Document:

Exhibit 4.2(l)

 

“CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED
AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.”

 

	
  DATE

  	
  April 28 1999

  

 

 

AUTOGEN PTY LTD

 

 

and

 

 

LIPHA S.A.

 

 

 

COMMERCIALISATION LICENCE

(Field of Obesity)

“BEACON”

 

 

 

TABLE OF CONTENTS

 

	
  1. INTERPRETATION

  	
   

  
	
  1.1 Definitions

  	
   

  
	
  1.2 Construction

  	
   

  
	
   

  	
   

  
	
  2. GRANT OF LICENCE

  	
   

  
	
  2.1 Grant of licence

  	
   

  
	
  2.2 Autogen’s Rights

  	
   

  
	
  2.3 Scope of exclusive licence

  	
   

  
	
   

  	
   

  
	
  3. ROYALTIES

  	
   

  
	
  3.1 Royalty Obligation

  	
   

  
	
  3.2 Royalty on unprotected products

  	
   

  
	
  3.3 Multiple royalties

  	
   

  
	
   

  	
   

  
	
  4. REPORTS

  	
   

  
	
  4.1 Reporting requirements

  	
   

  
	
  4.2 Products which don’t attract royalty

  	
   

  
	
  4.3 Time of Sale

  	
   

  
	
  4.4 Foreign currencies

  	
   

  
	
  4.5 Payment mechanics

  	
   

  
	
  4.6 Lipha to keep accounts and records

  	
   

  
	
  4.7 Inspection of accounts

  	
   

  
	
  4.8 Settlement of discrepancies

  	
   

  
	
  4.9 Cost of audit

  	
   

  
	
  4.10 Advance royalty

  	
   

  
	
   

  	
   

  
	
  5. SUB-LICENSING

  	
   

  
	
  5.1 Scope of sub-licence provisions

  	
   

  
	
  5.2 Right to sub-Licence

  	
   

  
	
  5.3 Sub-licenses to Affiliates

  	
   

  
	
  5.4 Sub-licences - non-Affiliate

  	
   

  
	
  5.5 Calculation of royalty for all Sub-licensees

  	
   

  
	
  5.6 Royalty reporting

  	
   

  
	
  5.7 Enforcement of Sub-licences

  	
   

  
	
   

  	
   

  
	
  6. COMMERCIALISATION

  	
   

  
	
  6.1 General reporting

  	
   

  
	
  6.2 Decision-making

  	
   

  
	
  6.3 Registration of Product

  	
   

  
	
  6.4 Ceasing to pursue registration

  	
   

  
	
  6.5 Refusal of Registration

  	
   

  
	
  6.6 Maintenance of Registrations

  	
   

  
	
  6.7 Marketing of Products

  	
   

  
	
  6.8 Commencement of Marketing

  	
   

  
	
  6.9 General reports

  	
   

  
	
  6.10 Marketing reports

  	
   

  
	
  6.11 Restriction on clinical trials

  	
   

  

 

 

	
  7. CONFIDENTIAL INFORMATION

  	
   

  
	
  7.1 Obligations to Autogen

  	
   

  
	
  7.2 Obligations to Lipha

  	
   

  
	
  7.3 Exceptions to obligations

  	
   

  
	
  7.4 Rights in Know-How

  	
   

  
	
  7.5 Term of obligation

  	
   

  
	
  7.6 Permitted disclosures

  	
   

  
	
  7.7 Delivery-up of Know-How

  	
   

  
	
  7.8 Terms of this Agreement

  	
   

  
	
  7.9 Public Announcement

  	
   

  
	
  7.10 Continuous disclosure obligations

  	
   

  
	
   

  	
   

  
	
  8. LIABILITY

  	
   

  
	
  8.1 Responsibility for Products

  	
   

  
	
  8.2 Autogen not liable

  	
   

  
	
   

  	
   

  
	
  9. INDEMNITIES

  	
   

  
	
  9.1 Indemnity by Lipha

  	
   

  
	
  9.2 Indemnity by Autogen

  	
   

  
	
  9.3 Notification regarding indemnity

  	
   

  
	
   

  	
   

  
	
  10. INSURANCE

  	
   

  
	
   

  	
   

  
	
  11. TERM AND TERMINATION

  	
   

  
	
  11.1 Term

  	
   

  
	
  11.2 Termination for breach

  	
   

  
	
  11.3 Termination in default of payment

  	
   

  
	
  11.4 Grounds for immediate termination

  	
   

  
	
  11.5 Reconstruction exception

  	
   

  
	
  11.6 Termination by Autogen

  	
   

  
	
  11.7 Termination by Lipha

  	
   

  
	
  11.8 Termination to be without prejudice

  	
   

  
	
   

  	
   

  
	
  12. OBLIGATIONS AND RIGHTS ON TERMINATION

  	
   

  
	
  12.1 Obligations of Lipha

  	
   

  
	
  12.2 Obligations of Autogen

  	
   

  
	
  12.3 Limitation of Lipha’s rights

  	
   

  
	
   

  	
   

  
	
  13. WARRANTIES

  	
   

  
	
  13.1 General warranties

  	
   

  
	
  13.2 Specific warranty re Licensed Patents

  	
   

  
	
  13.3 Warranties by Lipha

  	
   

  
	
   

  	
   

  
	
  14. PROTECTION OF LICENSED PATENTS

  	
   

  
	
  14.1 Maintenance of Licensed Patents

  	
   

  
	
  14.2 Reporting infringements

  	
   

  
	
  14.3 Conduct of proceedings regarding Rights

  	
   

  
	
  14.4 Royalties

  	
   

  
	
   

  	
   

  
	
  15. INFRINGEMENT OF OTHERS RIGHTS

  	
   

  
	
  15.1 Notification of action

  	
   

  
	
  15.2 Autogen action

  	
   

  

 

ii

 

	
  15.3 Lipha action

  	
   

  
	
   

  	
   

  
	
  16. CONSTRUCTION OF PATENTS

  	
   

  
	
   

  	
   

  
	
  17. FORCE MAJEURE

  	
   

  
	
  17.1 Party not liable

  	
   

  
	
  17.2 Notice of Force Majeure

  	
   

  
	
  17.3 Termination in case of Force Majeure

  	
   

  
	
   

  	
   

  
	
  18. ARBITRATION

  	
   

  
	
   

  	
   

  
	
  19. NOTICES

  	
   

  
	
  19.1 Form of Notice

  	
   

  
	
  19.2 Manner of Service

  	
   

  
	
  19.3 Address for Service

  	
   

  
	
  19.4 Time of Service

  	
   

  
	
   

  	
   

  
	
  20. MISCELLANEOUS

  	
   

  
	
  20.1 Time of essence

  	
   

  
	
  20.2 Severance

  	
   

  
	
  20.3 Waiver

  	
   

  
	
  20.4 Relationship of parties

  	
   

  
	
  20.5 Injunctive relief

  	
   

  
	
  20.6 Proper law

  	
   

  
	
  20.7 Rule of construction

  	
   

  
	
  20.8 Variation

  	
   

  
	
  20.9 Assignment

  	
   

  
	
  20.10 Further documents

  	
   

  
	
  20.11 Affiliates’ actions

  	
   

  
	
  20.12 Costs and Taxes

  	
   

  
	
  20.13 Interest on overdue amounts

  	
   

  
	
  20.14 Withholding taxes

  	
   

  
	
  20.15 Counterparts

  	
   

  
	
  20.16 Registration of agreement

  	
   

  
	
  20.17 Not obliged to act contrary to law

  	
   

  
	
  20.18 Statutory rights not limited

  	
   

  
	
  20.19 Consents

  	
   

  
	
  20.20 Entire agreement

  	
   

  
	
   

  	
   

  
	
  Schedule 1

  	
  Autogen Patents

  	
   

  
	
  Schedule 2

  	
  Stage 1 Patents

  	
   

  

 

iii

 

	
  THIS AGREEMENT is made on

  	
  April 28
  1999

  

 

BETWEEN

 

Autogen Pty Ltd ACN 074 636 847

of 210 Kings Way, South Melbourne, Victoria, Australia

 

(“Autogen”)

 

AND

 

LIPHA S.A.

of 37 rue Saint Romain, 69379 Lyon, CEDEX
08, France

 

(“Lipha”)

 

RECITALS:

 

A.           Lipha has exercised its option to take a licence in respect of certain
intellectual property and to conduct further research and development of the
same with a view to the development and commercialisation of certain products.

 

B.            Autogen has agreed to
grant this licence to certain intellectual property on the terms and conditions
set out.

 

C.            Lipha has agreed to pay to Autogen certain
payments as and by way of royalty in respect of the use by it of certain
intellectual property licensed to it by Autogen and either used by it directly
in the commercialisation of certain products or used by it in the research and
development which has led to those products.

 

OPERATIVE PROVISIONS:

 

1.            INTERPRETATION

 

1.1          Definitions

 

In this
agreement the following expressions have the following meanings:

 

“Affiliate” means with respect to a party, any person which
directly or indirectly Controls, or is Controlled by, or is under common
Control with, such party.

 

“Arms Length” means in relation to a transaction or dealing,
a transaction or dealing which might reasonably be expected to operate or apply
between independent enterprises dealing wholly independently with one another
and where neither bears the other any special duty or obligation and no special
relationship exists between them and where the only consideration is cash.

 

 

“Autogen Know-How” means Know-How owned by or licensed to
Autogen in relation to the Autogen Patents in relation to the Tanis Gene
Product.

 

“Autogen Patents” the patents and patent applications owned
by or licensed to Autogen related to the Licensed Field including but not
limited to those referred to in Schedule 1 and
including:

 

(i)            any re-issue, renewal or extension of such a patent or patent application
(whether in whole or in part) and any patent of addition thereto; and

 

(ii)           any supplementary protection certificate or other form of extension
based on or arising from such patents or patent applications.

 

“Base Rate” means the PIBOR rate published as such by the
French Association of Banks (Association Francaise de Banque (AFB)) or EURIBOR
rate applicable on 1 January 2002 or at any later date, should such date
be postponed for any reason and published as such by the European Federation of
Banks (Federation Europeenne de Banque (FEB)) plus in either case the amount of
1.5% per annum.

 

“Business Day” means a day on which the trading banks are
open for general banking business in both Melbourne, Australia and Lyon,
France.

 

“Claim Asserted in Good Faith” means and is limited to any
claim asserted in any Project Patent which can reasonably be considered to be
patentable under the laws of the country where filed having regard to any and
all references, prior art, novelty, inventiveness, utility and any and all
other relevant legal criteria.

 

“Commencement Date” means the date of execution of this
agreement by the party last signing it.

 

“Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management of policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.

 

“Covered By” means when used in the context that a Product is
covered by a Subsisting Claim or a Claim Asserted in Good Faith, that the
Product or the normal method of operation or customarily intended use of such
Product must, when such Product is manufactured, sold, or otherwise Exploited
by Lipha or a Sub-Licensee constitute (but for the Licence or Lipha’s ownership
of Stage 2 Patents) an infringement of a Subsisting Claim or in the period of 5
years from the Commencement Date an infringement of a Claim Asserted in Good
Faith, considered as if it were a Subsisting Claim.

 

“Dollars” or “$” means Australian dollars.

 

“EUR” means the new European currency called EURO.

 

“Exploit” means in respect of a:

 

(i)            Product - to make, have made, hire, sell or otherwise dispose of the
Product, to offer to make, sell, hire or otherwise dispose of the Product, to
use or import it or keep it for the purpose of doing any of those things;

 

2

 

(ii)           Process - use the method or process or do any act in respect of a
product resulting from such use which falls within paragraph (i) (a);

 

“FFR” means French Francs.

 

“Final Judgment” means a Judgment or decree which becomes not
further appealable or reviewable through the exhaustion of all permissible
applications for appeal, rehearing or review by any superior court or tribunal
or through the expiration of time permitted for such applications.

 

“Force Majeure” means any cause which is not within the
reasonable control of the party affected by it including, but not limited to,
acts of God, industrial disputes of any kind, war declared or undeclared, civil
disturbance, acts or omissions of Government or other competent authority,
fire, lightning, explosion or flood.

 

“Insolvency Event” means any event of insolvency, bankruptcy
or liquidation of the relevant party, including any voluntary or involuntary
judicial liquidation or re-organisation proceedings.

 

“Know-How” means technical, commercial and other information,
data, know-how, drawings, specifications and/or designs, animal or other
models, methodologies and biological materials embodied in some Material Form,
and without prejudice to the generality of the foregoing includes:

 

(i)            all experimental, manufacturing, process, analytical, packaging,
product, warehousing, quality control and quality assurance and marketing
specifications, standards, procedures, processes, methods, instructions and
techniques, samples, prototypes, formulae, writings of any kind, opinions or
otherwise unwritten data or in the form of computer software or computer
programs or any part thereof in any code; and

 

(ii)           all other information and other material supplied to or received by
a party or its Representatives from another party or Representatives on a
confidential basis pursuant to this agreement.

 

“Licence” means the right and licence granted by Autogen to Lipha
pursuant to this agreement.

 

“Licensed Field” means the field of human therapeutic
applications for the treatment or prevention of Diabetes and its complication and as a secondary field, the field of
human therapeutic applications for the treatment or prevention of obesity. For
clarity it is noted that this does not include diagnostics or veterinary
applications.

 

“Licensed Patents” means the Autogen Patents and the Stage 1
Patents.

 

“Licensed Technology” means the Autogen Know-How and Stage 1
Know-How.

 

“Loss” means any loss, damage, cost, interest, expense, fee,
penalty, fine, forfeiture, assessment, demand, action, suit, claim, proceeding,
cause of action, liability or damages incurred by a person, and includes:

 

(i)            the cost of any action taken by the person to protect itself against
any loss or to preserve any right it has under this agreement; and

 

3

 

(ii)           where applicable, reasonable legal costs.

 

“Marketing” means the promotion, advertising, distribution
and sale of the Product and includes a product launch campaign.

 

“Material Form” in relation to information includes any form
(whether visible or not) of storage from which information can be reproduced,
and any form in which Information is embodied or encoded.

 

“Month” means calendar month.

 

“Net Sales Value” of a Product means in the case of an Arms
Length sale the gross amount invoiced by Lipha (or the relevant Sub-licensee)
to any customer less any and all of the following:

 

(i)            any discount or rebates on sales of the Products;

 

(ii)           insurance and freight;

 

(iii)          the selling price of any returned goods or free replacements; and

 

(iv)          taxes imposed on sales of the Products such as value added tax,
excise tax and consumption tax.

