overperformance in a Payment Year
	 
	 	 	Subject to this Funding Agreement, and not withstanding the provisions of
clauses 3.3 and
clause 3.5, where:

	 	(a)	 	an amount of Accrued Overperformance remains at the end of a
Payment Year; or
	 
	 	(b)	 	there is Overperformance in a Payment Year,

	 	 	the Commonwealth may, in its absolute discretion, elect to pay an amount to the
Participant in the Payment Year in respect of all or part of the Accrued
Overperformance or the Overperformance.
	 
	3.5	 	Overperformance in a Payment Year may offset Underperformance in the
immediately preceding Financial Year
	 
	 	 	Subject to this Funding Agreement, where:

	 	(a)	 	there is Overperformance in the Payment Year;
	 
	 	(b)	 	an amount of Accrued Underperformance remains at the end of the Payment Year;

	 
	 	(c)	 	[the Participant meets the 75% test] the aggregate of:

	 	(i)	 	the Actual Expenditure incurred in the Preceding Year; and
	 
	 	(ii)	 	any Overperformance in Previous Financial Years
to the Preceding Year that has been used to offset Underperformance in
the Preceding Year,

	 	 	 	was not less than 75% of the Forecast Expenditure for the Preceding Year; and

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	 	(d)	 	[the Participant meets the 50% test] the amount calculated in
accordance with
clause 3.2(b) in respect of the Preceding Year was not less than 50% of the
Maximum Annual Payment for the Preceding Year,

	 	 	then the amount to be paid under clause 3.1(d) in respect of the Payment Year is the lower of:

	 	(e)	 	30% of the Accrued Underperformance; and
	 
	 	(f)	 	30% of the Overperformance for the Payment Year.

	3.6	 	Conditions precedent to payment

	 	(a)	 	Notwithstanding any other clause of this Funding Agreement, the
Participant is
not entitled to receive, and the Commonwealth is no obliged to pay to the
Participant, an amount under this clause 3 if:

	 	(i)	 	the Commonwealth has insufficient Program Funding available at the
time a payment is due to the Participant;
	 
	 	(ii)	 	the Participant has not submitted all Reports due for submission at the
time a payment is otherwise due to the Participant;
	 
	 	(iii)	 	the Participant has not complied with any other of its obligations under
this Funding Agreement;
	 
	 	(iv)	 	the Commonwealth has become entitled to terminate this Funding Agreement under clause 13.3.

	 	(b)	 	The Commonwealth may withhold any payment:

	 	(i)	 	where it has reasonable grounds to suspect that the Participant may not be
entitled to payment, for such time as the Commonwealth reasonably requires to
make such further inquiries as are needed to determine the Participant’s
entitlement to payment;
	 
	 	(ii)	 	where the Commonwealth has decided to undertake an Ad Hoc Review under clause
8.3(a), until such time as the Ad Hoc Review is completed;
and
	 
	 	(iii)	 	where an event referred to in clause 6.1(b) occurs,
until the Commonwealth and the Participant have agreed to vary this
Funding Agreement or the Funding Agreement is terminated under
clause 6.1(d)(iii).

	3.7	 	Maximum payment
	 
	 	 	Notwithstanding any other clause of this Funding Agreement, if the
Commonwealth is required or elects under this Funding Agreement to pay to the
Participant an amount (“Amount”), the Amount which the Commonwealth is required
or elects to pay will be reduced so that:

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	 	(a)	 	[Program cap] the aggregate of the Amount and all previous payments to
the
Participant under the Program does not exceed $10 million;
	 
	 	(b)	 	[Maximum Payment] the aggregate of the Amount and all previous
payments to
the Participant under this Funding Agreement does not exceed the Maximum
Payment;
	 
	 	(c)	 	[first Quarterly cap] where the Amount is payable under clause 3.1 in
connection
with clause 3.1(a) in respect of the first Quarter of a Payment Year, the
aggregate

	 	(i)	 	the Amount; and
	 
	 	(ii)	 	the value of any Government Grant receivable in respect of the first Quarter
of the Payment Year, does not exceed 25% of the Maximum Annual Payment for that Payment
Year;

	 	(d)	 	[second Quarterly cap] where the Amount is payable under clause 3.1 in
connection with clause 3.1(a) in respect of the second Quarter of a Payment
Year, the aggregate of:

	 	(i)	 	the Amount;
	 
	 	(ii)	 	all payments previously made to the Participant under
this Funding Agreement in respect of that Payment Year; and
	 
	 	(iii)	 	the value of any Government Grant receivable in respect of the
first two Quarters of the Payment Year,

	 	 	 	does not exceed 50% of the Maximum Annual Payment for that Payment Year; and
	 
	 	(e)	 	[third Quarterly cap] where the Amount is payable under clause 3.1 in
connection with clause 3.1(a) in respect of the third Quarter of a Payment Year,
the aggregate of:

	 	(i)	 	the Amount;
	 
	 	(ii)	 	all payments previously made to the Participant under this
Funding Agreement in respect of that Payment Year, and
	 
	 	(iii)	 	the value of any Government Grant receivable
in respect of the first three Quarters of the Payment Year,

	 	 	 	does not exceed 75% of the Maximum Annual Payment for that Payment Year.

	3.8	 	Process and time for payment

	 	(a)	 	Payments under this clause 3 will be made directly to an
account with a financial institution nominated by the Participant.

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	 	(b)	 	Subject to this Funding Agreement, payments payable to the Participant
under
clause 3.1 in connection with clause 3.1(a) will be made quarterly in
arrears.
	 
	 	(c)	 	Subject to this Funding Agreement, payments payable to the Participant
under
clause 3.1 in connection with clause 3.1(b), clause 3.1(c) or clause 3.1
(d) will be
made at the same time as the amount payable under clause 3.8(b) in respect
of the
fourth Quarter of the Payment Year.
	 
	 	(d)	 	The Commonwealth may defer making a payment otherwise due in a Payment
Year to the next Financial Year if, in the Commonwealth’s reasonable opinion,
Program Funding may not be available or sufficient to meet that commitment
in
the Payment Year.
	 
	 	(e)	 	Where the Commonwealth increases Base Expenditure under clause 5.2,
the
Commonwealth may suspend payments until the earlier of:

	 	(i)	 	if the Commonwealth and the Participant agree to a variation of this
Funding Agreement, the day the Funding Agreement is effectively
varied; or
	 
	 	(ii)	 	the day the Commonwealth issues a notice to the Participant
in accordance with clause 5.3(d).

	 	(f)	 	Where an event referred to in clause 6.1 (b) occurs, the Commonwealth may
suspend payments until the earlier of:

	 	(i)	 	if the Commonwealth and the Participant agree to a variation of this
Funding Agreement, the day the Funding Agreement is effectively
varied; or
	 
	 	(ii)	 	the day this Funding Agreement is terminated.

	 	(g)	 	Where clause 8.2 applies and the Commonwealth undertakes an Ad Hoc
Review,
Commonwealth may suspend payments until the earliest of:

	 	(i)	 	the day the Commonwealth issues a notice to the Participant in
accordance with clause 8.4;
	 
	 	(ii)	 	if, as a result of the Ad Hoc Review process, the Commonwealth
and the
Participant agree to vary this Funding Agreement, the day the Funding
Agreement is effectively varied; or
	 
	 	(iii)	 	the day this Funding Agreement is terminated.

	3.9	 	Taxable grant
	 
	 	 	The Participant acknowledges that payments made under this Funding Agreement are
made as a taxable grant.

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	3.10	 	Set-off
	 
	 	 	The Commonwealth may set-off any money due for payment by the Commonwealth to the
Participant under this Funding Agreement against any money due for payment by the
Participant to the Commonwealth under this Funding Agreement.
	 
	3.11	 	Recovery by Commonwealth

	 	(a)	 	If at any time, for any reason, the Commonwealth has paid the
Participant more than the Participant is entitled to under clause 3.1 to
clause 3.10 inclusive, the Commonwealth may by notice in writing to the
Participant require the participant to repay to the Commonwealth the amount
of the excess.
	 