 

“Party” means Autogen or Lipha and their respective
Affiliates and successors and permitted assigns and “Parties” means all of
them.

 

“Patent” means any patent or patent application as defined in
the Patents Act 1952 (C’th) and any similar
international, national or regional patent or patent application and includes
any and all extensions, renewals, continuations, patent-of-addition and/or
supplementary protection certificates to any of the foregoing and includes any
corresponding patent or patent application taken out or applied for in any
country in the Territory which is fairly based upon or derived from any of the
aforesaid patents.

 

“Products” means any products produced or arising out of use
of the results of Stage 1 Research or Stage 2 Research or arising out of all
and any further development by Lipha pursuant to Stage 1 Research or Stage 2
Research or both.

 

“Project Patents” means the Autogen Patents, the Stage 1
Patents and/or the Stage 2 Patents.

 

“Project Research” means the research in the area of Diabetes
and of novel genes involved in Diabetes and the research arising therefrom,
consisting of the Stage 1 Research and the Stage 2 Research.

 

“Quarter” means each period of three months commencing on the
first days of each January, April, July and October during the Term.

 

“Registration” in respect of a country means the gaining of
all permissions from all Regulatory Authorities in that country necessary to
permit the commencement of Marketing in that country and includes any approval
in respect of packaging or labelling and further includes the agreement of relevant
authorities as to the level of pricing or reimbursement in respect of the
relevant Products, where such registration is mandatory or a practical
commercial imperative.

 

4

 

“Regulatory Authority” in respect of a country means any and
all bodies and organisations regulating the importation, distribution,
marketing or sale of the Product in any part of that country.

 

“Representatives” of a party means that party’s directors,
officers, employees or agents.

 

“Required Insurance” means:

 

(i)            public liability insurance in respect of Losses up to a limit of
$5,000,000 covering property damage and personal injury as may be relevant to
the performance of each party’s obligations under this agreement to the other,
including (without limitation) liability, loss or damage due to negligent or
malicious damage, data corruption or loss, fire, theft, electrical and water
damage; and

 

(ii)           if the relevant party sells a Product, product liability insurance
in respect of Losses up to a limit of $20,000,000 covering any liability
associated with use or misuse of the Product including, personal injury and
consequential loss.

 

“Research Agreement” means the Research and Licence Agreement
in the field of Diabetes between the parties dated 28 April 1999.

 

“Rights” means the Licensed Patents and the Licensed
Technology.

 

“Royalty Period” means each Quarter during the Term provided
that where the Term commences or ends on a day other than first day of a
Quarter the first and last reports will be for only so much of the Royalty
Period as occurs during the Term.

 

“Significant Competition” means competition or potential
competition to the Product from a third party’s product which, notwithstanding
the fact that it does not breach any Project Patent:

 

(i)            is in whole or in part intended to have the same function or effect
as the Product; or

 

(ii)           in the country of manufacture or sale has taken or has the potential
to take significant market share from the Product or has prevented or deterred
or has the capacity to prevent or deter the Product from obtaining significant
market share.

 

“Stage 1 Know-How” means the Know-How relating to or arising
out of Stage 1 Research in relation to
the Tanis Gene Product.

 

“Stage 1 Patents” means Patents relating to or arising out of
Stage 1 Research including in particular the Patents set out in Schedule 2.

 

“Stage 1 Research” means the Research so described conducted
under the Research Agreement.

 

“Stage 2 Know-How” means the Know-How relating to or arising out
of the Stage 2 Research program in
relation to the Tanis Gene Product.

 

“Stage 2 Patents” means Patents relating to or arising out of
the Stage 2 Research program in
relation to the Tanis Gene Product.

 

5

 

“Stage 2 Research” means generally antibody production, large scale protein production, structural
analysis, screening of compounds affecting the relevant novel gene product,
combinatorial chemistry, toxicological studies and first clinical studies in obese
patients and completion of dose efficiency relationship studies in diabetic
patients (clinical Phase 2).

 

“Sub-licence” means a sub-licence granted to an Affiliate or
other third party under clause 5.

 

“Sub-licensee” means the person in favour of whom a
Sub-licence is granted in accordance with clause 5

 

“Subsisting Claim” means and is limited to any valid claim of
a validly issued unexpired and non-lapsed Project Patent which has not been
held permanently revoked, unenforceable or invalid in a judgment or decree
which becomes not further appealable or reviewable through the exhaustion of
all permissible applications for appeal, rehearing or review by any superior
court or tribunal or through the expiration of time permitted for such
applications, (which judgment or decree has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise).  If there should be two or more decisions
within the same country which are conflicting with respect to the invalidity of
the same claim, the decision of the highest tribunal will thereafter
control.  However should the tribunals be
of equal authority, then the decision or decisions holding the claim valid will
prevail where the conflicting decisions are equal in number and the majority of
decisions will prevail where the conflicting decisions are not equal in
number.  Where a Project Patent has been
issued in a country other than Australia without a separate and independent
examination by the relevant authorities of that country that patent will be
deemed to have a scope equivalent to the scope of the claims of any
corresponding Australian Patent which has had examination in Australia.

 

“Tanis Gene Product” means the novel
gene the subject of the Autogen Patents, and any novel proteins or novel
antigens based on such novel gene, and any product arising from transcription
of such gene.

 

“Term” means the period during which this agreement is in
force pursuant to clause 11.

 

“Territory” means the whole of the world

 

“Year” means each period of twelve months commencing on the
first day of each January during the Term.

 

1.2          Construction

 

In this
agreement unless the context otherwise requires:

 

(a)           Business Day.  If any day appointed or specified by this
agreement for the payment of any money or the doing of any act or thing falls
on a day that is not a Business Day, the day so appointed or specified is
deemed to be the next day which is a Business Day.

 

6

 

(b)           Collective references.  Reference to any thing (including, without
limitation, any amount) is a reference to the whole or any part of it and a
reference to a group of things or persons is a reference to any one or more of
them.

 

(c)           Defined expressions.  If a word or phrase is defined, cognate words
and phrases have corresponding definitions.

 

(d)           Gender.  Words importing any gender include the other
genders.

 

(e)           Headings.  Headings must be ignored in construing this
document.

 

(f)            Joint liability.  An obligation of two or more parties binds
them jointly and severally.

 

(g)           Joint obligations.  An obligation incurred in favour of two or
more parties is enforceable by them jointly and severally.

 

(h)           Month.  Means a calendar month.

 

(i)            Numbers.  Words importing the singular include the
plural and vice versa.

 

(j)            Parts of agreement.  References to this agreement include its
recitals, schedules and annexures.

 

(k)           Persons.  References to persons include corporations
and bodies politic.

 

(l)            Reconstituted bodies.  References to a body which has ceased to
exist or has been reconstituted, amalgamated, reconstructed or merged, or the
functions of which have become exercisable by any other person or body in its
place, is taken to refer to the person or body established or constituted in
its place or the person or body by which its functions have become exercisable.

 

(m)          Representatives and assigns.  References to a person
include the legal personal representatives, successors and permitted assigns of
that person.

 

(n)           Statutory amendments.  A reference to a statute, ordinance, code or
other law includes regulations and other statutory instruments under it and
consolidations, amendments, re-enactments or replacements of any of them
(whether of the same or any other legislative authority having jurisdiction).

 

(o)           Variation.  References to this or any other document
include the document as varied or replaced, and notwithstanding any change in
the identity of the parties.

 

(p)           Writing.  References to writing include any mode of
representing or reproducing words in tangible and permanently visible form, and
include telex and facsimile transmissions.

 

7

 

2.            GRANT OF LICENCE

 

2.1          Grant of licence

 

Autogen grants
to Lipha with effect on and from the Commencement Date until expiry of the Term
an exclusive licence within the Licensed Field, that is to the exclusion of
Autogen and third parties, in the Territory within that Licensed Field, to use
the Licensed Patents and the Licensed Technology and to Exploit the Products utilising
the Licensed Patents and Licensed Technology.

 

2.2          Autogen’s Rights

 

Autogen and Lipha
agree and acknowledge that during the Term, except as set out in or permitted
by this agreement:

 

(a)           Autogen must not within the Licensed Field Exploit the Products in
the Territory utilising the Licensed Patents or Licensed Technology; and

 

(b)           must not grant or purport to grant to any third party any right in
respect of the Licensed Patents or Licensed Technology which is inconsistent
with the right and licence granted in clause 2.1.

 

2.3          Scope of exclusive licence

 

The grant of the exclusive licence
contained in clause 2.1 does not preclude:

 

(a)           the licensing of the Licensed Patents and Licensed Technology for
use or exploitation outside of the Licensed Field as long as it is not
competitive to the Product; or

 

(b)           the non-commercial use of the Licensed Patents or Licensed Technology by Autogen, the
International Diabetes Institute or Deakin University for the purposes of their
own internal research.

 

3.            ROYALTIES

 

3.1          Royalty Obligation

 

In
consideration of the grant of the Licence, Lipha agrees to pay to Autogen in
respect of sales of Products Covered By Project Patents in the Territory a
royalty equal to the following percentages of the Net Sales Value of such
Products:

 

(a)           for yearly Net Sales Value of Products up to US$[*], at the rate of [*]%; and

 

(b)           until the yearly Net Sales Value of Products reaches US$[*], in
respect of yearly Net Sales Value between US$[*] and US$[*], [*]%; and

 

(c)           once the yearly Net Sales Value of Products exceeds US$[*], in
respect of all yearly Net Sales Value in excess of US$[*], at the rate of [*]%.

 

8

 

In this clause, yearly means from 1 January to
31 December in any year.

 

Where in
accordance with the terms set out in the Research Agreement Lipha pursues the
Joint Venture Option, the dollar amounts of US$[*] and US$[*] above will be
replaced with US$[*] and US$[*] respectively.

 

3.2          Royalty on unprotected products

 

If the manufacture,
sale or use of a Product in a particular country is not Covered By a Project
Patent for any reason then so long as there is in respect of that Product no
Significant Competition, royalties will still be payable in respect of such a
Product as if it were Covered By a Project Patent, but at a rate equal to [*]%
of the royalty rate applicable to Products which are actually Covered By a
Project Patent.

 

3.3          Multiple royalties

 

If the
manufacture, use or sale of a Product, which attracts a royalty obligation
under clauses 3.1 or 3.2,
and also attracts a royalty obligation to a third party or parties, not being
Affiliates of Lipha, and the aggregate of all such third party non-Affiliate
royalties exceeds [*]% of Net Sales Value, then the royalty rate payable under clause 3.1 may be reduced in accordance with the following
formula:

 

	
  Rnew = 

  	
  Rold

  	
    x
  [*]%

  
	
  Rtotal

  

 

Where:

 

(a)           Rnew is the new royalty rate

 

(b)           Rtotal is the total of the royalties payable in respect of the
Product to third party non-Affiliates, including the royalty payable to Autogen

 

(c)           Rold is the rate of royalty otherwise payable under clause 3.1,

 

provided that Rnew must not be less than
half Rold.

 

4.            REPORTS

 

4.1          Reporting requirements

 

Lipha must
within 60 days of the end of each Royalty Period provide to Autogen a written
report setting out in reasonably specific detail on a country by country basis:

 

(a)           the gross sales value of all Products which have been sold by Lipha
and its Sub-licensees during the preceding Royalty Period and the calculation
of Net Sales Value from such gross sales,

 

(b)           the calculation of the royalty payable on such Products, including
details of the currency conversion rates used, any taxes or other amounts
withheld and any adjustments on account of returns.

 

9

 

4.2          Products which don’t attract royalty

 

Royalty will
not be payable in respect of any Products supplied, used or consumed by Lipha
or any of its Affiliates or Sub-licensees (provided Lipha itself receives no
royalty in the following circumstances) for the purposes of testing, obtaining
Registration or in good faith pre-marketing or post marketing studies or
reasonable quantities of normal commercial samples.

 

4.3          Time of Sale

 

A Product is
deemed to be sold at the time it is invoiced to the buyer.

 

4.4          Foreign currencies

 

Lipha will
calculate royalties in local currencies and convert the same to Dollars at the
ruling rate of exchange as on the last day of the Royalty Period.

 

4.5          Payment mechanics

 

The royalty
payable to Autogen must be paid to a bank account nominated by Autogen in
Melbourne, Australia (or at such other location as Autogen may stipulate from
time to time) within 60 days of the end of each Royalty Period.

 

4.6          Lipha to keep accounts and records

 

Lipha must
keep and retain at least for a period of 36 months after the end of the Royalty
Period to which they relate, true and particular accounts and records of all
sales of Products sufficient to verify Lipha’s calculation of Net Sales Value
of Products sold, the calculation of royalty based thereon and conversion of
such amounts into the relevant currency.

 

4.7          Inspection of accounts

 

During the
Term and for a period of 2 years thereafter, Autogen or its duly authorised
representatives reasonably acceptable to Lipha have the right to inspect and
audit from time to time the accounts and records referred to in clause 4.6 and such other matters as are directly relevant
to the calculation of the amount of any payment due by Lipha to Autogen under
this agreement and are entitled to take copies of such records, on the
following conditions:

 

(a)           inspection is limited to 2 times in any 12 month period;

 

(b)           inspections must take place during normal business hours and upon
reasonable prior notice to Lipha;

 

(c)           the Representatives of Autogen who inspect such accounts and records
must be suitably qualified personnel reasonably acceptable to Lipha and must:

 

(i)            prior to inspecting such records and accounts, enter into a
confidentiality agreement with Lipha containing undertakings similar to those
in clause 7;

 

(ii)           whilst inspecting such records and accounts, abide by all of Lipha’s
standard rules and regulations; and

 

10

 

(iii)          Autogen must indemnify and hold Lipha harmless from all liability
resulting from any negligence or any other activities on the part of Autogen’s
Representatives inspecting such records and accounts.

 

4.8          Settlement of discrepancies

 

If any
discrepancy is found by Autogen then the amount thereof, together with interest
at the Base Rate from the proper date for payment, must be paid within 7 days
of demand therefor to Autogen.

 

4.9          Cost of audit

 

Autogen must
bear the cost of any such examination unless a discrepancy of 5% or more in the
amount of any royalty payment is detected, in which event Lipha must bear the
reasonable expense of the examination.

 

4.10        Advance royalty

 

Where any
advance royalty has been paid by Lipha to Autogen, then until such time as such
advance royalty has been fully recouped from royalties due to Autogen, Lipha
will be obliged to calculate and report but not pay the royalties otherwise due
to Autogen under this agreement.