	 	(b)	 	In addition to the amount of the excess required to be repaid under
clause 3.11(a), the Commonwealth may, in its discretion, require the
Participant to pay Interest on the amount of the excess.
	 
	 	(c)	 	If the Commonwealth gives a notice to the Participant under this clause 3.11, the
Participant must repay the amount in full within 30 days of the date of the notice.
	 
	 	(d)	 	If the Participant is required to pay an amount to the Commonwealth
under this
Funding Agreement, the Commonwealth may recover the amount as a debt due
and payable to the Commonwealth.

	4	 	COMMONWEALTH’S DETERMINATION BINDING
	 
	4.1	 	Matters for binding determination
	 
	 	 	The Commonwealth’s determination as to all or any of the following matters is
final and binding on the Participant:

	 	(a)	 	whether activity is Eligible Pharmaceutical R&D Activity;
	 
	 	(b)	 	whether expenditure is Eligible Expenditure;
	 
	 	(c)	 	whether expenditure has been incurred in respect of the Portfolio; and
	 
	 	(d)	 	whether a Performance Milestone has been met.

	4.2	 	Procedure for binding determination

	 	(a)	 	In making a determination under clause 4.1, the Commonwealth must
take into
account all relevant documentation and submissions made by the Participant
in relation to the determination.
	 
	 	(b)	 	After making a determination under clause 4.1, the Commonwealth must
provide
to the Participant written reasons for the determination.

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	5	 	BASE EXPENDITURE
	 
	5.1	 	Audit Statement
	 
	 	 	Within 60 days after the end of the Third Base Year, the Participant must
provide to the Commonwealth an Audit Statement verifying:

	 	(a)	 	the Actual Expenditure in respect of the Third Base Year; and
	 
	 	(b)	 	that the expenditure reported as Actual Expenditure in respect of the Third Base
Year is Eligible Expenditure and has been spent on the Portfolio.

	5.2	 	Adjustment of Base Expenditure
	 
	 	 	Where Audited Third Base Year Expenditure is higher than Estimated Third Base Year
Expenditure, the Commonwealth may by notice in writing to the Participant, increase
Base Expenditure to an amount equal to the average of the following amounts:

	 	(a)	 	the amount of Expenditure set out in item 2(a) of the Schedule in respect of the First
Base Year;
	 
	 	(b)	 	the amount of Expenditure set out in Item 2(b) of the Schedule in
respect of the
Second Base Year; and
	 
	 	(c)	 	the Audited Third Base Year Expenditure.

	5.3	 	Adjustment of maximum payments
	 
	 	 	If the Commonwealth increases Base Expenditure under clause 5.2:

	 	(a)	 	[Participants may submit proposals] the Commonwealth must allow the
Participant 30 days from the date of the notice referred to in clause 5.2 to submit
one or more proposals to vary any or all of the Forecast Activity, Forecast
Expenditure and the Portfolio, so that the Participant can retain the benefit of the
original Maximum Annual Payments and original Maximum Payment;
	 
	 	(b)	 	[Commonwealth may accept or reject proposals] subject to clause 16.1(c), the
Commonwealth may, in its discretion, accept or reject a proposal referred to in
clause 5.3(a), with or without conditions;
	 
	 	(c)	 	[variation of Funding Agreement] if the Commonwealth accepts a proposal
referred to in clause 5.3(a), this Funding Agreement will be varied when
the parties enter into a valid variation in accordance with clause
16.1(c)(ii); and
	 
	 	(d)	 	if the Participant does not submit any proposals under clause 5.3(a)
or the
Commonwealth rejects all proposals made by the Participant pursuant to
clause
5.3(a), the Commonwealth may by notice in writing to the Participant:

	 	(i)	 	[reduce Maximum Annual Payments] reduce the Maximum Annual
Payment for each of the Payment Years in the period from the
Start Date to the Exit Date to an amount calculated in accordance
with the formula
	 
	 	 	 	(FE – BE) x 30%

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	 	 	 	where:

	 	(A)	 	FE means Forecast Expenditure for that Payment Year; and
	 
	 	(B)	 	BE means Base Expenditure calculated
in accordance with
clause 5.2; and

	 	(ii)	 	[reduce Maximum Payment] reduce the Maximum Payment
so that it is equal to the aggregate of the Maximum Annual Payments
for each of the Payment Years in the period from the Start Date to the
Exit Date, as reduced under clause 5.3(d)(i).

	6	 	MATTERS FOR REPORTING
	 
	6.1	 	Cessation of activity and change in corporate group

	 	(a)	 	The Participant must notify the Commonwealth in its next Quarterly Report
if an
Eligible Pharmaceutical R&D Activity ceases to be performed.
	 
	 	(b)	 	The Participant must notify the Commonwealth immediately in writing:

	 	(i)	 	if an activity in the Portfolio ceases to be performed by the Participant
and Members or under contract with the Participant or a Member,
and commences to be performed by a person who is not the Participant
or a Member and who is not performing the activity under a
contract with the Participant or a Member;
	 
	 	(ii)	 	where there is a change in the identity of the person who
Controls the Participant or a Member;
	 
	 	(iii)	 	where a Member ceases to be a member of the Group; and
	 
	 	(iv)	 	where a person who is not a Member:

	 	(A)	 	is or becomes a member of the Group; and
	 
	 	(B)	 	commences either:

	 	(v)	 	performing eligible pharmaceutical research and
development (R&D) activity as defined in the
Directions; or
	 
	 	(vi)	 	procuring someone
else to perform eligible pharmaceutical research and
development (R&D) activity as defined in the
Directions for or on behalf of that person under a
contract with that person, or both.

	 	(c)	 	The Participant must provide to the Commonwealth the information
required by
Attachment C of the Program Guidelines within 90 days of the event referred
to in
clause 6.1(b) occurring.
	 
	 	(d)	 	Where an event referred to in clause 6.1(b) occurs:

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	 	(i)	 	subject to clause 6.1(d)(iii), the Commonwealth and the Participant must
negotiate in good faith in relation to varying this Funding
Agreement to take into account the event;
	 
	 	(ii)	 	if the Commonwealth and the Participant agree to a
variation of this Funding Agreement, this Funding Agreement will be
varied when the parties enter into a valid variation in accordance
with clause l6.1(c)(ii);
and
	 
	 	(iii)	 	if the Commonwealth and the Participant do not
reach agreement within 60 days of the date of the notification
referred to in clause 6.1(b), the Commonwealth may by notice in
writing terminate this Funding Agreement with effect from the date
on which the event referred to in
clause 6.1(b) occurred.

	6.2	 	Government Grants
	 
	 	 	If, a Government Grant, is or becomes receivable by the Participant, it must
immediately:

	 	(a)	 	notify the Commonwealth; and
	 
	 	(b)	 	provide to the Commonwealth sufficient information to allow the
Commonwealth
to determine the effect of the Government Grant on payments under this Funding
Agreement.

	7	 	REPORTS
	 
	7.1	 	Reporting and estimating expenditure
	 
	 	 	In reporting and estimating expenditure, the Participant must, and must procure
its auditor to, comply with the requirements of the Program Guidelines.
	 
	7.2	 	Quarterly Reports
	 
	 	 	Within 30 days of the end of each of the first three Quarters of each
Payment Year, the
Participant must submit a report which:

	 	(a)	 	sets out the Actual Expenditure incurred in that Quarter;
	 
	 	(b)	 	indicates where Actual Activity and Actual Expenditure are
not proceeding in accordance with the Performance Milestones;
	 
	 	(c)	 	provides details of any breach or likely breach of this Funding Agreement;
	 
	 	(d)	 	complies with requirements of the Program Guidelines; and
	 
	 	(e)	 	contains the information and is in the form required by the
Commonwealth from
time to time, provided that the Commonwealth has notified the Participant
in
writing of any changes to the required format before the end of the
relevant
Quarter.

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	7.3	 	Annual Report
	 
	 	 	Within 60 days of the end of each Payment Year and within 60 days of the
termination of this Funding Agreement, the Participant must submit a report which:

	 	(a)	 	sets out the Actual Expenditure incurred in the fourth Quarter;
	 
	 	(b)	 	indicates where Actual Activity and Actual Expenditure are not
proceeding in
accordance with the Performance Milestones;
	 
	 	(c)	 	sets out the Actual Expenditure incurred in the Payment Year,
	 
	 	(d)	 	sets out the Actual Activity performed in the Payment Year;
	 
	 	(e)	 	includes an Audit Statement which verifies the Actual Expenditure
incurred in the
Payment Year;
	 
	 	(f)	 	sets out and provides reasons for any Underperformance or
Overperformance in
respect of the Payment Year;
	 
	 	(g)	 	details and provides reasons for any potential future
Underperformance or
Overperformance;
	 
	 	(h)	 	provides detailed information in respect of the
Participant’s progress against the Performance Milestones;
	 
	 	(i)	 	details any expected changes to Forecast Activity, Forecast Expenditure and the
Participant’s progress against the Performance Milestones, and in
particular, whether the Participant knows that it or Members will not or
may not meet the Performance Milestones, Forecast Activity or Forecast
Expenditure;
	 
	 	(j)	 	provides details of any breach or likely breach of this Funding Agreement;
	 
	 	(k)	 	complies with requirements of the Program Guidelines; and
	 
	 	(l)	 	contains the information and is in the form required by the Commonwealth
from time to time, provided that the Commonwealth has notified the Participant in
writing of any changes to the required format before the end of the relevant Payment
Year.

	7.4	 	Requesting further information

	 	(a)	 	The Commonwealth may request from the Participant additional
information
which relates to this Funding Agreement or the Participant’s participation
in the
Program.
	 
	 	(b)	 	If the Commonwealth requests information under clause (a), the
Participant must
provide the information to the Commonwealth within 30 days of the request
or
such other time as is agreed between the parties.

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	7.5	 	Extension of time for Reports

	 	(a)	 	Before the due date for submission of a Report, the Participant may,
in writing setting out the reason for the application, apply for an extension of time
for submission of the Report.
	 
	 	(b)	 	The Commonwealth may, in its absolute discretion, grant to the
Participant an extension of time ending on a specific date for submission of a Report.

	7.6	 	Failure to submit Reports

	 	 	If the Participant fails to submit two or more Reports consecutively by the due
dates for submission (or, where the Commonwealth has granted the Participant an
extension under clause 7.5(b), the due date for submission as extended under clause 7.5(b)), the Commonwealth may by notice in writing terminate this Funding
Agreement.

	7.7	 	Evaluation

	 	(a)	 	The Participant must, and must procure that Members, cooperate in the
evaluation of the Program by the Commonwealth.
	 
	 	(b)	 	During the term of this Funding Agreement and for 5 years after the Exit
Date, the Participant must, within 30 days of a request by the Commonwealth to do so,
provide information and completed survey forms relating to the Program and this
Funding Agreement.

	8	 	REVIEW
	 
	8.1	 	Annual Assessment and Mid Term Review

	 	(a)	 	Without limiting its right to do so at any other time, the
Commonwealth may undertake an assessment of the
Participant’s performance of its obligations under this Funding Agreement:

	 	(i)	 	after it has received the Annual Report; and
	 
	 	(ii)	 	at the end of the 2005/2006 Financial Year.

	 	(b)	 	Without limiting clause 8.2, the Commonwealth may use the assessment
process referred to in clause 8.1(a) to determine whether the
Commonwealth is entitled to undertake an Ad Hoc Review under clause 8.2.

	8.2	 	Ad Hoc Review trigger

	 	 	Clauses 8.3 and 8.4 apply where, in a Payment Year:

	 	(a)	 	the aggregate of:

	 	(i)	 	the Actual Expenditure incurred in that Payment Year; and
	 
	 	(ii)	 	any Overperformance in Previous Financial
Years to that Payment Year that has been used to offset
Underperformance in that Payment Year,

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	 	 	 	was less than Base Expenditure;
	 
	 	(b)	 	the aggregate of:

	 	(i)	 	the Actual Expenditure incurred in that Payment Year; and
	 
	 	(ii)	 	any Overperformance in Previous Financial Years to
that Payment Year that has been used to offset Underperformance in
that Payment Year,

	 	 	 	was less than 75% of the Forecast Expenditure for that Payment Year; or
	 
	 	(c)	 	in the opinion of the Commonwealth, the Participant has not met
one or more of the Performance Milestones to a sufficient degree.

	8.3	 	Ad Hoc Review process

	 	(a)	 	Subject to clause 8.2, the Commonwealth may undertake an
assessment of the Participant’s performance of its obligations under this Funding Agreement
and consider the Participant’s continued participation in the Program.
	 
	 	(b)	 	The Commonwealth must notify the Participant in writing of a
decision to undertake an Ad Hoc Review under clause 8.3(a).

	8.4	 	Effect of Ad Hoc Review
	 
	 	 	Following the completion of an Ad Hoc Review:

	 	(a)	 	Subject to clause 8.2, the Commonwealth may, by notice in
writing to the Participant, reduce Forecast Expenditure for each of the Payment Years in
the period from the end of the Payment Year referred to in clause 8.2 to the
Exit Date so that it is equal to an amount calculated in accordance with the
formula:
	 
	 	 	 	FE x (TAE/TFE)
	 
	 	 	 	where:

	 	(i)	 	FE means Forecast Expenditure for the relevant
Payment Year before the reduction in accordance with this clause
18.4;
	 
	 	(ii)	 	TAE means the aggregate of the Actual
Expenditure incurred in each of the Payment Years in the period
from the Start Date to the end of the Payment Year referred to in
clause 8.2; and
	 
	 	(iii)	 	TFE means the aggregate of Forecast Expenditure
for each of the Payment Years in the period from the Start Date to
the end of the Payment Year referred to in clause 8.2.

	 	(b)	 	Subject to clause 8.2, where the Commonwealth is of the opinion
that an activity performed by or on behalf of the Participant or a Member is not Eligible
Pharmaceutical R&D Activity, the Commonwealth may by notice in writing to the
Participant do one or more of the following:

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	 	(i)	 	reduce Forecast Expenditure for each of the Payment
Years in the period from the end of the Payment Year referred to in
clause 8.2 to the Exit Date so that it does not include any amounts
for activities which are not Eligible Pharmaceutical R&D Activity;
	 
	 	(ii)	 	remove any activity which is not Eligible
Pharmaceutical R&D Activity from the Portfolio; and
	 
	 	(iii)	 	require the Participant to repay any amount which
has been paid by the Commonwealth to the Participant in connection with
activity which is not Eligible Pharmaceutical R&D Activity and, in
its discretion, require the Participant to pay Interest on the
amount, whereupon the Participant
must repay the amount and Interest (if required) within 30
days of the
date of the notice.

	 	(c)	 	Where the Commonwealth reduces Forecast Expenditure under clause 18.4(a)
or clause 8.4(b)(i), the Commonwealth may also, in the same or a separate
written notice to the Participant, reduce the Maximum Annual Payment for each of
the Payment Years in the period from the end of the Payment Year referred
to in clause 8.2 to the Exit Date to an amount calculated in accordance with the
formula:
	 
	 	 	 	(FE – BE) x 30%
	 
	 	 	 	where:

	 	(i)	 	FE means Forecast Expenditure for that Payment Year as reduced under
clause 18.4(a) or clause 8.4(b)(i) as appropriate; and
	 
	 	(ii)	 	BE means Base Expenditure.

	 	(d)	 	Where the Commonwealth reduces Forecast Expenditure under clause
18.4(a) or clause
8.4(b)  (i), the Commonwealth may also, in the same or a separate written
notice to the Participant, reduce the Maximum Payment to an amount equal to
the aggregate of the Maximum Annual Payments for each of the
Payment Years in the period from the Start Date to the Exit Date, as
reduced under clause 8.4(c).
	 
	 	(e)	 	Subject to clauses 8.2 and 8.4(f), where, in the Commonwealth’s reasonable
opinion:

	 	(i)	 	the Actual Activity does not meet the Merit Criteria to the same extent
as the Portfolio; and
	 
	 	(ii)	 	the quality of the Actual Activity is lower than that which
was required for entry into the Program in the Round,

	 	 	 	the Commonwealth may by notice in writing terminate this Funding Agreement.
	 