 

5.            SUB-LICENSING

 

5.1          Scope of sub-licence provisions

 

Lipha
acknowledges and agrees that the provisions of this agreement dealing with
sub-licences apply equally to licences by Lipha of Stage 2 Patents, to the
extent that any licence by Lipha of a Stage 2 Patent will be subject to the
same restrictions and requirements, including royalty entitlements, as if they
were Licensed Patents owned by Autogen.

 

5.2          Right to sub-Licence

 

Except as
required under this agreement, Lipha may grant sub-licences of Project Patents
upon such terms and conditions as it may arrange.

 

5.3          Sub-licenses to Affiliates

 

Lipha has the
right to grant sub-licences to an Affiliate in respect of a particular country
or group of countries in respect of the Product provided that the sub-licence
complies with the following:

 

(a)           the Affiliate being granted the sub-licence has the commercial
capacity to promote and exploit the relevant Product with due diligence and
probity and has at least sufficient skills and resources to comply with the
obligations placed upon Lipha in relation to that Product in the relevant
country or countries;

 

(b)           the sub-licence is wholly consistent with the terms of this Licence
and in particular:

 

11

 

(i)            such sub-licence does not purport to extend or continue in any
circumstances where this Licence may be terminated, and

 

(ii)           the sub-licensee acknowledges that Autogen owns or is the valid
licensee of the Rights;

 

(c)           the sub-licence prohibits the sub-licensee from taking any action or
allowing any action to be taken which detracts from the ownership of the Rights
by Autogen or conflicts with the provisions contained in this Licence in
relation to prosecuting or defending the Project Patents or defending any
allegation of infringement of the Rights;

 

(d)           the sub-licence is in the English language, executed by the
sub-licensee and giving its place of business;

 

(e)           the sub-licence requires the sub-licensee to maintain all books,
records and accounts necessary to enable verification of Net Sales Value and
royalties and other income required to be paid by Lipha to Autogen and permits
inspection by Autogen on terms essentially identical to clauses
4.6 and 4.7;

 

(f)            the sub-licence limits the duration of the sub-licence in respect of
any Product for the term of this agreement and further provides for the
sub-licence to terminate automatically upon the termination of this agreement,
or upon an Insolvency Event occurring in relation to the sub-licensee;

 

(g)           the sub-licence prohibits the sub-licensee without the consent of
Autogen from assigning, transferring, mortgaging or parting with any of its
rights under the sub-licence;

 

(h)           the sub-licence provides that the sub-licence will terminate in the
event that the relevant company ceases to be an Affiliate of Lipha;

 

(i)            the sub-licence obliges the sub-licensee to maintain the insurances
referred to in clause 10 or Lipha does so itself
in respect of the Products that may be sold in the sub-licence territory; and

 

(j)            the sub-licence provides that all the terms and conditions of the
sub-licence may be enforced by Autogen against the sub-licensee notwithstanding
that Autogen is not a party to the sub-licence or any rule of law or
equity to the contrary.

 

If the sub-licence to be granted by Lipha
is in favour of an Affiliate, and complies in all material respects with the
above requirements, it is not necessary for Lipha to seek the consent of
Autogen to the granting of such sub-licence, however, Lipha is obliged within 3
months of the entering into of such sub-licence to notify Autogen of the
granting of the licence and is further obliged to provide Autogen with general
details of the sub-licensee, including information as to its financial affairs
and resources and a copy of the executed sub-licence.

 

12

 

5.4          Sub-licences - non-Affiliate

 

Lipha may not grant any sub-licence to a
non-Affiliate without the prior written consent of Autogen, such consent not to
be withheld unless Autogen reasonably believes and can objectively justify its
view that:

 

(a)           any proposed sub-licensee will not properly perform and discharge
all of the obligations of Lipha under this agreement in respect of the relevant
sub-licensed Territory;

 

(b)           that the proposed sub-licensee is not financially sound or will be
unable to pay royalties and other amounts payable under the relevant
sub-licence as and when they fall due;

 

(c)           there are reasonable grounds to believe that the proposed
sub-licensee is likely to conduct itself in a manner likely to endanger or
cause injury to Autogen’s reputation, or the reputation, quality, image or
character of the Product, in this regard Lipha must provide to Autogen full
information detailing any products manufactured, distributed or sold by the
proposed sub-licensee in the proposed sub-licence territory which are
competitive with the Product;

 

(d)           the proposed sub-licence is not wholly consistent with the terms of
this licence and in particular complies with clauses 5.3
(a), (b) (c), (d), (e), (f), (g), (i) and (j); and

 

(e)           the proposed sub-licensee or any of its Affiliates is engaged in
litigation with Autogen or its Affiliates.

 

Lipha must
provide full and adequate information to Autogen on the above matters.  Autogen undertakes to give its consent within
a period not exceeding one month of receipt from Lipha of all information
reasonably required to make a determination under this clause, including
written confirmation by Lipha that the proposed licence agreement is in
compliance with this clause.  If no
response is given in that period, Autogen will be deemed to have consented to
the sub-licence.

 

5.5          Calculation of royalty for all Sub-licensees

 

Where any
Product is Exploited by a Sub-licensee, the Net Sales Value of any Products
sold by such Sub-licensee to a person or persons who is not a Sub-licensee is
to be included in Net Sales Value pursuant to clause 3.1
and bear royalty payable by Lipha in accordance with clauses 3
and 4 as if it was Net Sales Value of
Product sold by Lipha, not as a
proportion of the royalties or other receipts which may be paid by such
Sub-licensee to Lipha pursuant to any sub-licence granted by Lipha.

 

5.6          Royalty reporting

 

Any payments
due to Autogen under this clause 5 must
be included with Lipha’s reports and payments to be made under the provisions
of clause 4 for the Royalty Period in
which any such amounts become due and payable to Lipha.

 

13

 

5.7          Enforcement of Sub-licences

 

Lipha must, if
so directed by Autogen, take all commercially and legally reasonable steps to
enforce the terms of any Sub-licence.

 

6.            COMMERCIALISATION

 

6.1          General reporting

 

Lipha will at all times during Stage 2
Research and subsequent steps, including commercialisation, keep Autogen timely
and fully informed of:

 

(a)           the progress of development and commercialisation, including
internal milestones and approvals;

 

(b)           broad details of any competing products being marketed by Lipha or
its Affiliates;

 

(c)           any decision to suspend the continuation of the development or
commercialisation of the Products.

 

6.2          Decision-making

 

Where Lipha intends to make a decision
which may result in the suspension or termination of Stage 2 Research or the
further development and commercialisation of Products or which is otherwise
materially adverse to such activities then:

 

(a)           it will give Autogen advance notice of such decision making and the
reasons why such decision may be made; and

 

(b)           it will give Autogen an opportunity to submit material to and make a
presentation to the Lipha decision makers in respect of such decision prior to
such decision being made,

 

it being
acknowledged that having followed the above procedures, Lipha’s decision will
be in Lipha’s entire discretion and will not be fettered or reviewable in any
way by Autogen.

 

6.3          Registration of Product

 

After
completion of the relevant Stage 2 Research program Lipha must use reasonable
endeavours to promptly complete Phase III clinical trials, and to apply for and
gain Registration in its own name in respect of one or more Products.  The cost of undertaking all such trials and
further development and making and prosecuting such applications is to be borne
by Lipha.

 

6.4          Ceasing to pursue registration

 

If, following the process of clause 6.2, Lipha in its reasonable opinion decides not to
continue to pursue Registration of any Product on the basis of efficacy, safety
or medical reasons, concerns about the validity of Project Patents or a
substantial change in economic factors, then it must promptly advise Autogen in
writing, together with written reasons for such decision.  In such a case this licence will terminate
and Autogen may request a

 

14

 

licence in respect of Stage 2 Know-How and
Stage 2 Patents, in which case the Parties will negotiate in good faith the
terms of a licence (which may be exclusive or non-exclusive and limited to the
discontinued Novel Gene Product and necessary related technology being part of
Stage 2 Know-How and Stage 2 Patents) for the commercialisation of such
Know-How and Patents.

 

6.5          Refusal of Registration

 

If an
application by Lipha for Registration is refused, Lipha is obliged to re-apply
for Registration when so required by Autogen but such requirement must only be
imposed if Autogen is of the reasonable belief, following discussions with Lipha,
that the re-application will be approved. 
The cost of making and prosecuting any such re-application will be borne
by Lipha.

 

6.6          Maintenance of Registrations

 

Lipha agrees
to do all things necessary to ensure that all product registrations and
approvals in respect of the Products are maintained and to provide Autogen with
any and all documentation and information concerning any variations to such
product registrations or approvals.  Such
product registrations and approvals include without limitation any registration
concerning the packaging or labelling of the Products.

 

6.7          Marketing of Products

 

Following
Registration of the Product, Lipha must use its best endeavours, at the expense
of Lipha, to:

 

(a)           promote, distribute and sell the Products in the Territory in order
to obtain the optimum market potential for the Products;

 

(b)           provide and maintain such suitable places of business for the
storage, handling and sale of the Products at such locations throughout the
Territories as Lipha thinks suitable;

 

(c)           provide and maintain such marketing, sales and office staff to
promote and sell the Products in accordance with this agreement, such personnel
to be deemed the agents, representatives or employees of Lipha and not those of
Autogen;

 

(d)           maintain in each country in the Territory sufficient stocks of the
Products to meet the market demand for the Products;

 

(e)           where Lipha or its Affiliates or sub-licensees are marketing
Competing Products, provide information about the comparative efforts being
made;

 

(f)            no later than 2 months prior to the commencement of each year during
the Term prepare sales and marketing plans in respect of the Product in the
Territories for discussion with Autogen; and

 

(g)           provide to Autogen yearly reports of Lipha’s market intelligence and
proposed marketing strategy and performance goals other than where there is a
material change in the market intelligence, proposed marketing strategy or
performance goals, in which case Lipha will promptly provide to Autogen a
report of those material changes.

 

15

 

6.8          Commencement of Marketing

 

If Marketing by Lipha has not commenced in
any country in the Territories within 6 months of Lipha obtaining Registration
or within such other time as agreed by the parties and such failure to so
commence Marketing is not attributable to any failure by Autogen to comply with
its obligations under this agreement, Autogen may by notice in writing to Lipha
convert the licence to a non exclusive licence, in respect of that country. This section should
be applicable, if Lipha is not able to justify the delay or to give the reasons
why it was not able to commence marketing within the given period.

 

6.9          General reports

 

Lipha must
within one month of the relevant dates advise Autogen, at Lipha’s cost, in
respect of each country in the Territory of:

 

(a)           the making of an application for Registration and the gaining of
Registration of any Product; and

 

(b)           details of the date of commencement of Marketing and details of the
establishment of or change to any facilities referred to in clause 6.7(b).

 

6.10        Marketing reports

 

Lipha must
every year provide to Autogen a written report detailing its proposed Marketing
activities in relation to the Products in the coming year.  The initial marketing plan is to be provided
no later than one month prior to the commencement of Marketing in the relevant
country and subsequent Marketing plans are to be provided at least three months
prior to each anniversary of such initial date. 
The marketing plan will specify objectives and strategies in respect to
the following and any related matters necessary to ensure optimum market
penetration in the relevant country:

 

(a)           pricing and margin structure;

 

(b)           distribution channels;

 

(c)           sales and distribution targets;

 

(d)           accumulation of market data including assessment of total market
size and segmentation in units and dollars;

 

(e)           overview of trading for the current year and objectives and
strategies for the following year;

 

(f)            assessment of competition;

 

(g)           advertising and promotional expenses;

 

(h)           overall advertising and promotional strategy.

 

Lipha will allow Autogen to provide comment
on the marketing plan (if any) and will consider such comments in good faith.

 

16

 

6.11        Restriction on clinical trials

 

Lipha must not
conduct or knowingly supply Product to any person who intends to conduct any
clinical trials or scientific study concerning or utilising Products (other
than where such trial or study is to involve less than 15 human subjects and
does not require any prior Regulatory Authority approval) unless such trial or
study has first been discussed at and approved by the Scientific Advisory Board
established by the parties.

 

7.            CONFIDENTIAL INFORMATION

 

7.1          Obligations to Autogen

 

Subject to clauses 7.3 and 7.6, Lipha
covenants with Autogen as follows:

 

(a)           to keep all Know-How belonging to Autogen or supplied to it by
Autogen, including the existence of such Know-How, strictly secret and
confidential (including from all its employees, servants and agents),
exercising at least the same degree of care as it uses to maintain its own
Know-How;

 

(b)           to provide proper and secure storage for such Know-How within its
possession or control;

 

(c)           to use such Know-How only for the purposes of this agreement and not
for any other activity or purpose whatsoever without the prior written approval
of Autogen; and

 

(d)           to not copy or reduce to writing or any other medium any part of
such Know-How except as may be reasonably necessary for the purposes of this
agreement.

 

7.2          Obligations to Lipha

 

Subject to clauses 7.3 and 7.6, Autogen
covenants with Lipha as follows:

 

(a)           to keep all Know-How belonging to Lipha or supplied to it by Lipha,
including the existence of such Know-How, strictly secret and confidential
(including from all its employees, servants and agents), exercising at least
the same degree of care as it uses to maintain its own Know-How;

 

(b)           to provide proper and secure storage for such Know-How within its
possession or control;

 

(c)           to use such Know-How only for the purposes of this agreement and not
for any other activity or purpose whatsoever without the prior written approval
of Lipha; and

 

(d)           to not copy or reduce to writing or any other medium any part of
such Know-How except as may be reasonably necessary for the purposes of this
agreement.

 

7.3          Exceptions to obligations

 

The
obligations of confidence set out in clauses 7.1 and
7.2 do not extend to Know-How which:

 

17

 

(a)           at the time of disclosure to a party is in the public domain;

 

(b)           after disclosure to a party becomes part of the public domain
otherwise than as a result of the wrongful act of that party or one of that
party’s disclosees;

 

(c)           a party can show was in its possession at the time of disclosure and
was not acquired directly or indirectly from the other party; or

 

(d)           is received from a third party provided that it was not acquired
directly or indirectly by that third party from a party to this agreement or
under an obligation of confidence;

 

(e)           is required by compulsion of law to be disclosed,

 

provided that:

 

(f)            the onus is on the party alleging the same to prove that one of the
above exceptions has application; and

 

(g)           in any case of uncertainty as to whether the obligations in clauses 7.1 or 7.2 have
application to any information, such information must be treated as subject to
the obligations until advised otherwise by the party to whom the obligations
are owed.