	 	(f)	 	Before the Commonwealth terminates this Funding Agreement in accordance with
clause 8.4(e), the Commonwealth must:

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	 	(i)	 	notify the Participant that the Commonwealth intends
to terminate the Funding Agreement in accordance with clause 8.4(e);
	 
	 	(ii)	 	allow the Participant 14 days from the date on which
the Commonwealth notifies the Participant in accordance with clause
8.4(f)(i) to provide written submissions in relation to the matters
referred to in clause 8.4(e); and
	 
	 	(iii)	 	take into account any submissions provided by the
Participant pursuant to clause 8.4(f)(ii) in deciding whether or not to
terminate this Funding Agreement in accordance with clause 8.4(e).

	9	 	INTELLECTUAL PROPERTY
	 
	9.1	 	Vesting of Intellectual Property
	 
	 	 	Subject to clause 9.2, the Commonwealth does not assert ownership of, or any
right to, any Intellectual Property created under this Funding Agreement.
	 
	9.2	 	Licence
	 
	 	 	Subject to clause 10, the Participant grants to the Commonwealth a
permanent, irrevocable, royalty-free, world-wide, non-exclusive licence to use,
reproduce, publish, electronically transmit, electronically distribute, adapt and
modify any Contract Material, including any existing Material which is used for
the purposes of the Program, for the purposes of the Commonwealth’s dissemination, reporting and accountability requirements, but not to commercially exploit such
Contract Material.
	 
	9.3	 	Documentation
	 
	 	 	If requested by the Commonwealth, the Participant agrees to bring into
existence, sign, execute or otherwise deal with any document which may be necessary or
desirable to give effect to this clause 9.
	 
	9.4	 	Warranty
	 
	 	 	The Participant warrants that:

	 	(a)	 	it is entitled, or will be entitled at the relevant time, to deal with the
Intellectual Property in the Contract Material in the manner provided
for in this clause 9; and
	 
	 	(b)	 	it will use all reasonable endeavours to exploit the Intellectual
Property created under this Agreement in order to meet the objectives of the
Program as described in the Program Guidelines.

	10	 	CONFIDENTIALITY
	 
	10.1	 	Publicity

	 	(a)	 	The Participant must acknowledge the financial assistance received
from the Commonwealth under this Funding Agreement in any public statements
about the Portfolio or its Eligible Pharmaceutical R&D Activities as a
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	 	(b)	 	The Commonwealth may publicise the involvement of the Participant
in the Program, by including in press releases, general announcements,
publications, presentations and annual reports, and may disclose in
order to satisfy any other accountability requirement or reporting
obligation, the following information:

	 	(i)	 	the name of the Participant;
	 
	 	(ii)	 	a description of this Funding Agreement;
	 
	 	(iii)	 	a brief description of the Portfolio
and any activity in the Portfolio, as agreed with the Participant
in writing from time to time;
	 
	 	(iv)	 	the Maximum Payment and Maximum Annual
Payments;
	 
	 	(v)	 	Actual Expenditure; and
	 
	 	(vi)	 	the amount of payments made by the Commonwealth under this Funding Agreement.

	10.2	 	Confidential Information
	 
	 	 	The Commonwealth must not disclose any Confidential Information except:

	 	(a)	 	with the prior consent of the Participant;
	 
	 	(b)	 	where required or permitted under law;
	 
	 	(c)	 	to the Minister (as defined in the Directions) or the
Auditor-General or his or her delegate;
	 
	 	(d)	 	to the extent that they require the information for the
purposes of this Funding Agreement or the Program, to officers, consultants, employees and
advisers of the Commonwealth, provided that the Commonwealth ensures that the recipient of
the information is aware of the confidentiality obligations under this clause 10.2
and takes steps to ensure the recipient of the information complies with those
confidentiality obligations; or
	 
	 	(e)	 	where permitted by clause 10.1.

	11	 	RECORDS AND AUDIT
	 
	11.1	 	Records

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	 	(a)	 	The Participant must, and must procure that Members, keep to the
Commonwealth’s satisfaction:

	 	(i)	 	all records (including original receipts and
invoices) in accordance with accounting principles generally
applied in commercial practice and as required by law which are
necessary to provide a complete, detailed record and explanation
of Actual Expenditure and the Participant’s performance of its
obligations under this Funding Agreement, and
	 
	 	(ii)	 	any other records relating to this Funding Agreement which are
required by the Commonwealth.

	 	(b)	 	The Participant must, and must procure Members to, retain the records referred to
in clause 11.1(a), during the term of the Program and for at least 7
years from the
date of their creation.

	11.2	 	Approvals and contract R&D
	 
	 	 	The Participant must, within 14 days of a request by the Commonwealth
to do so, provide to the Commonwealth copies of:

	 	(a)	 	any Approval; and
	 
	 	(b)	 	contracts under which Actual Activity has been performed by another person on
behalf of the Participant of a Member.

	11.3	 	Inspection and audit

	 	(a)	 	The Participant must, and must procure Members to, allow the
Commonwealth and its auditor, including the Australian National Audit Office, at
reasonable times and on reasonable notice, to:

	 	(i)	 	enter the Participant’s or Member’s premises;
	 
	 	(ii)	 	 audit the Participant’s compliance with this Funding Agreement; and
	 
	 	(iii)	 	inspect records held by the Participant or the Member which are
relevant to this Funding Agreement.

	 	(b)	 	The Participant must, and must procure Members to, provide
the Commonwealth and its auditor with all necessary facilities and
assistance to enable them to conduct the audit.
	 
	 	(c)	 	The Participant must, and must procure Members to, allow the
Commonwealth and its auditor to make copies of any records that the
Commonwealth or its auditor considers relevant to the Participant’s
obligations under this Funding Agreement.

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	 	(d)	 	The Commonwealth and its auditor may only use the copies
referred to in clause 11.3(c) for the purposes of:

	 	(i)	 	an audit;
	 
	 	(ii)	 	verifying the Participant’s performance of
its obligations under this
Funding Agreement; and
	 
	 	(iii)	 	the Commonwealth’s and the auditor’s accountability and reporting
obligations.

	12	 	WARRANTIES
	 
	12.1	 	Corporate capacity
	 
	 	 	The Participant warrants that as at the date of this Funding Agreement and on each day
during the term of this Funding Agreement: 

	 	(a)	 	[incorporation] the Participant is:

	 	(i)	 	incorporated under the Corporations Act 2001 (Cth); and
	 
	 	(ii)	 	registered for GST purposes pursuant to the
GST Act having the Australian Business Number as specified
adjacent to the Participant’s name in the Particular Conditions;

	 	(b)	 	[legal right and power] it has the legal right and power to enter into this Funding Agreement
and to perform its obligations under the terms of this Funding
Agreement;
	 
	 	(c)	 	[corporate action] the execution, delivery and performance of this
Funding Agreement by it has been duly and validly authorised by all necessary
corporate action on its part;
	 
	 	(d)	 	[binding agreement] this Funding Agreement is a valid and binding agreement of it, enforceable in accordance with its terms; and
	 
	 	(e)	 	[constitution] the execution and performance of this
Funding Agreement by it does not and the other transactions contemplated
by this Funding Agreement do not, violate or conflict with or result in
a breach of or constitute a default under its constitution.

	12.2	 	Application and Portfolio
	 
	 	 	The Participant warrants that as at the date of this Funding Agreement:

	 	(a)	 	[Application] the Application has been made in accordance
and compliance with the Program Guidelines and, in particular, has
specified all Eligible Pharmaceutical R&D Activity performed in the
First Base Year and the Second Base Year by or on behalf of the
Participant and people who were members of the Group at the closing date
for submission of applications to participate in the Round and all
Eligible Pharmaceutical R&D Activity proposed to be performed

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	 	 	 	in the Third Base Year and during the term of this Funding
Agreement by or on behalf of the Participant and people who were members
of the Group at the closing date for submission of applications to
participate in the Round; and
	 
	 	(b)	 	[Portfolio] the Portfolio consists of all Eligible
Pharmaceutical R&D Activity that has been, and is proposed to be, performed
by or on behalf of the Participant and Members.