 

7.4          Rights in Know-How

 

Each party acknowledges
and agrees that each other party has made a substantial investment in that
party’s Know-How and has a legitimate right to protect itself against wrongful
disclosure or use of such Know-How.

 

7.5          Term of obligation

 

The
obligations in this clause 7
survive the expiry or termination of this agreement for whatever reason and
continue for a period of 10 years, subject always to the exceptions included in
clause 7.3.

 

7.6          Permitted disclosures

 

Each party (“the
first party”) is permitted to disclose Know-How belonging to another party or
supplied to it by another party (“the other party”) to such of the first party’s
Representatives as require access to such information for the purposes of this
agreement, provided that:

 

(a)           only such Know-How as needs to be disclosed to a person for the
purposes of this agreement will be disclosed to that person; and

 

(b)           the first party must:

 

(i)            have obtained from each such person undertakings in favour of the
other party substantially in the form of the relevant obligations and
undertakings in this clause 7 (but
not this clause 7.6);

 

(ii)           be responsible for the performance of its Representatives’
undertakings referred to in clause 7.6(b)(i);
and

 

18

 

(iii)          take whatever steps are reasonably necessary, including the
institution of legal proceedings, to ensure that each of its Representatives is
bound by and observes the terms of the undertakings referred to in clause 7.6(b)(i).

 

7.7          Delivery-up of Know-How

 

All of a party’s
Know-How and all materials containing or embodying such Know-How and all copies
of or extracts from or notes on the same in the possession, power or control of
another party or any of its employees, servants or agents together with all
forms and other materials relating to practices and procedures in relation to
the Know-How to the extent possible must:

 

(a)           in the event of the expiration or sooner termination of this
agreement, be delivered up by the other party to the first party at the expense
of the other party; and

 

(b)           in the event of any demand made by the first party be delivered up
by the other party to the first party at the expense of the first party.

 

7.8          Terms of this Agreement

 

Lipha and
Autogen shall not disclose any terms or conditions of this agreement to any
third party without the prior consent of the other party, except as required by
applicable law or to a third party with whom Autogen or Lipha has entered into
or proposes to enter into a business relationship, provided that such third
party shall enter into a confidentiality agreement with, or otherwise owe a
duty or confidentiality to Lipha or Autogen, as applicable.

 

7.9          Public Announcement

 

Except as
required by law, order or regulation of a governmental agency or a court of
competent jurisdiction, no other announcement, public release or notice of any
kind may be issued without the express written consent of both parties, which
consent shall not be unreasonably withheld, provided, however, the parties
shall prepare a joint press release announcing the transaction set forth in
this agreement to be issued promptly upon execution of this agreement.

 

7.10        Continuous disclosure obligations

 

Autogen is a
subsidiary of Australia Wide Industries Limited (“AWI”) ACN 000 248 304, which
is listed on the Australian Stock Exchange (“ASX”).  As such Autogen is subject to the continuous
disclosure requirements of the ASX.  The
obligations of Autogen under this agreement will not restrict it or AWI from
making whatever disclosures are necessary for the purposes of fulfilling the
requirements applicable to AWI as a company listed on the ASX, and neither
Autogen or AWI is under any obligation to delay the public release of any
required announcement pending the provision of any consent or approval from Lipha.  The above provision will also apply with such
adaptations as are necessary to disclosure obligations imposed upon Lipha as a
subsidiary of its listed parent Merck KGaA.

 

19

 

8.            LIABILITY

 

8.1          Responsibility for Products

 

Lipha must
ensure at all times during the Term that Products are tested, manufactured,
used and sold strictly in accordance with all relevant applicable requirements
and standards of relevant jurisdictions and Lipha will be responsible for
conducting its own independent examination and verification of the accuracy and
suitability of Licensed Patents and Licensed Technology and for ensuring the
same are suitable for the purposes for which they are provided.

 

8.2          Autogen not liable

 

Except as
provided in clauses 9.2 and 13.2, Autogen is not liable (in contract or tort or
otherwise) to compensate Lipha for any loss howsoever arising suffered by Lipha
arising directly or indirectly from the use of the Licensed Patents or Licensed
Technology or the sale of Products.

 

9.            INDEMNITIES

 

9.1          Indemnity by Lipha

 

Lipha agrees
to indemnify Autogen against and hold Autogen harmless from any and all Losses
arising from or in connection with:

 

(a)           a breach by Lipha of any of its warranties or obligations under this
agreement;

 

(b)           the manufacture of the Products by Lipha or any Sub-licensee;

 

(c)           the storage, use, sale, shipping and Marketing of the Product by Lipha
or any Sub-licensee;

 

(d)           any representations, express, implied or statutory made by Lipha or
any Sub-licensee as to the efficacy or safety or use to be made by any
purchaser of the Product including, without limitation, representations made by
reference to the labelling or packaging or the Product; and

 

(e)           it must be a term of any Sub-licence granted by Lipha that the
Sub-licensee agrees to the same extent and in the same terms as the indemnities
contained in clauses 9.1 (b), (c) and (d) to indemnify Autogen and the Sub-licensee
specifically agrees that it will not challenge the standing of Autogen in the
event of Autogen seeking to rely upon such indemnification;

 

provided that
neither Lipha nor any sub-licensee is required to indemnify Autogen for any
Losses, to the extent they result from Autogen’s or its Representatives
negligence or breach of any of Autogen’s warranties or obligations under this
agreement.

 

9.2          Indemnity by Autogen

 

Autogen agrees
to indemnify Lipha and hold Lipha all harmless from any and all Losses, arising
from or in connection with a breach by Autogen of any of its warranties or
obligations under this agreement provided that Autogen is not required to
indemnify

 

20

 

Lipha for any
Losses, to the extent they result from Lipha’s or its Representatives
negligence or breach of any of Lipha’s warranties or obligations under this
agreement.

 

9.3          Notification regarding indemnity

 

Each party
must promptly notify the other of any claims or suits for which the first party
may assert indemnification from the other party and the first party will permit
the other party and its insurer at the other party’s expense to assume or
participate in the defence of any such claims or suits and the first party will
co-operate with the other party or its insurers in such defence when reasonably
requested to do so.

 

10.          INSURANCE

 

Each party
must have and must maintain for the Term the relevant Required Insurance.  The Required Insurance must be with a
reputable insurer and name the other party as an additional insured.  Each party will at the others request provide
to that party a certificate from a reputable insurance broker confirming that
the insurance required by this clause in currently in effect.

 

11.          TERM AND TERMINATION

 

11.1        Term

 

Subject to the
further provision of this clause 11, the
term of this agreement and the rights granted to Lipha under this agreement is
for so long as any Product is still Covered By a Project Patent.

 

11.2        Termination for breach

 

If one party
breaches any term, provision or obligation of this agreement (the “Defaulting
Party”) and the Defaulting Party fails to:

 

(a)           remedy such breach within 60 days after receipt of notice from the
other party requiring remedy of the breach; or

 

(b)           if the breach cannot be remedied within the said 60 day period,
commence action within the said 60 day period to remedy the breach and
undertake in writing to the other party to complete remedy of the breach as
soon as practicable thereafter,

 

the other
party has the right to terminate this agreement immediately upon the expiration
of the said period of 60 days by written notice to the Defaulting Party.

 

11.3        Termination in default of payment

 

This agreement
may be forthwith terminated by a party by giving notice to the other party if
that other party defaults in the payment of any money due by that other party
to the first party under this agreement and such default continues for a period
of 30 days after notice has been given to the other party demanding the payment
of such money.

 

21

 

11.4        Grounds for immediate termination

 

Subject to clause 11.5 this agreement may be terminated by a party
giving notice to the other party upon the happening of any of the following
events in respect of that other party:

 

(a)           an Insolvency Event; or

 

(b)           if the other party is in breach of an undertaking given pursuant to clause 11.2(b).

 

11.5        Reconstruction exception

 

A winding up
or liquidation for the purposes of reconstruction or amalgamation by the other
party is not an event permitting or giving rise to termination if after that
reconstruction or amalgamation the resulting corporation becomes bound by the
terms of this agreement by way of assignment or novation.

 

11.6        Termination by Autogen

 

Autogen may
terminate this agreement upon notice to Lipha if, taking into consideration that the given reasons for termination by
Autogen should only be applicable to occurrences after the effective:

 

(a)           there is a change of greater than 50% in the control of the issued
voting capital of Lipha or a holding company (if any) of Lipha other than for
the purpose of internal re-construction;

 

(b)           a person or persons not previously in Control of Lipha obtain
Control of Lipha or a holding company (if any) of Lipha; or

 

(c)           if Lipha or any of its Affiliates or any Sub-licensee or any of its
Affiliates challenges or seeks or causes to be challenged the validity of the
Project Patents, provided that in respect of a Sub-licensee not being an
Affiliate, termination will be limited to the country or countries to which
such Sub-licence relates.

 

11.7        Termination by Lipha

 

Lipha may
terminate this agreement upon notice to Autogen if there is a change of greater
than 50% in the control of the issued voting capital of Autogen or a holding
company (if any) of Autogen other than for the purpose of internal
re-construction.

 

11.8        Termination to be without prejudice

 

Any
termination of this agreement is without prejudice to the rights which a party
has against the other in respect of anything done or omitted to be done
hereunder prior to such termination or in respect of any sums or other claims
outstanding at the time of termination.

 

22

 

12.          OBLIGATIONS AND RIGHTS ON TERMINATION

 

12.1        Obligations of Lipha

 

Immediately
upon termination or expiration of this agreement, but subject to clause 12.3, Lipha must:

 

(a)           pay all outstanding balances with respect to the Product within the
terms of this agreement;

 

(b)           remove all signs, advertising displays, labels and the like
identifying Lipha as a licensee of the Product and thereafter Lipha will not
use such signs and displays in connection with any business conducted by it and
will not in any way refer to its previous association with the Product for any
commercial purpose whatsoever; and

 

(c)           not conduct its business so as to falsely reflect discredit on
Autogen or the Product.

 

12.2        Obligations of Autogen

 

Immediately
upon termination or expiration of this agreement, Autogen must:

 

(a)           as soon as conveniently possible reconcile all accounts relating to Lipha;
and

 

(b)           accept all outstanding balances within existing terms of settlement
within the terms of this agreement.

 

12.3        Limitation of Lipha’s rights

 

Lipha is not
in any circumstances entitled to compensation for goodwill which may have
accrued to the marketing of the Product in the Territory.

 

13.          WARRANTIES

 

13.1        General warranties

 

Each party
represents and warrants to the other that:

 

(a)           it has all powers and authorisations necessary to enter into this
agreement and observe its obligations hereunder and allow this agreement to be
enforced against it; and

 

(b)           all necessary consents, approvals and authorisations of all
governmental authorities required to be obtained by that party in connection
with this agreement have been obtained; and

 

(c)           the execution and delivery of this agreement does not contravene any
law, regulation or official directive or any obligations or undertakings,
contractual or otherwise, by which it or any of its assets are bound or cause a
limitation on its powers to be exceeded; and

 

23

 

(d)           the performance of the party’s obligations under this agreement:

 

(i)            do not and will not conflict with or violate any requirement of
applicable laws or regulations; and

 

(ii)           do not and will not conflict with, or constitute a default under any
contractual obligation of that party; and

 

(e)           there does not presently exist any event which would either now or
with the effluxion of time entitle the other party to terminate this agreement
pursuant to clause 11; and

 

(f)            it is not a party to any pending or threatened action or proceeding
affecting it or any of its assets before a court, governmental agency,
commission or arbitrator where an adverse outcome could reasonably be expected
to adversely impact upon the performance of its obligations under this
agreement; and

 

(g)           it has no immunity from the jurisdiction of a court or from legal
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise).

 

13.2        Specific warranty re Licensed Patents

 

Autogen
warrants to Lipha that:

 

(a)           as at the date of this agreement it has disclosed to Lipha details
of all prior art sighted by Autogen by way of international search in relation
to the Licensed Patents; and

 

(b)           at the date of this agreement it is unaware of any other Patent
which has not been disclosed to Lipha and which may be infringed by Lipha
exercising the Licensed Patents in accordance with the terms of this agreement.

 

13.3        Warranties by Lipha

 

Lipha warrants
to Autogen that:

 

(a)           it will obtain or has obtained from its Representatives who have
access to the Licensed Technology written obligations to treat such information
as confidential strictly in accordance with this agreement; and

 

(b)           that it has made its own enquiries into the validity and
enforceability of the Licensed Patents and satisfied itself that the usage by Lipha,
its Affiliates or sub-licensees of the Licensed Patents and the Licensed
Technology do not and will not infringe the intellectual property rights of any
third party.

 

14.          PROTECTION OF LICENSED PATENTS

 

14.1        Maintenance of Licensed Patents

 

Autogen is
responsible for the cost of preparing, filing, prosecuting and maintaining the
Autogen Patents but nothing expressed or implied herein necessarily obliges
Autogen to

 

24

 

institute
legal proceedings to protect same.  The
party responsible for the cost of preparing, filing, prosecuting and
maintaining the Stage 1 Patents will be determined in accordance with the
Research Agreement.  Lipha is responsible
for the cost of preparing, filing, prosecuting and maintaining the Stage 2
Patents.  Nothing expressed or implied
herein necessarily obliges Lipha to institute legal proceedings to protect
Stage 1 Patents or Stage 2 Patents.

 

14.2        Reporting infringements

 

A party must
promptly report to the other in writing particulars of any action or activity
of which the first party becomes aware which might reasonably amount to infringement
of or challenge to any of the Rights.

 

14.3        Conduct of proceedings regarding Rights

 

Lipha has the
first right to take control of and conduct any infringement proceedings in
respect of the Rights where such infringement is within the Licensed Field.  Should Lipha undertake such proceedings
Autogen must fully co-operate with Lipha in relation to such action including
the lending of Autogen’s name to the action and assistance by personnel of
Autogen.  The costs and expenses of any
such action will be borne by Lipha, and the proceeds of such action after
payment of Lipha’s reasonable external costs will be divided between Autogen
and Lipha on the basis that Autogen gets 50% and Lipha the balance.  In the event Lipha does not wish to undertake
the conduct of such proceedings on its own, Autogen and Lipha must discuss
whether they will undertake joint proceedings and if so on what basis.  If no such agreement can be reached Autogen
is entitled to bring an action in its own name, and Lipha must provide Autogen
with all reasonable assistance including lending Lipha’s name to such
action.  Autogen must bear all the costs
of such an action, and the proceeds of any such action belongs to Autogen
absolutely.

 

14.4        Royalties

 

Lipha is not entitled to withhold or deduct
any amount from any royalty payable to Autogen on account of any proceeding as
referred to in clause 14.3.

 

15.          INFRINGEMENT OF OTHERS RIGHTS

 

15.1        Notification of action

 

In the event
that legal action is threatened or commenced against Lipha or any Sub-licensee
arising out of Lipha’s use of Autogen Patents or Autogen Know-How, Lipha must
not make any admissions or enter into any substantive steps in connection
therewith but must promptly notify Autogen.

 

15.2        Autogen action

 

If such legal
action against Lipha or a Sub-licensee arises out of the use of the Autogen
Patents or Autogen Know-How in accordance with the terms and conditions of this
agreement in relation to Products, then Autogen must defend and/or assist in
the defence of such litigation, and must bear the reasonable costs and expenses
of such defence.  If any damages or
awards are assessed against Lipha, then provided that Lipha has at all times
followed the instructions of, or otherwise obtained the consent of, Autogen in

 

25

 

respect of the
defence of such claims, then such damages or awards must, as well as any and
all reasonable costs incurred by Lipha, be satisfied and paid by Autogen.

 

15.3        Lipha action

 

If such legal
action against Lipha related to the use by Lipha, Lipha Affiliates or
Sub-licensee of the Autogen Patents or Autogen Know-How or use of Stage 1
Patents, Stage 1 Know-How or Stage 2 Patents or Stage 2 Know-How other than in
accordance with the terms and conditions of this agreement Lipha must promptly
notify Autogen of the commencement of legal action. Lipha must bear all its own
costs and expenses and must be responsible for awards against it and Autogen,
as well as any and all reasonable costs incurred by Autogen, to the extent that
indemnification, warranties and other claims may not be available against
Autogen.  If any amounts are recovered by
or awarded or paid to Lipha from or by a third party as a result of any such
action or litigation, Lipha must from such amounts reimburse Autogen for all
costs and amounts paid by Autogen in connection with such action or litigation
and must, after deducting the legal costs incurred by it in taking such legal
or other action, pay to Autogen from any compensation recovered thereby, Autogen’s
part thereof determined in accordance with the respective interests of the
parties in such compensation.

 

16.          CONSTRUCTION OF PATENTS

 

If in any
proceedings in which the validity infringement or priority of any claim of any
patent or patent application included in Licensed Patents is in issue a Final
Judgment is obtained the construction placed upon any such claim by such a
Final Judgment must be thereafter followed not only as to such claim but as to
all claims to which such construction applies with respect to acts occurring
thereafter.

 

17.          FORCE MAJEURE

 

17.1        Party not liable

 

Where a party
is required under this agreement to perform an obligation or do any act or
thing by a designated time or date (other than an obligation to make payment) (“Obligation”), the part is not be liable for any delay in
performing or for failure to perform an Obligation where the delay or failure
arises from Force Majeure and that party has complied with this clause.

 

17.2        Notice of Force Majeure

 

A party who
claims Force Majeure must:

 

(a)           give the other party prompt notice of the Force Majeure with
reasonably full particulars and an estimate of the extent and duration of its
delay in performance, or inability to perform; and

 

(b)           use all possible diligence to remove the Force Majeure as quickly as
possible provided that this will not oblige the party to settle on terms
unsatisfactory to that party any strike, lockout or other labour difficulty, or
any investigation or proceeding by any governmental authority or any litigation
by any third party.

 

26

 

17.3        Termination in case of Force Majeure

 

If the delay
continues beyond 30 Business Days, after the notice given under clause 17.2, the parties must meet to discuss in good faith
a mutually satisfactory resolution of the problem and, if unable to achieve
such a resolution within a further 30 Business Days, either party may elect to
terminate this agreement by 5 Business Days prior written notice to the other.

 

18.          ARBITRATION

 

In case of any
disputes arising between the parties or arising out of the performance or
non-performance of the obligations of either party hereunder, or the
termination of this agreement, the parties will endeavour to settle such
disputes amicably between themselves.  If
the parties fail to resolve such disputes, then such disputes shall be finally
resolved by arbitration in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce (ICC) by one or more
arbitrators appointed in accordance with the said rules.

 

Any such
arbitration will be held in English language and take place in Paris - FRANCE.

 

19.          NOTICES

 

19.1        Form of Notice

 

Any notice,
approval, consent or other communication (“notice”) from one party to another (“Recipient”)
must be in writing and be signed by a person duly authorised by the person
giving the notice.

 

19.2        Manner of Service

 

A notice must
be served by:

 

(a)           leaving it at the Recipient’s address;

 

(b)           sending it by ordinary pre-paid post (airmail if being sent from or
to a place outside of Australia) to the Recipient’s address; or

 

(c)           sending it by facsimile to the facsimile number of the Recipient.

 

19.3        Address for Service

 

Until other
details are specified by a Party as its address or facsimile number for service
the following apply:

 

27

 

Autogen

 

	
  Address :

  	
  210 Kings
  Way, South Melbourne, Victoria, Australia

  
	
   

  	
   

  
	
  Facsimile :

  	
  61 3 9234
  1190

  
	
   

  	
   

  
	
  Attention :

  	
  Company
  Secretary

  
	
   

  	
   

  
	
  Lipha

  	
   

  
	
   

  	
   

  
	
  Address :

  	
  37 rue Saint
  Romain, 69379 Lyon, CEDEX 08, France

  
	
   

  	
   

  
	
  Facsimile :

  	
  33-4-78-75-39-05

  
	
   

  	
   

  
	
  Attention :

  	
  Head of
  Legal Department

  

 

19.4        Time of Service

 

A letter or
facsimile will be taken to be served:

 

(a)           in the case of a delivered letter, on the day of delivery, unless
delivery is made on a non Business Day or after 4:30 p.m. (local time in
the place of receipt) on a Business Day, in which case it will be taken to be
served on the next Business Day;

 

(b)           in the case of a posted letter, on the third (or seventh in the case
of airmail) Business Day after posting; and

 

(c)           in the case of a facsimile, on receipt by the party giving the
notice of a transmission confirmation report, unless within one Business Day of
receipt the Recipient has informed the party giving the notice that the
transmission was incomplete or garbled, provided that in any case if
transmission is completed after 4:30 p.m. (local time in the place of
receipt) or is received on a non Business Day, the notice will be taken to be
served on the next Business Day.

 

20.          MISCELLANEOUS

 

20.1        Time of essence

 

Time will be
of the essence of the obligations of each party to each other under this
agreement.

 

20.2        Severance

 

This agreement
is severable and is deemed to apply separately as to each country comprising
the Territory.  A material breach of this
agreement in respect of one or more countries in the Territory will not affect
the validity or enforceability of this agreement as to the other countries
comprising the Territory.  If any
provision is held invalid or unenforceable, in whole or in part in any
jurisdiction, then such invalidity or unenforceability will only affect such
provision or part thereof in such jurisdiction, and will not in any manner
affect the provision in this agreement in any other jurisdiction.  To

 

28

 

the extent
legally permissible an arrangement which reflects the original intent of the
parties must be substituted for such invalid or unenforceable provision.

 

20.3        Waiver

 

The failure,
delay, relaxation or indulgence by any party in exercising any power or right
given to that party under this agreement will not operate as a waiver of that
power or right, nor will any single exercise of a power or right preclude any
other or further exercise of it or the exercise of any other power or right
under this agreement.  A power or right
may only be waived in writing, signed by the party to be bound by the waiver.

 

20.4        Relationship of parties

 

Nothing
contained in this agreement is to be construed so as to place any party in the
relationship of principal, employee, agent, partner, joint venturer or legal
representative of any other party.  The
parties expressly agree and acknowledge that each of the parties is an
independent contracting party and does not, unless expressly provided, have the
authority or power for or on behalf of any other party to enter into any
contract, to incur debts, to accept money, to assume any obligations or to make
any warranties or representations.

 

20.5        Injunctive relief

 

If there is
any conduct or threatened conduct which is or may be a breach of this
agreement, both parties acknowledge that damages may be inadequate compensation
for such a breach and that the other party is entitled to apply to any court of
competent jurisdiction for interim or permanent injunctive relief or both
restraining the other party from committing any breach or threatened breach of
this agreement without showing or proving any actual damage sustained by it.  Such rights and remedies will be cumulative
and in addition to any other rights or remedies which that party may be
entitled to at law or in equity.

 

20.6        Proper law

 

This agreement
must be construed in accordance with and governed by the laws of the United
Kingdom and its form, execution, validity, construction and effect is to be
determined in accordance with the laws of the United Kingdom.

 

20.7        Rule of construction

 

No rule of
construction applies to this agreement to the disadvantage of a party because
that party was responsible for the preparation of this agreement or any part of
it.

 

20.8        Variation

 

Any
modification, alteration, change or variation of any term or condition of this
agreement must be in writing, executed by all parties.

 

20.9        Assignment

 

This agreement is personal to the
respective parties and neither is entitled to assign in whole or in part
without the prior written consent of the other party.

 

29

 

20.10     Further documents

 

Each party
agrees that it will forthwith upon the request of the other party execute and
deliver all such instruments and agreements and will take all such other
actions as the other party may reasonably request from time to time in order to
give effect to the provisions and purposes of this agreement.

 

20.11     Affiliates’ actions

 

Each party
will ensure that none of its Affiliates takes any action which is inconsistent
with that party’s obligations under this agreement, or which if it was done or
not done under this agreement by that party would amount to a breach of this
agreement by that party.

 

20.12     Costs and Taxes

 

Each party
must pay its own costs and expenses in relation to the negotiation,
preparation, execution, delivery, stamping and registration, completion,
variation and discharge of this agreement and Lipha must pay any Tax in respect
of the execution, delivery, performance, release, discharge, amendment,
enforcement or attempted enforcement or otherwise of any of the following:

 

(a)           this agreement;

 

(b)           any agreement or document entered into or signed under this
agreement;

 

(c)           any transaction contemplated under this agreement; and

 

(d)           any payment made or received in respect of this agreement,

 

except in any
case to the extent to which such Tax is payable in Australia or on or in
respect of the income of Autogen.

 

20.13     Interest on overdue amounts

 

If any amount
due under this agreement is not paid when due, then the party obliged to make
payment must pay to the other party interest at the Base Rate on the amount due
and payable, accruing from day to day and to be computed from the date for
payment of the amount until payment of the amount in full.

 

20.14     Withholding taxes

 

If Lipha is
legally obliged to deduct or withhold any tax from any payment, in particular
any royalty payment, to be made to Autogen hereunder, then if such payment is
made from its country of domicile (for tax purposes) Lipha must on request
provide Autogen with receipts and any other evidence from relevant revenue
authorities which may be required by Autogen for its own tax affairs, provided
that in no circumstances may the amount withheld be more than the minimum
amount required to be withheld under the double tax treaty between France and
Australia and to the extent the withholding is greater than the minimum amount,
Lipha is obliged to gross up such payment so that the net payment actually
received by Autogen is not less than the full payment less the minimum amount.

 

30

 

20.15     Counterparts

 

This agreement
may be executed in counterparts, and by the parties on separate or the same
counterparts, each of which is deemed an original, but all of which constitute
one and the same instrument.

 

20.16     Registration of agreement

 

If this
agreement or any associated transaction is required by the law of any country,
except Australia, to be either approved or registered in any country or with
any governmental agency, Lipha is responsible for obtaining such approval or
registration including without limiting the generality of the foregoing,
causing this agreement to be stamped, recorded and registered at its cost in
such country.  Autogen agrees to
co-operate in any such application or registration procedure.  Lipha must furnish proof of compliance with
the foregoing to Autogen when and if Autogen so requires.

 

20.17     Not obliged to act contrary to law

 

No party is
obliged to carry out or perform any of the terms of this agreement where doing
so would constitute a violation of any treaty, law, code or regulation of any
governmental authority whether local, national or supranational.  In any event the other terms of this
agreement nevertheless continue and the parties must use all reasonable
endeavours to re-negotiate and amend this agreement so that the performance of
this agreement as so amended will not involve any such violation.

 

20.18     Statutory rights not limited

 

The powers,
remedies and rights conferred upon the parties by or under any statute are
(except to the extent inconsistent with the terms and provisions expressed in
this agreement) be in addition to the powers, remedies and rights conferred by
this agreement.

 

20.19     Consents

 

Unless this
agreement provides otherwise and to the extent permitted by law, a party may,
in its absolute discretion, conditionally or unconditionally give or withhold
any approval or consent permitted or required to be given by it pursuant to
this agreement.

 

20.20     Entire agreement

 

This agreement
constitutes the entire agreement between the parties in relation to the subject
matter of this agreement.  Any prior
arrangements, agreements, representations or undertakings are superseded and,
except as expressly provided, each party acknowledges that it has not relied on
any arrangement, agreement, representation or understanding which is not
expressly set out in this agreement.

 

31

 

SCHEDULE 1

 

Autogen Patents

 

(Referred to in clause 1.1,
definition of “Autogen Patents”)

 

International
Patent Application No. PCT/AU 98/00902 based on Australian Provisional
Patent Application Nos PP0117/97 and PP0323/97 “A novel gene and uses therefor”,
filed on 31 October, 1997 and 11 November, 1997 respectively, in the names of
International Diabetes Institute and Deakin University.

 

Both applications have a Priority Date of 31 October 1997.

 

32

 

SCHEDULE 2

 

Stage 1 Patents

 

Nil

 

33

 

EXECUTED
as an agreement

 

 

	
  The common seal of Autogen Pty Ltd is

  	
   

  	
  )

  
	
  affixed in accordance with its articles of

  	
   

  	
  )

  
	
  association in the presence of:

  	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph Isaac Gutnick

  	
   

  
	
  Director

  	
   

  	
  (name printed)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Peter James Lee

  	
   

  
	
  Director/Secretary

  	
   

  	
  (name printed)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The common seal of Lipha S.A. is affixed 

  	
   

  	
  )

  
	
  in accordance with its articles of association

  	
   

  	
  )

  
	
  in the presence of:

  	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J N Treilles

  	
   

  
	
  Chairman of the Board

  	
   

  	
  (name printed)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yves Bonhomme

  	
   

  
	
  Managing Director

  	
   

  	
  (name printed)

  

 

34Exhibit 4.2(m)

 

“CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND HAVE BEEN SEPARATELY FILED WITH
THE COMMISSION.  CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.”