	12.3	 	Other warranties
	 
	 	 	The Participant warrants that as at the date of this Funding Agreement and on
each day during the term until this Funding Agreement terminates:

	 	(a)	 	[eligibility] the Participant satisfies the Eligibility Criteria;
	 
	 	(b)	 	[financial capacity] the Participant and the Members have the
financial capacity
to perform or procure performance of the Forecast Activity and undertake the
Forecast Expenditure;
	 
	 	(c)	 	[intellectual property] the Participant, the Members and any person who is
not a Member and who performs Eligible Pharmaceutical R&D Activity under a
contract with the Participant or a Member will, at the relevant time,
have access to all intellectual property rights necessary for them to
perform or procure performance of the Forecast Activity and undertake the
Forecast Expenditure;
	 
	 	(d)	 	[accuracy of information] all information provided by the Participant to
the Commonwealth from time to time, including information:

	 	(i)	 	given in the
Application;
	 
	 	(ii)	 	incorporated into the Particular Conditions;
	 
	 	(iii)	 	given in any independent audit certificate provided to
the Commonwealth by the Participant under the Program; or
	 
	 	(iv)	 	given in any Report to the Commonwealth by the Participant
under this Funding Agreement,
is true and correct;

	 	(e)	 	[conflict of interest] the Participant, Members and any other person
who performs Eligible Pharmaceutical R&D Activity under a contract with the
Participant or a Member do not have any interests or obligations that
conflict or may conflict with its interests or obligations under this
Funding Agreement;
	 
	 	(f)	 	[adverse circumstances] the Participant is not aware of any
circumstances which adversely affect or might adversely affect the Participant’s ability to fulfil
its obligations under this Funding Agreement;
	 
	 	(g)	 	[activity] the Forecast Activity does not include any activity which
is not Eligible Pharmaceutical R&D Activity; 

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	 	(h)	 	[expenditure] Actual Activity, Actual Expenditure, Base
Expenditure, Forecast Activity and Forecast Expenditure have been
reported in accordance with the requirements of the Program Guidelines;
	 
	 	(i)	 	[Group]:

	 	(i)	 	it is the only member of the Group which applied for funding in the Round;
	 
	 	(ii)	 	each Member is a member of the Group; and
	 
	 	(iii)	 	all members of the Group which perform Eligible Pharmaceutical
R&D Activity or procure other people to perform Eligible
Pharmaceutical R&D Activity for or on behalf of the member
under a contract with the member are included in the list of
Members in Item 6 of the Schedule;

	 	(j)	 	[forecasts] the Forecast Activity and Forecast Expenditure are
realistic and achievable;
	 
	 	(k)	 	[Ethical and regulatory approval] in respect of any activity
in the Portfolio involving research using genetic material from humans
(including human embryos, stem cells and all other human organs, tissues
and cells), animals or plants, and/or experimentation in animals or
humans:

	 	(i)	 	the Participant, Members and any other person who performs Eligible
Pharmaceutical R&D Activity under a contract with the
Participant or a Member will, at the relevant time, have
received Ethical and Regulatory Approval for that activity; and
	 
	 	(ii)	 	the Participant, Members and any other
person who performs Eligible Pharmaceutical R&D Activity under a
contract with the Participant or a Member have, in performing or
procuring performance of that activity, complied with all
relevant legal requirements of the Commonwealth and any State or
Territory of Australia that are applicable during the
performance of the activity; and

	 	(l)	 	[contract R&D] where Actual Activity, Actual Expenditure,
Forecast Activity or Forecast Expenditure includes Eligible
Pharmaceutical R&D Activity or Eligible Expenditure financed by a person
who is not the Participant or a Member, it has been included by the
Participant with the consent of that person.

	12.4	 	Notification of breach

	 	(a)	 	If the Participant becomes aware of a breach or potential breach of
warranty, the Participant must immediately notify the Commonwealth in writing of that
breach or potential breach.
	 
	 	(b)	 	The Participant acknowledges that, without limiting clause
13.3, breach of a warranty set out in this Funding Agreement justifies termination of this
Funding Agreement by the Commonwealth.

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	13	 	TERM AND TERMINATION
	 
	13.1	 	Term

	 	(a)	 	This Funding Agreement will start on the Start Date.
	 
	 	(b)	 	This Funding Agreement will terminate on the earliest
occurring of the following events:

	 	(i)	 	the Exit Date;
	 
	 	(ii)	 	the Commonwealth and the Participant enter
into a new Funding
Agreement following the selection of the Participant or a
Member in a later funding round for the Program;
	 
	 	(iii)	 	the Commonwealth and the Participant agree
in writing to terminate this Funding Agreement;
	 
	 	(iv)	 	the aggregate of all payments made to
the Participant under this Funding Agreement equals the Maximum
Payment; and
	 
	 	(v)	 	the Commonwealth terminates this Funding
Agreement under clause 13.2 or clause 13.3,

	 	 	 	but without prejudice to the following obligations, which survive such
termination:

	 	(vi)	 	any obligation of the Commonwealth to pay an amount to the
Participant under clause 3 in respect of any part of the Payment
Year immediately preceding termination; and
	 
	 	(vii)	 	the obligation of the Participant to submit
Reports under clause 7 in respect of any part of the Payment Year
immediately preceding termination.

	13.2	 	Termination at any time

	 	(a)	 	The Commonwealth may terminate this Funding Agreement at
any time by giving not less than 30 days notice in writing to the
Participant, specifying the effective date of termination.
	 
	 	(b)	 	If this Funding Agreement is terminated under clause
13.2(a), the Commonwealth is liable only for:

	 	(i)	 	all payments due and not yet made to the
Participant at the effective date of termination; and
	 
	 	(ii)	 	any reasonable substantiated unavoidable loss
(excluding loss of profits) incurred by the Participant as a
direct consequence of termination of this Funding Agreement.

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	13.3	 	Termination for default
	 
	 	 	The Commonwealth may, without prejudice to any right of action or remedy
which has
accrued or which may accrue in favour of the Commonwealth, terminate this Funding
Agreement by notice in writing to the Participant in the event of any one or more
of the following:

	 	(a)	 	the Participant is in breach of this Funding Agreement and in the opinion of
the Commonwealth the breach is not capable of being remedied;
	 
	 	(b)	 	the Participant is otherwise in breach of this Funding Agreement
and the Participant fails to remedy the breach within 21 days of receipt of a written notice
from the Commonwealth requiring it to do so (or within any longer period
specified in the notice);
	 
	 	(c)	 	the Participant is in breach of a warranty set out in this Funding Agreement;
	 
	 	(d)	 	the Commonwealth becomes entitled to terminate pursuant to clause
6.1(d);
	 
	 	(e)	 	the Commonwealth becomes entitled to terminate pursuant to clause 7.6;
	 
	 	(f)	 	the Commonwealth becomes entitled to terminate pursuant to clause 8.4(e); or
	 
	 	(g)	 	an Insolvency Event occurs in relation to the Participant.

	13.4	 	Force majeure
	 
	 	 	The Commonwealth may not take action under clause 13.3 for a breach of
this Funding Agreement due to a cause or causes beyond the Participant’s reasonable
control which does not continue for more than 12 weeks in the aggregate.
	 
	13.5	 	Survival of obligations after termination
	 
	 	 	Clauses 3.10, 3.11, 4, 6.2, 7.1, 7.3, 7.3(1)4, 7.7, 9, 10, 11, and this clause
13.5 of this Funding Agreement will remain in full force and effect and survive the
expiry or termination of the agreement evidenced by this Funding Agreement.
	 
	14	 	COMMUNICATIONS
	 
	14.1	 	General
	 
	 	 	A Communication must be in writing in English and may be given by an
agent of the sender.
	 