 

RESEARCH, LICENSE AND COMMERCIALIZATION AGREEMENT

 

 

Date:  December 31, 2002

 

Commencement Date:
January 1, 2003

 

 

AUTOGEN RESEARCH
PTY LTD, ACN 074 636 847

(“Autogen”)

 

 

SOUTHWEST
FOUNDATION FOR BIOMEDICAL RESEARCH

(“SFBR”)

 

 

Schedule 1             Budget

 

Schedule 2             Project

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS AND
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  APPOINTMENT OF SFBR

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  TERM

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  FUNDING OF THE PROJECT

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  PERFORMANCE REVIEW

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  FINAL REPORT

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  AUTOGEN BACKGROUND
  TECHNOLOGY

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  SFBR BACKGROUND TECHNOLOGY

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  OWNERSHIP OF
  INTELLECTUAL PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  ACCESS TO THE PROJECT

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  LIABILITY AND OBLIGATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  PUBLICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  EFFECT OF TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  CO-OPERATION AND ASSISTANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  GENERAL

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  DISPUTES

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  VARIATION OF
  PROJECT OR THIS AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  INFRINGEMENT
  AND THIRD PARTY PROCEEDINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  CONTINUING OBLIGATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1: BUDGET

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2: PROJECT

  	
   

  

 

 

THIS AGREEMENT IS MADE THE DECEMBER 31,
2002

 

BETWEEN:

 

AUTOGEN RESEARCH PTY LTD ACN 074 636 847 of Pigdon’s
Road, Geelong, Vic, 3217 (“Autogen”)

 

AND

 

SOUTHWEST FOUNDATION FOR BIOMEDICAL RESEARCH, 7620 NW
Loop 410, San Antonio, Texas, 78227-5301, USA (“SFBR”)

 

WHEREAS:

 

A.           Autogen proposes to
engage in research in the fields of diabetes, obesity, allergy, asthma,
depression, osteoporosis, heart disease, and autoimmunity (“the Research Fields”).

 

B.             Autogen desires to
collaborate with SFBR and to provide the Funding for the Project in return for
the joint ownership and an exclusive license to use and commercialize all
Intellectual Property resulting from the Project on the terms set out in this
Agreement.

 

C.             The parties wish to
ensure that the Research Expertise is applied to the Project and that the
results of the Project are commercialized by Autogen.

 

NOW THIS AGREEMENT WITNESSES as follows:

 

1.             DEFINITIONS AND
INTERPRETATION

 

1.1          Definitions

 

In this Agreement the following words and
expressions shall have the meanings ascribed thereto as follows (unless the
context otherwise requires):

 

“Autogen Background Technology” means
Intellectual Property which was owned by Autogen prior to the Commencement Date
of the Project, or is acquired or created by Autogen independently of this
Agreement and which is contributed to the Project by Autogen.

 

“Budgets and Workplans” means the detailed
budgets and time plans and schedules for work to be carried out under the
R&D Program and attached in Schedules 1 and 2 as may be amended from time
to time by mutual written agreement between Autogen and SFBR.

 

“Business Day” means a day that is not a
Saturday, Sunday or any other day which is a public holiday or a bank holiday
in the place where the relevant act is to be performed or a payment is to be
made.

 

“Commencement Date” means the date specified
in Item 1 of Schedule 1.

 

“Confidential Information” means, subject to
the exclusions in clause 10.4, all information including technical and
commercial information which might reasonably be regarded by either party to be
confidential, or which may be expressly stated as being confidential
information including, but not limited to, drawings, diagrams, scientific
formulae and methodology, procedures, standards and specifications, and
includes:

 

(a)                                   information comprised in or relating to any Intellectual Property
rights of either party;

 

1

 

(b)                                  information relating to the financial position of either party and
in particular includes information relating to the assets or liabilities of
either party and any other matter that does or may affect the financial
position of or the reputation of either party;

 

(c)                                   information relating to the internal management and structure of
either party or the personnel, policies and strategies of either party;

 

(d)                                  information of a party to which the other party has access other
than information referred to in paragraphs (a), (b) and (c) that has
actual or potential commercial value to the first party or to the person or
corporation which supplied that information;

 

(e)                                   information in the possession of the other party relating to the
first party’s clients or suppliers, and like information; and

 

(f)                                     information of a party disclosed to the other party, on, before or
after the Commencement Date.

 

“Funding” means:

 

(a)            in respect of the Initial Term the amount specified in Item 2 of Schedule 1;
and

 

(b)                                  in respect of any period after the Initial Term, the amount agreed
in writing by the parties to be paid by Autogen for that period.

 

“Initial Term” means the period of one year
from the Commencement Date.

 

“Intellectual Property” includes any rights
in or relating to an invention, discovery or new process (whether patentable or
not); patent, copyright, trade mark, design, semi-conductor or circuit layout
rights; plant variety rights; trade, business or company names; Confidential
Information; other proprietary rights; and any other rights to the registration
of such rights, whether created before or after the date of this Agreement and
whether created in the USA, Australia or elsewhere.

 

“Net Sales Revenue” means the revenue in
Australian dollars received by Autogen or any Related Body Corporate from all
sales or the dollar value equivalent of transfers not involving the sales of
the Products, or license fees or royalties derived from licensing of the
Intellectual Property to produce, market and sell the Products, or from any
other revenue producing use of the Intellectual Property or the Products, after
the deduction of all third party license fees where applicable, trade
discounts, allowances, returns of sales, transportation charges, packaging
costs, foreign exchange charges, withholding tax, sales tax or similar tax such
as consumption tax, goods or services tax or value added tax, and insurance and
freight costs under a cost, insurance and freight arrangement. In regard to
clause 9.10, the definition of Net Sales Revenue is refined to include revenue
received by SFBR.

 

“Dr. Blangero”means Dr. John
Blangero.

 

“Products” means products which, or the
manufacture, use or sale of which, are derived from the Project Intellectual
Property.

 

“Project” means scientific research using the
Research Expertise into human genomics as detailed in the research plan in Schedule 2,
to be conducted by SFBR pursuant to this Agreement. The Project is limited to
research conducted by Dr. Blangero pursuant to the research plan attached
in Schedule 2 of this Agreement and does not include any prior

 

2

 

work by Dr. Blangero or by other SFBR
staff or any other contemporaneous or future research other than that funded
solely by Autogen. The use of Autogen-purchased computers by SFBR staff during
periods when these computers are not required for Autogen-funded projects shall
not be part of the Project.

 

“Project Intellectual Property” means any
Intellectual Property created, resulting from or arising in the course of
carrying out the Project under this Agreement, on or after the Commencement
Date pursuant to the R&D Program, and includes any such rights in any
Serendipitous Discovery.

 

“Project Location” means Southwest Foundation
for Biomedical Research, 7620 NW Loop 410, San Antonio, Texas, 78227-5301, USA.

 

“Research Expertise” means the field or
fields of expertise of Dr. Blangero and his staff at SFBR specified in Schedule 2.

 

“Research Fields” means the fields of
diabetes, obesity, osteoporosis, depression, allergy, asthma and autoimmunity
and such other fields as may be included by mutual written agreement between
Autogen and SFBR from time to time.

 

“R&D Program” means the program of
research and development work to be carried out by or on behalf of SFBR
pursuant to this Agreement in relation to the Project.

 

“Serendipitous Discovery” means any
information, know-how, discovery, innovation or invention, resulting from or
arising in the course of carrying out the Project, which was not reasonably
anticipated by the parties, having regard to the R&D Program.

 

“SFBR Background Technology” means
Intellectual Property which was developed by Dr. Blangero and owned by
SFBR prior to the Commencement Date of the Project, or is acquired or created
by SFBR independently of this Agreement and which is contributed to the Project
by SFBR.

 

“Stock Exchange” means Australian Stock
Exchange Limited.

 

“Term” means the Initial Term of this
Agreement and any agreed extension in accordance with clause 3.

 

1.2          Interpretation

 

In this Agreement, except to the extent the
context otherwise requires:

 

(a)                                 the singular includes the plural and vice versa and a gender
includes other genders;

 

(b)                                a reference to a party is to be construed as a reference to a party
to this Agreement;

 

(c)                                 a reference to a party to this Agreement or any other document or
agreement includes its successors and permitted assigns;

 

(d)                                a reference to an item in the Background, clause, schedule, annexure
or appendix is a reference to an item in the Background, clause of or schedule,
annexure or appendix to this Agreement and references to this Agreement include
its schedules and any annexures;

 

(e)                                 where a word or phrase is given a particular meaning, other parts of
speech or grammatical forms of that word or phrase have corresponding meanings;

 

3

 

(f)                                   a reference to a document or agreement including this Agreement
includes a reference to that document or agreement as amended, novated,
supplemented, varied or replaced from time to time; and

 

(g)                                in the interpretation of this Agreement, headings are to be
disregarded.

 

2.             APPOINTMENT OF SFBR

 

2.1

 

Autogen hereby appoints, and SFBR accepts the
appointment of, SFBR to conduct the Project, such appointment to take effect on
and from the Commencement Date.

 

2.2

 

SFBR shall provide the services of Dr. Blangero
as the principal scientist to conduct the project and supervise and direct the
scientific staff engaged in the conduct of the Project.

 

2.3

 

The Project shall be carried out at the
Project Location.

 

2.4

 

Dr. Blangero shall select from a pool of
SFBR-approved applicants and SFBR shall employ such scientific staff as shall
be necessary to conduct the Project, subject to Autogen’s prior written
approval, and subject to Autogen’s liability for payment of personnel costs
from Funding being limited to the amounts set out in Item 2 of Schedule 1.

 

2.5

 

SFBR may, subject to the prior written
consent of Autogen, sub-contract the performance of any part or parts of the
work for the Project provided that in so doing the sub-contractor first enters
into an intellectual property and confidentiality agreement on terms reasonably
acceptable to Autogen including:

 

(a)a covenant not to infringe any
Intellectual Property rights of Autogen and SFBR.

 

(b)an
acknowledgment that all Intellectual Property rights arising from the carrying
out of the sub-contracted work shall belong to Autogen and SFBR in accordance
with this Agreement.

 

2.6

 

SFBR shall at all times make a good-faith
effort consistent with commercial practicability to ensure that completion of
the respective stages of the Project is achieved substantially in accordance
with the timetable set out in the Project and in the Budgets and Workplans.

 

2.7

 

SFBR will diligently and competently carry
out the Project in a professional and timely manner and in accordance with
generally accepted scientific and ethical principles and standards.

 

4

 

3.             TERM

 

This Agreement shall commence on the
Commencement Date and shall continue (subject to the provisions as to
termination hereunder) for the Initial Term. 
Not less than three months prior to the expiration of the Initial Term,
the parties shall determine whether this Agreement is to continue by mutual
agreement and if so, the terms upon which it will continue, including the
Funding to be provided beyond the Initial Term. 
If no written agreement is reached between the parties by the end of the
Initial Term, this Agreement shall terminate at the end of the Initial
Term.  If agreement is reached between
the parties prior to the end of the Initial Term, this Agreement shall continue
to apply for the further term agreed by the parties subject to any written
variations to this Agreement agreed by the parties.

 

4.             FUNDING OF THE PROJECT

 

4.1

 

Subject to SFBR performing and complying with
the provisions of this Agreement and subject particularly to clauses 4.4, 4.5
and 4.6, Autogen shall provide the Funding to finance the Project over the
Initial Term, in accordance with the payment program in Item 2 of Schedule 1.

 

4.2

 

Subject to sub-clause 4.3, the Funding shall
be used to pay for salaries of staff, supplies, and equipment engaged in the
conduct of the Project.  Indirect costs
specified in Item 2 of Schedule 1 shall be used for administration and
infrastructure costs.

 

4.3

 

SFBR shall only use the Funding for the
purpose of carrying out the Project in accordance with the Budgets and
Workplans or for such other research in the Research Fields as shall be agreed
in writing by the parties.

 

4.4

 

Autogen will not pay any instalment of
Autogen Funds unless, in the opinion of Autogen, SFBR has:

 

(a)                                 completed
each milestone in the Budgets and Workplans to the satisfaction of Autogen by
the dates specified in the Budgets and Workplans;

 

(b)                                fully
complied with its obligations to deliver reports pursuant to clauses 5 and 6;
and

 

(c)                                 fully
complied with its obligations regarding use of Funding pursuant to Item 2
of Schedule 1.

 

4.5

 

Without limiting clause 4.4, Autogen may
withhold payment of up to [*]% of the final instalment of Funding or, [*]% of
the total Funding (whichever amount is the greater) until SFBR has delivered to
Autogen, the final report to the standard required by clause 6.

 

5

 

4.6

 

Nothing in this Agreement limits any right
Autogen may have to withhold or cease providing any Funding if:

 

(a)                                 SFBR
has failed to perform or comply with any provision of this Agreement; or

 

(b)                                Autogen,
in its sole discretion, determines that the Project is no longer viable.

 

4.7

 

Any equipment or materials purchased for use
in the Project by SFBR using the Funding provided by Autogen, including in
particular the computer equipment comprising 300 processors described in
Schedules 1 and 2 of this Agreement, will remain the property of SFBR, except
where this agreement is terminated pursuant to clause 15.1and (g)  hereof
in which case such equipment and materials shall be the sole property of
Autogen.

 

4.8

 

Other than its obligations under clause 9.7,
the total liability of Autogen to fund the Project, to pay or reimburse money
to SFBR and to pay or reimburse SFBR for any outstanding liability of SFBR in
respect of any contract, commitment or expenditure, is limited to the total
amount of Funding specified in Item 2 of Schedule 1, plus any additional
Funding beyond the Initial Term agreed by Autogen in writing pursuant to clause
3.

 

4.9

 

SFBR will keep full and accurate accounting
records of all receipts of Autogen Funding, and all other money used or applied
in carrying out the Projects and of all outgoings and expenditure incurred in
carrying out the Projects.

 

4.10

 

SFBR will provide to Autogen a quarterly
financial statement made up to 30 September, 31 December, 31 March and 30 June in
each financial year during which the Project is carried out.

 

4.11

 

SFBR will, whenever required by Autogen,
promptly produce to Autogen invoices, receipts or other appropriate evidence of
the proper use and application of Funding.