	14.2	 	How to give a Communication
	 
	 	 	In addition to any other lawful means, a Communication may be given to a party by
being:

	 	(a)	 	personally delivered to the party;
	 
	 	(b)	 	left at the party’s registered office or current business address;

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	 	(c)	 	subject to clauses 14.5 and 14.7, sent by pre-paid ordinary mail to the party’s
current address nominated for receipt of Communications by mail or, if the address is
outside Australia, by pre-paid airmail;
	 
	 	(d)	 	subject to clauses 14.6 and 14.7, sent by facsimile to the party’s current
facsimile number nominated for receipt of Communications by facsimile; or
	 
	 	(e)	 	subject to clause 14.3, by email sent to the party’s current email address nominated for
receipt of Communications by email.

	14.3	 	Email communication
	 
	 	 	The following Communications must not be given by email:

	 	(a)	 	Audit Statements;
	 
	 	(b)	 	Reports;
	 
	 	(c)	 	variations to this Funding Agreement; and
	 
	 	(d)	 	notices and information under clauses 3.10, 3.11, 5.2, 5.3, 6.1, 6.2, 7.5,
8.3(b), 8.4, 12.4(a), 13.1(b)(iii), 13.2, 13.3, 15, 16.1 and 16.2.

	14.4	 	Current address for delivery of Communications

	 	(a)	 	The particulars for delivery of Communications are initially as set out in Item
8 of the Schedule.
	 
	 	(b)	 	Each party may change its particulars for delivery of Communications by notice
in writing to the other party.

	14.5	 	Communications by post
	 
	 	 	Subject to clause 14.7, a Communication is given if posted:

	 	(a)	 	within Australia to an Australian address, 3 days after posting; or
	 
	 	(b)	 	in any other case, 14 days after posting.

	14.6	 	Communications by facsimile
	 
	 	 	Subject to clause 14.7, a communication is given if sent by facsimile, when the sender’s facsimile
machine produces a report that the facsimile was sent in full to the addressee, the report being
conclusive evidence that the addressee received the facsimile in full at the time indicated on that
report.
	 
	14.7	 	After hours communications
	 
	 	 	If a Communication is given:

	 	(a)	 	after 5.00 pm in the place of receipt; or
	 
	 	(b)	 	on a day which is a Saturday, Sunday or public holiday in the place of receipt,

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	 	 	it is taken as having been given at 9.00 am on the next day which is not a Saturday, Sunday
or public holiday in that place.
	 
	14.8	 	Process service
	 
	 	 	Any process or other document relating to litigation, administrative or arbitral proceedings
relating to this Funding Agreement may be served by any method contemplated by this clause 14
or in accordance with any applicable law.
	 
	15	 	GST
	 
	15.1	 	Construction
	 
	 	 	In this clause 15 words and expressions which are not defined in this Funding Agreement but
which have a defined meaning in GST Law have the same meaning as in the GST Law.
	 
	15.2	 	Consideration GST exclusive
	 
	 	 	Unless otherwise expressly stated, all prices or other sums payable or consideration to be
provided under this Funding Agreement are exclusive of GST.

	 
	15.3	 	Payment of GST
	 
	 	 	If GST is payable by a supplier, or by the representative member for a GST group of which the
supplier is a member, on any supply made under this Funding Agreement, the recipient will pay
to the supplier an amount equal to the GST payable on the supply.
	 
	15.4	 	Timing of GST payment
	 
	 	 	The recipient will pay the amount referred to in clause 15.3 in addition to and at the same
time that the consideration for the supply is to be provided under this Funding Agreement.
	 
	15.5	 	Tax invoice

	 
	 	 	
Except where clause 15.8 applies:

	 	(a)	 	the supplier must deliver a tax invoice or an adjustment note to the recipient
before the supplier is entitled to payment of an amount under clause 15.3; and
	 
	 	(b)	 	the recipient can withhold payment of the amount payable under clause 15.3
until the supplier provides a tax invoice or an adjustment note as appropriate.

	15.6	 	Adjustment event
	 
	 	 	If an adjustment event arises in respect of a taxable supply made by a supplier under this
Funding Agreement the amount payable by the recipient under clause 15.3 will be recalculated
to reflect the adjustment event and a payment will be made by the recipient to the supplier
or by the supplier to the recipient as the case requires.

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	15.7	 	Reimbursements
	 
	 	 	Where a party is required under this Funding Agreement to pay or reimburse an expense or
outgoing of another party, the amount to be paid or reimbursed by the first party will be
the sum of:

	 	(a)	 	the amount of the expense or outgoing less any input tax credits in respect
of the expense or outgoing to which the other party, or to which the representative member for a GST
group of which the other party is a member, is entitled; and
	 
	 	(b)	 	if the payment or reimbursement is subject to GST, an amount equal to that GST.

	15.8	 	Recipient created tax invoice
	 
	 	 	Where the Participant makes a taxable supply to the
Commonwealth under this Funding
Agreement, the parties agree:

	 	(a)	 	the Commonwealth will issue a recipient created tax invoice for the supply at
the same time that the Commonwealth provides the consideration for the supply;
	 
	 	(b)	 	the Participant will not issue a tax invoice in respect of the supply;
	 
	 	(c)	 	the Commonwealth will issue an adjustment note for any adjustment event that
arises in relation to the supply; and
	 
	 	(d)	 	the Participant will not issue an adjustment note for any adjustment event that
arises in relation to the supply.

	15.9	 	Acknowledgment by Commonwealth
	 
	 	 	The Commonwealth acknowledges that it is registered for GST at the date of entry into this
Funding Agreement and that it will notify the Participant if it ceases to be so registered.

	15.10	 	Acknowledgment by Participant
	 
	 	 	The Participant acknowledges that it is registered for GST at the date of entry into this
Funding Agreement and that it will notify the Commonwealth if it ceases to be so
registered.
	 
	16	 	SUBSTITUTION, VARIATION, ASSIGNMENT AND WAIVER
	 
	16.1	 	Substitution and variation

	 	(a)	 	At any time during the term of this Funding Agreement, the Participant may
submit in writing to the Commonwealth a proposal to:

	 	(i)	 	substitute a different Eligible Pharmaceutical R&D Activity for an
activity in the Portfolio; or
	 
	 	(ii)	 	add an Eligible Pharmaceutical R&D Activity to the Portfolio.

	 	(b)	 	Subject to clause 16.1(c), the Commonwealth may, in its discretion, accept or
reject a proposal referred to in clause 16.1(a), with or without conditions.

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	 	(c)	 	This Funding Agreement may only be varied or replaced:

	 	(i)	 	in accordance with clause 5.2, clause 5.3 or clause 8.4; or 

	 
	 	(ii)	 	by written agreement of both parties.

	16.2	 	Assignment and dealing

	 	(a)	 	The Participant must not assign, novate or deal with any
right under this Funding Agreement without the prior written consent
of the Commonwealth.
	 
	 	(b)	 	Any assignment, novation or dealing or purported assignment,
novation or dealing in breach of this clause 16.2 will have
no effect in so far as it might otherwise affect the Commonwealth.

	16.3	 	Waiver and exercise of rights

	 	(a)	 	A single or partial exercise or waiver by a party of a right relating to this Funding Agreement
does not prevent any other exercise of that right or the exercise of any other right.
	 
	 	(b)	 	A party is not liable for any loss, cost or expense of any other party caused or contributed
to by the waiver, exercise, attempted exercise, failure to exercise or delay in the exercise of a
right.

	17	 	GENERAL
	 
	17.1	 	Further steps
	 
	 	 	Each party must promptly do whatever any other party reasonably requires of it to give effect to
this Funding Agreement and to perform its obligations under it.

	17.2	 	Governing law and jurisdiction

	 	(a)	 	This Funding Agreement is governed by and is to be construed
in accordance with the laws applicable in
the Australian Capital Territory.

	 
	 	(b)	 	Each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the
courts of the Australian Capital Territory and any courts which have jurisdiction to hear appeals
from any of those courts and waives any right to object to any proceedings being brought in those
courts.

	17.3	 	Liability
	 
	 	 	An obligation of two or more persons binds them separately and together.
	 
	17.4	 	Good faith and reasonableness
	 
	 	 	During the term of this Funding Agreement, the parties must act towards each other reasonably and
in good faith when exercising rights and discretions, considering consents or approvals, and
performing obligations under this Funding Agreement.