 

4.12

 

SFBR will retain all records of account and
technical records until at least 7 years after the end of the Term.

 

4.13

 

If part of any instalment of Funding remains
uncommitted by SFBR at the end of the Project period , then SFBR will no longer
be entitled to such amount and such amount will be returned to Autogen unless
SFBR, with the written consent of Autogen, retains such amount for use for the
purpose of carrying out the Project.

 

6

 

5.             PERFORMANCE REVIEW

 

5.1

 

The parties shall review the progress of the
Project every three (3) months.

 

5.2

 

The purpose of the reviews shall be to
ascertain whether the stages targeted and milestones set in the Budgets and
Workplans are being met at the appropriate times and to an appropriate
standard.

 

5.3

 

Dr. Blangero shall three (3) months
after the date of this Agreement, and every three months thereafter, provide
Autogen and SFBR with a written report for the purposes of the review setting
out adequate details of the following:

 

(a)                                   the progress of the Project work during the preceding three (3) months,
and whether all milestones which ought to have been reached during that period
have been reached and best professional standards maintained;

 

(b)           any material advances or developments;

 

(c)            any material delays or unforeseen problems in the conduct of the
Project;

 

(d)                                  any recommendations on changes to the Project or associated Budgets
and Workplans, including changes in direction of the Project;

 

(e)            any other relevant information relating to or affecting the Project;

 

(f)            the reports shall be delivered to:

 

For Autogen: 
Greg Collier, Ph.D.

 

Chief Executive Officer

 

Autogen

 

For SFBR:  Robert E. Shade, Ph.D.

Scientific
Director

Southwest
Foundation for Biomedical Research

P.O. Box
760549

San Antonio,
TX  78245-0549

 

The report from Dr. Blangero shall be
provided to the parties within fourteen (14) days of the end of the relevant
three (3) month period.

 

5.4

 

Within fourteen (14) days after receipt of a
report from Dr. Blangero pursuant to clause 5.3, Autogen may request, in
writing to SFBR, that any stage or part of the Project or the R&D Program
be varied, suspended or declared completed.

 

7

 

5.5

 

In addition to the reports under clause 5.3, Dr. Blangero
on behalf of SFBR will immediately advise Autogen in writing of any material
advancements or developments as they occur, and in any case not later than 14
days after their occurrence.

 

5.6

 

If so requested by Autogen, the parties shall
meet at Autogen’s expense to consider the report from Dr. Blangero
pursuant to clause 5.3, and to discuss the progress of the Project any
variation or suspension of the R&D Program.

 

5.7

 

If Autogen after consulting with the parties
is, in Autogen’s sole and absolute discretion, satisfied as to the progress of
the Project after each review pursuant to this clause 5, and the R&D
Program has not been suspended or declared completed pursuant to clause 5.4,
Autogen shall continue to make the Funding payment specified in Item 2 of Schedule 1.

 

6.             FINAL REPORT

 

6.1

 

SFBR will deliver to Autogen, on or before
the completion date of the Project, upon termination of this Agreement or on a
date otherwise agreed between the parties, a final report in respect of the
Project, which will include:

 

(a)                                   a cover page detailing the title of the Project, any Project
reference number, the name of SFBR, the name, address and telephone contact of Dr. Blangero
and the name of Autogen;

 

(b)           a 1 page non-technical summary of the Project;

 

(c)            background to the Project;

 

(d)           objectives;

 

(e)            introductory technical information concerning the problem or
research need;

 

(f)            the methodology - including a description and justification;

 

(g)           detailed results - including the statistical analysis of results;

 

(h)                                  discussion of results including an analysis of research outcomes
compared with the objectives;

 

(i)             implications and recommendations;

 

(j)                                      a description of the Project Intellectual Property and of any
commercially significant developments arising from the Project;

 

(k)                                   a technical summary of all information developed as a part of the
Project including discoveries in methodology and equipment design;

 

(l)                                      a statement of the extent to which SFBR has achieved the objectives
of the Project; and

 

8

 

(m)                                the total funds and other contributions made by Autogen, SFBR and
others to the Project.

 

6.2

 

The final reports will not be completed until
Autogen has advised SFBR in writing that the final reports are
satisfactory.  Copyright in all reports
(including final reports) issued or produced by either or both of the parties
under this Agreement will vest in Autogen. 
Subject to the parties’
obligations under this Agreement concerning publication and disclosure of such
reports (and of matters dealt with in those reports), Autogen grants to SFBR
such non-transferable, non-exclusive copyright license in such reports as SFBR
reasonably requires for internal research purposes.

 

7.             AUTOGEN BACKGROUND
TECHNOLOGY

 

7.1

 

Subject to this clause, all rights (including
any Intellectual Property rights) to Autogen Background Technology will remain
vested solely in Autogen.

 

7.2

 

Autogen warrants that it has the right to
license Autogen Background Technology in accordance with the terms of this Agreement.

 

7.3

 

For the Term, Autogen grants to SFBR a
royalty free, non-exclusive right to use Autogen Background Technology to the
extent necessary for carrying out the Project.

 

7.4

 

For the Term, Autogen grants SFBR a royalty
free, non-exclusive right to use Autogen Background Technology to conduct
internal research, but only to the extent that:

 

(a)                                   such use is in conjunction with the use of Project Intellectual
Property for internal research (which use is not contrary to this Agreement);

 

(b)                                  SFBR would, but for this subclause, experience practical difficulty
in using the Project Intellectual Property for internal research by reason of
Autogen Background Technology having become materially associated with or part
of the Project Intellectual Property; and

 

(c)                                   such use does not involve a breach of the obligations of
confidentiality specified in clause 10 or otherwise prejudice any present
or future registration, or commercial exploitation or value of Autogen
Background Technology.

 

7.5

 

In respect of each right of Intellectual
Property embodied in Autogen Background Technology over which SFBR may exercise
licensed rights pursuant to the preceding subclause, the license under the
preceding subclause is for the duration of such right of Intellectual Property
subject to earlier termination pursuant to clause 16.

 

9

 

7.6

 

The rights and obligations of the parties
under this clause shall survive the expiry of the Term.

 

8.             SFBR BACKGROUND
TECHNOLOGY

 

8.1

 

Subject to this clause, all rights (including
any Intellectual Property rights) to SFBR Background Technology will remain
vested solely in SFBR.

 

8.2

 

SFBR warrants that it has the right to
license SFBR Background Technology in accordance with the terms of this Agreement.

 

8.3

 

For the Term, SFBR grants Autogen a royalty
free, non-exclusive right to the use of SFBR Background Technology to the
extent necessary for carrying out the Project.

 

8.4

 

In respect of each right of Intellectual
Property embodied in SFBR Background Technology over which Autogen may exercise
licensed rights pursuant to the preceding subclause is for the duration of such
right of Intellectual Property.

 

8.5

 

Subject to the provisions of this Agreement,
SFBR will at all times indemnify, hold harmless and defend Autogen and its
respective employees and agents (in this subclause referred to as ‘those indemnified’) from and against any loss
(including reasonable legal costs and expenses) or liability incurred by any of
those indemnified arising from any claim, demand, suit, action or proceeding by
any person against any of those indemnified where such loss or liability arose
out of the infringement or an alleged infringement of the Intellectual Property
of any person, which infringement or alleged infringement occurred by reason of
purchase, license, sub-license or possession or use of SFBR Background
Technology.

 

8.6

 

SFBR will not indemnify Autogen if such
infringement or alleged infringement referred to in the preceding subclause
arises from:

 

(a)                                   use of SFBR Background Technology in combination by any means and in
any form with other technology not specifically approved by SFBR;

 

(b)                                  use of SFBR Background Technology in a manner or for a purpose not
reasonably contemplated or not authorised by SFBR;

 

10

 

(c)                                   modification or alteration of SFBR Background Technology without the
prior consent in writing of SFBR; and

 

(d)                                  any transaction entered into by Autogen relating to SFBR Background
Technology without SFBR’s prior
consent in writing.

 

8.7

 

The rights and obligations of the parties
under this clause shall survive the expiry of the Term.

 

9.             OWNERSHIP
OF INTELLECTUAL PROPERTY

 

9.1

 

The parties acknowledge and agree that all
Project Intellectual Property shall belong to and be the property of Autogen as
to [*]% and SFBR as to [*]%.

 

9.2

 

All Intellectual Property in any discoveries,
inventions, secret processes, designs or improvements in procedure or methods
made or discovered by any party during the currency of this Agreement arising
from the Project, shall belong to Autogen and SFBR in the proportions specified
in clause 9.1.

 

9.3

 

SFBR will promptly but at least within 14
days of creation notify Autogen in writing of any Project Intellectual
Property, giving full particulars.

 

9.4

 

SFBR will ensure that Dr. Blangero and
each other researcher or SFBR personnel involved in the Project are employed or
engaged by SFBR such that any Project Intellectual Property is adequately
secured and so that SFBR can comply with its obligations under clause 9 of this
Agreement.

 

Before commencing work on the Project, all
SFBR personnel involved in the Project, will be required to sign an
Intellectual property and Confidentiality Agreement in a form approved by
Autogen to satisfy SFBR’s obligations under this clause.

 

9.5

 

Autogen may at its sole expense take out and
maintain appropriate protection for all Project Intellectual Property. SFBR
shall provide reasonable assistance, at Autogen’s expense, in applying for
letters of patent, or other Intellectual Property protection in Australia or in
any other part of the world for all such discoveries and developments and
execute all instruments and do all things necessary for vesting the said
letters of patent or other Intellectual Property protection and rights when
obtained and all right and title to and interest in the same in Autogen and
SFBR.  Autogen shall bear all costs of
taking out and maintaining appropriate protection for all new discoveries and
developments made under the R&D Program .

 

11

 

9.6

 

SFBR hereby grants to Autogen from the
Commencement Date, an exclusive, permanent, worldwide license to use the
Project Intellectual Property for the purpose of developing and commercially
exploiting the results of the Project and Autogen shall have the right to
sub-license its rights and to decide in its absolute discretion as to how the
Intellectual Property and the Products are to be commercially exploited.  SFBR shall retain a permanent, royalty-free
license to use the Intellectual Property for internal research.  The parties acknowledge that this Agreement
does not include a license of any patents or patent applications in the USA,
Australia or elsewhere, which have ceased to be in force.

 

9.7

 

If the Products are successfully
commercialized, Autogen shall pay to SFBR an annual royalty based on [*]
percent ([*]%) of the Net Sales Revenue. 
No royalties will be payable by Autogen to SFBR in respect of the
Project, until such time as Autogen has recovered all of the Funding, and all
costs associated with applying for a grant, registration, renewal or extension
of any Project Intellectual Property.

 

9.8

 

Autogen shall solely decide upon whether and,
if so, the terms and conditions upon which, to develop and commercially exploit
the Intellectual Property and the Products whether by licensing or otherwise,
throughout the world.  All income and
royalties derived from the development and commercialization of the Project
Intellectual Property and the Products shall, subject to clause 9.7, belong to
Autogen solely.

 

9.9

 

Autogen shall diligently pursue commercial
exploitation of the Intellectual Property and the Products, but Autogen shall solely
decide whether and, if so, the terms and conditions upon which to develop and
commercially exploit the Intellectual Property and the Products whether by
sub-licensing or otherwise, throughout the world.

 

9.10

 

If Autogen has not developed and commercially
exploited the Project Intellectual Property and the Products, or licensed one
or more third parties to do so, within 2 years of the expiration of the Term,
SFBR may seek approval in writing from Autogen to develop and commercially
exploit the Project Intellectual Property and the Products.  Autogen shall solely decide if such approval
shall be granted, but shall not unreasonably withhold such approval. If such
approval is granted to SFBR, SFBR shall pay to Autogen an annual royalty equal
to two percent 2% of the Net Sales Revenue.

 

9.11

 

Autogen shall keep proper financial records
and books of account in relation to the commercial exploitation of the Project
Intellectual Property and the Products so that royalty payments may be
verified.  SFBR or its authorized representatives
shall be entitled at SFBR’s cost to inspect the financial records and books of
account but only in respect of commercialization of the Project Intellectual
Property and the Products and only once in each year.  Inspection shall take place at the principal
office of Autogen

 

12

 

during normal business hours at a mutually
agreed time and on a minimum of 7 days’ prior written notice.  If SFBR commercially exploits the Project
Intellectual Property and the Products pursuant to clause 9.10 of this
Agreement, the provisions of this clause shall apply mutatis mutandis.

 

9.12

 

SFBR warrants to Autogen that it has not
entered into, and will not enter into, an agreement or arrangement with a third
party concerning the Project Intellectual Property which in any way precludes,
reduces, compromises or encumbers the parties’ ownership of, or other present
or future rights and powers in respect of, the Project Intellectual Property.

 

9.13

 

Within 28 
days of receiving a request from Autogen, SFBR will execute, sign,
register and deliver all written assignments, deeds, agreements, applications,
notices, information and other documents necessary or convenient to assign to
Autogen SFBR’s title and
ownership of Project Intellectual Property or otherwise as appropriate to
evidence ownership of, or to register, defend or maintain Project Intellectual
Property, in the proportions specified in clause 9.1.

 

9.14

 

Notwithstanding
anything to the contrary in this Agreement, the Intellectual Property of each
party prior to implementation of the Project, shall remain that parties’
property during and subsequent to the duration of the Project and the Term of
this Agreement, and nothing in thisAgreement shall be construed as a transfer
of such Intellectual Property.

 

10.          CONFIDENTIALITY

 

10.1

 

All information relating to the Project which
is supplied by or on behalf of any party, or which relates to or arises from
the Project, shall be treated by both parties as confidential and shall be used
solely during the Term of and in accordance with this Agreement to enable SFBR
and sub-contractors to carry out the Project or to enable the commercialization
of the Project Intellectual Property and the Products in accordance with this
Agreement.

 

10.2

 

Prior to disclosing any of the Confidential
Information to any employees or subsidiaries or related companies or
sub-contractors, the relevant party will procure the execution by the party in
question of a Deed or otherwise in the form and substance satisfactory to both
parties or otherwise procure the person to whom it is intended to disclose any
of the Confidential Information to undertake to maintain the same in confidence
and acknowledge the interest therein of the party whose Confidential
Information is disclosed.