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	17.5	 	Relationship of parties

	 	(a)	 	This Funding Agreement does not create a partnership, joint venture, employment or agency
relationship between the parties.
	 
	 	(b)	 	The Participant must not represent that it is, or act as if it was, a partner, joint venturer,
employee or agent of the Commonwealth.

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PHARMACEUTICALS PARTNERSHIPS PROGRAM

P3

FUNDING AGREEMENT

 

PARTICULAR CONDITIONS

 

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Partnerships Program Particular Conditions

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PARTIES

	 	1	 	Commonwealth of Australia represented by the Department of Industry, Tourism and Resources
	 
	 	 	 	ABN 51 835 430479 001
	 
	 	 	 	GPO Box 9839

Canberra ACT 2601
	 
	 	 	 	20 Allara Street

Canberra ACT 2601
	 
	 	2	 	The Participant
	 
	 	 	 	Peplin Operations Pty Ltd
	 
	 	 	 	ABN 69093317367
	 
	 	 	 	Level 2
	 
	 	 	 	1 Breakfast Creck Road

	 
	 	 	 	NEWSTEAD QLD 4006

OPERATIVE PROVISIONS

	1	 	This Funding Agreement is made, and the Funding is made available to the Participant, under the
Pharmaceuticals Partnerships Program.
	 
	2	 	The Funding is made available to the Participant on the terms and conditions of the Funding
Agreement which comprises the General Conditions and the Particular Conditions including the
schedules).
	 
	3	 	The Participant acknowledges that it has received and read a copy of the General
Conditions, and agrees that the terms and conditions of the General
Conditions form part of the Funding Agreement.
	 
	4	 	Terms defined in the General Conditions have the same meaning in the Particular Conditions.
	 
	5	 	The Participant acknowledges that it has received and read a copy of the Program Guidelines and
the Directions.
	 
	6	 	If there is an inconsistency between the Particular Conditions and the General Conditions, the
Particular Conditions prevail to the extent of the inconsistency.

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	EXECUTED as a deed.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date of
Deed: 22 September 2005	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Commonwealth of Australia	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SIGNED SEALED AND DELIVERED	 	 	)	 	 	 	 	 
	for and on behalf of the	 	 	)	 	 	 	 	 
	COMMONWEALTH OF AUSTRALIA	 	 	)	 	 	 	 	 
	 
	by

	 	/s/
Judith Zieke
	 	 	)	 	 	 	 	 
	a delegate of the Minister for Industry	 	 	)	 	 	/s/
Judith Zieke	 	 
	Tourism and Resources	 	 	)	 	 	Signature of delegate	 	 
	in the presence of:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ Lyn Dodd	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Signature of witness	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 Lyn Dodd	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Name of witness (print)	 	 	 	 	 	 	 	 

I hereby accept the terms and conditions pursuant to which the Funding is made available.

Participant

THE COMMON SEAL of

     Peplin Operations Pty Ltd

	 	 	 	 	 
	 
	 	 	 	 
	 

is affixed in the presence of:

	 	 	 	 
	 
	 	 	 	 
	/s/ Philia Baker

	 	 	 	/s/ Michael Aldridge
	 

	 	 	 	 
	Company Secretary/Director

	 	 	 	Director
	 
	 	 	 	 
	
Philia Baker

	 	 	 	 Michael Aldridge
	 

	 	 	 	 
	Name of Company Secretary/Director (print) `

	 	 	 	Name of Director (print)

Pharmaceuticals Partnerships Program Particular Conditions

Version 2.0 — Release Date June 2005exv10w19

 

Exhibit 10.19

Project No: GRA02090

R&D Start Program

Grant Agreement

Particular Conditions

	 	 	 
	Parties
	 	 
	 
	 	 
	Commonwealth of Australia acting
	 	 
	through the Industry Research and
	 	 
	Development Board
	 	 
	 
	 	 
	ABN 51 835 430 479
	 	 
	(Department of Industry, Science and
	 	 
	Resources)
	 	 
	 
	 	 
	Postal address
	 	OLD State Manager
	 
	 	Department of Industry, Tourism and Resources
	 
	 	GPO Box 9839
	 
	 	BRISBANE QLD 4001
	 
	 	 
	The Grantee
	 	 
	 
	 	 
	- ABN
	 	Peplin Operations Pty Ltd
	- ACN
	 	69093317367
	- postal address
	 	093 317 367
	 
	 	PO Box 346
	 
	 	FORTITUDE VALLEY   QLD   4006
	 
	 	 
	- business address
	 	Ground Floor, South Tower
	 
	 	527 Gregory Terrace
	 
	 	BOWEN HILLS   QLD   4006

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	1	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

 

 

Operative provisions

	1.	 	This Grant is made to the Grantee in respect of the
Project by the Industry Research and Development
Board on behalf of the Commonwealth to the Grantee
under the R&D Start Program.
	 
	2.	 	The Grant is made pursuant to the Industry Research
and Development Act 1986 and the relevant
Ministerial Directions issued under sections 19 and
20 of that Act.
	 
	3.	 	
 The Grant is made on the terms and conditions of the
Grant Agreement, which comprises the General
Conditions (version 6.1) and the Particular
Conditions (including the schedule).
	 
	4.	 	The Grantee
acknowledges that it has received and read a copy of
the General Conditions (version 6.1), and agrees
that the terms and conditions of the General
Conditions form part of the Grant Agreement.
	 
	5.	 	

Terms defined in the General Conditions
(version 6.1) have the same meaning in the
Particular Conditions.
	 
	6.	 	If there is an inconsistency between the Particular
Conditions and the General Conditions (version 6.1),
the Particular Conditions prevail to the extent of
the inconsistency.

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	2	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

 

 

	 	 	 	 	 	 	 	 	 
	Acceptance of terms

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	EXECUTED as a deed
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date of deed: 19 September 2003
	 	 	 	 	 	 	 	 
	Commonwealth of Australia

	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SIGNED for and on behalf of the

	 	 	)	 	 	 	 	 
	COMMONWEALTH OF AUSTRALIA by

	 	 	)	 	 	 	 	 
	Paul Flynn a delegate of the INDUSTRY

	 	 	)	 	 	 	 	 
	RESEARCH AND DEVELOPMENT

	 	 	)	 	 	 	 	 
	BOARD in the presence of:

	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	/s/ Bruce Dawson

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Signature of witness

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	Bruce Dawson

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name of witness (block letters)

	 	 	)	 	 	/s/ [ILLEGIBLE]	 	 
	 

	 	 	)	 	 	 
	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Grantee

The terms and conditions pursuant to which the Grant
is made are hereby accepted by the Grantee.	 	 
	
	THE COMMON SEAL of

	 	 	)	 	 	 	 	 
	Peplin Operations Pty Ltd

	 	 	)	 	 	 	 	 
	is affixed in the presence of:

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	/s/
Garry Llewellyn Redlich

	 	 	)	 	 	/s/ David Legh Craig	 	 
	 

	 	 	 	 	 	 	 	 
	Signature of director

	 	 	)	 	 	Signature of secretary	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 GARRY LLEWELLYN REDLICH

	 	 	)	 	 	DAVID LEGH CRAIG	 	 
	 	 	 	 	 	 	 	 	 
	Name of director (block letters)

	 	 	)	 	 	Name of secretary (block letters)	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	3	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

 

 

The Schedule

	 	 	 	 	 
	1

	 	Project Title
	 	New generation anti-cancer drugs.
	 
	 	 	 	 
	2

	 	Project Reference Number
	 	GRA02090
	 
	 	 	 	 
	3

	 	Project Duration	 	 
	 
	 	 	 	 
	 

	 	(a)  Commencement Date:
	 	25 May 2001
	 
	 	 	 	 
	 

	 	(b)  Completion Date:
	 	31 August 2004
	 
	 	 	 	 
	4

	 	Grant
	 	      A maximum amount of $3,247,950
	 
	 	 	 	 
	5

	 	Grant Percentage of Eligible Expenditure
	 	      50%
	 
	 	 	 	 
	6

	 	Interest Rates [5.525%] per annum
	 	 
	 
	 	 	 	 
	7	 	Project Planned
Eligible Expenditure by Financial Year

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Head of	 	 	 	 
	Expenditure	 	Estimated Expenditure $	 	Total $
	 
	 	 	2001/02	 	 	 	2002/03	 	 	 	2003/04	 	 	 	2004/05	 	 	 	 	 
	R&D Salary
Expenditure
	 	 	348,000	 	 	 	351,100	 	 	 	354,300	 	 	NIL	 	 	 	1,053,400	 
	Contract
Expenditure
	 	 	1,945,000	 	 	 	1,745,000	 	 	 	1,745,000	 	 	NIL	 	 	 	5,435,000	 
	Plant Expenditure
	 	NIL	 	 	NIL	 	 	NIL	 	 	NIL	 	 	NIL	 
	Prototype Expenditure
	 	NIL	 	 	NIL	 	 	NIL	 	 	NIL	 	 	NIL	 
	Other Expenditure
	 	 	2,500	 	 	 	2,500	 	 	 	2,500	 	 	NIL	 	 	 	7,500	 
	Project Eligible
Expenditure
	 	 	2,295,500	 	 	 	2,098,600	 	 	 	2,101,800	 	 	NIL	 	 	 	6,495,900	 
	Annual Cap
Amount
	 	 	1,417,380	 	 	 	827,650	 	 	 	840,520	 	 	 	162,400	 	 	 	3,247,950	 

	 	 	 	 	 
	8

	 	Initial Payment
	 	$621,535

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	4	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

 

 

	9	 	Project Description and Planned Outcomes

The project will compete the development of the company’s topical drug for the treatment of
skin cancer and progress the research and development of intracavitary, intralesional and
systemic drugs for solid tumours from the company’s novel proprietary compounds.

	10	 	Performance Milestones and Planned Achievement Dates

	 	 	 	 	 
	 	 	 	 	Expected Achievement
	 	 	Major Milestone	 	Date
	1

	 	Selection of lead compound.
	 	31 October 2001
	2

	 	Successful scale up of plant production
	 	7 December 2001
	3

	 	Successful scale up of active ingredient extraction.
	 	4 January 2002
	4

	 	Acceptable formulation for clinical trials.
	 	30 September 2002
	5

	 	Completion of toxiclogy studies for
Phase 1 study.
	 	30 November 2003
	6

	 	Acceptance of IND submission for Phase 1 Clinical
Trial.
	 	31 December 2003
	7

	 	Completion of Phase 1 Clinical Trial.
	 	31 August 2004
	8

	 	Completion of phase 2 Clinical Trial.
	 	31 August 2004

	 	 	 	 	 	 	 
	11

	 	Retention Amount
	 	$	162,400	 
	 
	 	 	 	 	 	 
	12

	 	Reports	 	 	 	 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Audit
	 	 	 	 	 	 	Report
	Review Type	 	Due Date	 	Report Period	 	Y/N
	Progress

	 	26 January 2002
	 	28 November 2001 to 31 December 2001	 	 
	Progress

	 	26 April 2002
	 	1 January 2002 to 31 March 2002	 	 
	Progress

	 	28 July 2002
	 	1 April 2002 to 30 June 2002
	 	Y
	Progress

	 	28 October 2002
	 	1 July 2002 to 30 September 2002	 	 
	Progress

	 	28 January 2003
	 	1 October 2002 to 31 December 2002	 	 
	Progress

	 	28 April 2003
	 	1 January 2003 to 31 March 2003	 	 
	Progress

	 	28 July 2003
	 	1 April 2003 to 30 June 2003
	 	Y
	Progress

	 	28 October 2003
	 	1 July 2003 to 30 September 2003	 	 
	Progress

	 	28 January 2004
	 	1 October 2003 to 31 December 2003	 	 
	Progress

	 	28 April 2004
	 	1 January 2004 to 31 March 2004	 	 
	Progress

	 	28 July 2004
	 	1 April 2004 to 30 June 2004	 	 
	Final

	 	28 September 2004
	 	1 July 2004 to 31 August 2004
	 	Y

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	5	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

 

 

Reports must conform with the requirements in the Project Reporting Guide supplied to
the Grantee by the Commonwealth, as varied from time to time by the Commonwealth and notified
to the Grantee.

Unless the
Grantee is otherwise notified by the Commonwealth, commercialisation reports will
be required 1, 3 and 5 years after completion of the Project, in the format supplied by the
Commonwealth at those times.

	13	 	Notices

Notices must be addressed as follows:

	 	a)	 	if given to the Commonwealth, addressed and forwarded to the Director, AusIndustry
State Office, Department of Industry, Science and Resources for the attention of an
AusIndustry Customer Service Manager at the following address:
	 
	 	 	 	Address: GPO Box 9839, BRISBANE Qld 4001 

Facsimile No: 3227 4730

Email address: aiqld@industry

or as otherwise notified in writing by an AusIndustry Customer Service Manager;

and

	 	b)	 	if given by the Commonwealth, signed by an authorised delegate of the Industry Research
and Development Board and forwarded to the Grantee at the following address:

Peplin Operations Pty Ltd

Mr Garry Redlich

CEO and Managing Director

PO Box 346

FORTITUDE VALLEY QLD 4006

or as otherwise notified in writing by the Grantee.

	14	 	Special Conditions
	 
	 	 	None

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	6	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

 

 

NATIONAL BENEFIT INDICATORS — COMMERCIALISATION

The Industry Research and Development (IR&D) Board understands the increasing global nature of
business and the need for innovative companies to respond flexibly to market needs. For example,
while the IR&D Board is keen to support projects which involve manufacturing or production in
Australia, it accepts that there will be instances where Australian manufacture could limit the
commercialisation prospects of intellectual property developed with its grant funding. This does
not remove the necessity for the commercialisation of project outcomes to provide national
benefits.

Set out below are the indicators by which the IR&D Board will assess the level of national benefit
contribution to Australia and the Australian economy from the commercialisation of R&D Start
projects where commercialisation will not take place in Australia;

	•	 	the commercialisation plan includes Australia being maintained as the home base for future
R&D, manufacture or product development;

	 
	•	 	the ongoing development of the commercial outcomes, (product, process or service), arising
from R&D activities involves interactions with other firms and research institutions (both
domestic and international);

	 
	•	 	the commercialisation of the products, processes or services arising from R&D activities result
in an increase in the number of employees in the company’s operations based in Australia;

	 
	•	 	as a result of the commercialisation, Australian residents receive commercial compensation
through royalties, licence fees, equity, dividends or outright sale; and

	 
	•	 	production overseas could be considered reasonable as:

	 	Ø	 	local production is demonstrated to be uneconomic in terms of cost structure;
and/or
	 
	 	Ø	 	the production or commercialisation requires close physical interaction
with overseas companies, customers, suppliers and competitors.

Where a company is proposing to conduct exploitation overseas due to economic viability in terms of
cost structure, the Board will consider:

	•	 	the level of commitment to retaining or enhancing the companies R&D facilities in Australia;
	 
	•	 	the degree of globalisation of the relevant industry sector;
	 
	•	 	the relative input costs to production as identified by the company;
	 
	•	 	the relative transport costs as identified by the company;
	 
	•	 	the relative costs of skilled labour as identified by the company; and
	 
	•	 	legal barriers to entry; or
	 
	•	 	any other factors the Board considers relevant.

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	7	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

 

 

Where the company is proposing to conduct exploitation overseas due to close proximity
to customers, suppliers and competitors, the Board will consider:

	•	 	the level of commitment to retaining or enhancing the companies R&D facilities in Australia;
	 
	•	 	the mechanisms established to disseminate knowledge and market intelligence from overseas to
the companies operations based in Australia;
	 
	•	 	the industry norms in terms of proximity;
	 
	•	 	the level of competition in the industry sector and the need
to innovate quickly;
	 
	•	 	the nature of the products’ inputs which require close contact eg perishables, knowledge, etc;
and
	 
	•	 	any other factors the Board considers relevant.

	 	 	 	 	 
	R&D
Start Grant Agreement Particular Conditions

	 	 	8	 
	Version 6.1
— Release Date July 2001

	Author: R&D Start Program Management

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