 

13

 

10.3

 

Both parties hereby undertake and agree that,
except for such disclosure as is prudent and reasonably necessary for the
purposes of this Agreement, no part of the Confidential Information given to it
pursuant to this Agreement shall be disclosed to anyone who is not an employee
or sub-contractor of a party except with the prior written approval of the
party whose Confidential Information is disclosed which consent, if given,
shall be on the basis that the recipient of any part of the Confidential
Information shall first be bound to SFBR and Autogen by contract to maintain
the same in confidence.  Without
prejudice to the foregoing each party shall use its best endeavours to take all
reasonably necessary steps to prevent the Confidential Information from passing
into the public domain.

 

10.4

 

Nothing stated herein shall be construed as
restricting or creating any liability for the disclosure or communication of
Confidential Information which:

 

(a)            is now or becomes publicly known through no wrongful act of either
party;

 

(b)                                  is received from a third party without restriction and without
breach of this Agreement;

 

(c)                                   is now or comes to be contained in any published patent or published
or otherwise generally known to the trade through no wrongful act of either
party; or

 

(d)                                  is disclosed pursuant to governmental, legislative or judicial
requirement, including disclosure by Autogen pursuant to its obligations under
the Corporations Act 2001 (Cth) or
the Stock Exchange Listing Rules.

 

10.5

 

The obligations set out in this clause 10
shall remain in full force and effect, and shall continue to bind each of the
parties, notwithstanding that this Agreement may have been terminated, or one
of the parties may have ceased to be a party to this Agreement, for any reason.

 

11.          ACCESS TO THE PROJECT

 

SFBR will ensure that Autogen is allowed,
during normal business hours at a mutually agreed upon time and with a minimum
of seven days notice, access to parts of premises at the Project Location used
for purposes directly associated with this Agreement and will render all
reasonable and necessary assistance to allow persons authorised by Autogen to:

 

(a)                                 speak
to Dr. Blangero and any other persons who may be associated with the
Project;

 

(b)                                examine,
copy and otherwise inspect any books of account or technical records relating
to the Project;

 

(c)                                 inspect
any facilities and equipment used in the carrying out of the Project, any
activities relating to it to assess progress and any other matters relating to
the implementation of this Agreement; and

 

(d)                                make
any other inquiries of any Project personnel who may be associated with the
examination of any Project Intellectual Property.

 

14

 

12.          INSURANCE

 

12.1

 

SFBR will effect and maintain, with reputable
and substantial underwriters, the following insurances against all usual risks:

 

(a)                                 insurance
against loss of or damage to facilities and equipment purchased with the
Funding;

 

(b)           public
liability insurance.

 

12.2

 

SFBR will provide to Autogen, proof of such
insurance and any other evidence reasonably required by Autogen in relation to
the policies referred to in clause 12.1. 
SFBR will provide the same within 14 days of Autogen’s request.

 

13.          LIABILITY AND
OBLIGATIONS

 

13.1

 

All indemnities given under this clause, and
elsewhere in this Agreement, are continuing and are not discharged until all of
the obligations of the parties under this Agreement have been fully discharged.

 

13.2

 

SFBR shall at all times indemnify, hold
harmless and defend Autogen and its respective officers, employees and agents
(in this clause referred to as “those indemnified”) from and against any loss
(including reasonable legal costs and expenses) or liability reasonably incurred
or suffered by any of those indemnified arising from any suit, action or
proceeding by any person against any of those indemnified where such loss or
liability was caused by any wilful, unlawful, or negligent act or omission of
SFBR, it employees, agents, or sub-contractors in connection with this
Agreement or by any Products infringing any person’s Intellectual Property
rights where SFBR is or ought reasonably to have been aware of such rights or
such infringement was caused by any wilful, unlawful or negligent act or
omission of SFBR.

 

13.3

 

Autogen shall at all times indemnify, hold
harmless and defend SFBR and its respective officers, employees and agents (in
this clause referred to as “those indemnified”) from

 

15

 

and against any loss (including reasonable
legal costs and expenses) or liability reasonably incurred or suffered by any
of those indemnified arising from any suit, action or proceeding by any person
against any of those indemnified where such loss or liability was caused by any
wilful, unlawful, or negligent act or omission of Autogen, its employees,
agents, or sub-contractors in connection with this Agreement or by any Products
infringing any person’s Intellectual Property rights where Autogen is or ought
reasonably to have been aware of such rights and such infringement was caused
by any wilful, unlawful or negligent act or omission of Autogen.

 

13.4

 

Each party agrees during the period of this
Agreement and at all times thereafter to indemnify and hold harmless the other
party against any and all actions, suits, proceedings, claims, demands, costs,
penalties, expenses (legal or otherwise) or losses whatsoever which may arise
out of or in respect of or in any way connected with the conduct of the Project
in that party’s laboratories or with any tests or trials that may be carried
out in connection therewith or as a result of any act or omission of any
servant or agent or sub-contractor of that party in respect of the foregoing.

 

13.5

 

SFBR separately covenants and undertakes that
the work done by it under the Project including the carrying out of all tests
and trials will at all times be conducted to the professional standards
accepted in the field and in accordance with all applicable rules, regulations
and conditions and in particular will indemnify Autogen against all losses,
liabilities, legal costs (on a solicitor and own client basis), actions, suits,
or proceedings made against Autogen in respect of or in connection with the
conduct of the work under the Project, or arising directly or indirectly as a
result of or in connection with any performance or non-performance of the
express or implied obligations of SFBR under this Agreement.

 

13.6

 

SFBR shall be responsible for obtaining
necessary regulatory approval (if any), by any and all government agencies, for
conducting research and development work in the field of the Project in the
USA.  SFBR shall deliver copies of all
such approvals (if any) to Autogen within fourteen (14) days of receipt of such
approvals by SFBR.  SFBR may pay from the
Funding the costs of any infrastructure required in order to obtain regulatory
approval provided that the limitation for use of the Funding in Item 2 of Schedule 1
or such further Funding as Autogen agrees to pay following the Initial Term,
shall not be exceeded.

 

13.7

 

Autogen is listed on the Stock Exchange.    SFBR will use its best endeavours to ensure
that SFBR employees assigned to the Project and/or any subcontractors under
this Agreement have been informed that Australian law prohibits insider
trading.  SFBR has been informed of a
continuous disclosure requirement applicable to Autogen under the Stock
Exchange Listing Rules, and agrees that Dr. Blangero shall immediately
advise Autogen in writing of any advancement or development that he deems to be
material.

 

16

 

13.8

 

SFBR warrants that it has the right to use
the facilities at the Project Location for the purpose of carrying out the
Project, and that it is authorised to install the equipment at the Project
Location, which is equipment purchased with the Funding and described more
fully in Schedules 1 and 2.

 

13.9

 

Where Funding is used to purchase items of
equipment, SFBR will be solely responsible for the purchase, installation,
maintenance and insurance of such items, although ownership of such items of
equipment vests in Autogen unless otherwise agreed in writing between the
parties.

 

13.10

 

SFBR will treat as confidential, and will
ensure that all personnel employed or engaged by it in carrying out the Project
treat as confidential, any Project Intellectual Property. or disclose any
Confidential Information relating to any equipment purchased with the Funding,
to any other person.

 

13.11

 

If for any reason Dr. Blangero is not
available, or SFBR becomes aware that he will not be available to perform the
role or functions specified for him in the Project:

 

(a)                                   SFBR will, within 14 days of becoming aware that Dr. Blangero
will not be available, notify Autogen in writing giving particulars of the
reasons for his not being available.

 

(b)                                  Autogen reserves its right to terminate this Agreement pursuant to
clause 15.1(c) if it does not approve of Dr. Blangero’s replacement
nominated by SFBR.

 

14.          PUBLICATION

 

14.1

 

SFBR shall not (and shall procure that Dr. Blangero
shall not), without the prior written approval of Autogen, publish in academic
or scientific publications the results of any part of the Project.  Autogen may withhold its approval if in its
reasonable opinion, having regard to commercial considerations, publication
would not be appropriate in the circumstances.

 

14.2

 

At least 60 days prior to submission for
publication of any proposed paper, the party proposing to publish the same
shall forward a copy of the paper to Autogen, at the same time as requesting
approval for publication.  Autogen shall
use reasonable endeavours to respond to the request for approval for
publication within thirty (30) days of receipt of the request and the paper
but, if Autogen has not responded within thirty (30) days, Autogen is deemed to
have refused approval for publication. 
Such refusal does not preclude reassessment by Autogen and the later
granting of approval.  The party
proposing to publish may resubmit the request for approval for publication at
any time.

 

17

 

14.3

 

Each such request for approval for
publication shall be made in sufficient time to allow for the filing (on behalf
of Autogen and SFBR) of provisional patent applications, if considered
appropriate.

 

14.4

 

The publishing party shall make appropriate
acknowledgment in the publication, of Autogen’s involvement and interest in the
subject matter of the publication.

 

14.5

 

If Autogen has not developed and commercially
exploited the Intellectual Property or the Products within eighteen (18) months
of the expiration of this Agreement, SFBR may seek approval in writing from
Autogen to publish in academic or scientific publications the results of any
part of the Project.  Autogen shall
solely decide if such approval shall be granted.  If such approval is granted, it may be on
such conditions as Autogen may, acting reasonably but in its absolute
discretion, specify.

 

15.          TERMINATION

 

15.1

 

Autogen may terminate this Agreement, in
whole or in part (including any licenses granted to SFBR under this Agreement)
without prejudice to any right of action or remedy which has accrued or which
may accrue in favour of Autogen, by notice in writing effective immediately to
SFBR, if any of the following occur:

 

(a)                                 SFBR
fails to commence work on the Project within thirty (30) days of the
Commencement Date;

 

(b)                                SFBR
fails to achieve the milestones set out in the Budgets and Workplans or
maintain the professional standards accepted in the field;

 

(c)                                 SFBR
does not utilize Dr. Blangero;

 

(d)                                the
parties do not agree by the end of the Initial Term to continue this Agreement
as required by clause 3;

 

(e)                                 Autogen
becomes aware of any material misrepresentation made by SFBR in the making of
any application used as the basis for the R&D Program;

 

(f)                                   where
SFBR is a body (corporate or otherwise) established by statute, or under or by
the authority of any Government, the body ceases to exist or is merged with any
other body or its functions or powers are materially altered;

 

(g)                                where
SFBR is a corporation, it becomes insolvent or subject to the appointment of a
mortgagee, a receiver or manager, or an investigator to investigate its
affairs, or makes any arrangement or composition for the benefit of creditors
or is the subject of winding up proceedings;

 

(h)                                where
SFBR is other than a natural person, and there is a change in the effective
control of SFBR.  Effective control
includes the ability to cast, or control the casting of, more than one-half of
the maximum number of votes that might be cast at a general meeting of
SFBR.  Effective control also includes
holding more than one-half of the issued share capital of SFBR (excluding any
part of that issued share capital that carries no right to participate beyond a
specified amount in a distribution of either profit or capital);

 

18

 

(i)                                    SFBR
becomes a subsidiary of any entity (other than a natural person), or any such
entity that is a holding company of SFBR at the date on which this Agreement
was made ceases to be a holding company of SFBR, or there is, in the opinion of
Autogen, any other change in the direct or indirect ownership or control of
SFBR;

 

(j)                                    where
SFBR is a natural person, SFBR becomes bankrupt, applies to take the benefit of
any law for the relief of bankrupt or insolvent debtors, compounds with his
creditors, makes an assignment of his income or estate or any part thereof for
their benefit, is charged with any indictable offence, dies or becomes
incapable or becomes of unsound mind or a person whose person or estate is
liable to be dealt with in any way under the law relating to mental health;

 

(k)                                 SFBR
breaches or fails to comply with any provision of this Agreement, and where the
breach or failure is capable of being remedied, fails to remedy the breach or
failure to the reasonable satisfaction of Autogen within 30 Business Days
of receiving notice in writing from Autogen specifying the breach or failure
and requiring it to be remedied.

 

15.2

 

Autogen may terminate this Agreement, in
whole or in part (including any licenses granted to SFBR under this Agreement),
by 30 Business Days’ notice
in writing to SFBR if any of the following occur:

 

(a)                                 in
the opinion of Autogen, the Project has not been, or has ceased to be relevant,
to the objectives or functions of Autogen, or otherwise ceases to be of value;

 

(b)                                the
Project is not, in the opinion of Autogen, producing or likely to produce
results from the Project which can be commercialized by Autogen; or

 

(c)                                 Autogen’s finances do not, in the reasonable
opinion of Autogen, enable it to continue to fund the Project.

 

15.3

 

When forming the opinion referred to in
clause 15.2(a), Autogen may have regard to any consideration whatsoever,
including:

 

(a)                                 the
achievement of any of the objectives of the Project by any other person
(whether in the USA, Australia or anywhere else in the world and whether
pursuant to research and development projects or work funded or supported by
Autogen or otherwise);

 

(b)                                the
establishment, commencement, termination, cessation, abandonment or completion
by any person of any other research and development project work (whether in
the USA, Australia or anywhere else in the world and whether or not funded or
supported by Autogen) having the same or similar or related objectives to the
Project; and

 

(c)                                 any
other research and development in relation to the functions of Autogen.

 

15.4

 

If Autogen fails to provide the Funding at
all or does not provide all the Funding for the Initial Term, SFBR may give
thirty (30) days’ written notice to Autogen of the intention of SFBR to
terminate this Agreement and unless Autogen resumes payment of the

 

19

 

Funding within the thirty (30) day period
specified in the notice, this Agreement shall terminate at the expiration of
the thirty (30) day period.

 

16.          EFFECT OF TERMINATION

 

16.1

 

On termination of this Agreement:

 

(a)                                 Autogen
will cease to be liable to pay or provide to SFBR any further Funding or
facilities or equipment, save and except that Autogen shall remain liable for
any amounts previously due that are on the effective date of termination
unpaid;

 

(b)                                SFBR
agrees (other than where to do so would give rise to a void or voidable
transaction) to:

 

(i)                                      repay
to Autogen within 30 days any part of Funding paid to SFBR and not then used or
applied for a purpose permitted under this Agreement or appropriated for
expenditure already incurred and permitted under this Agreement;

 

(ii)                                   within
30 days return or deliver up to Autogen, or as Autogen directs, all facilities
or equipment purchased with the Funding, except
as set forth in this Agreement; and

 

(iii)                                deliver to Autogen
within 30 days a written report on the work carried out in the Project to the
date of termination in accordance with clause 6;

 

(c)                                 SFBR
will disclose to Autogen and to any person or persons nominated by Autogen to
take over the Project written descriptions of methodology used and results and
conclusions reached in carrying out the Project, and SFBR will also allow
Autogen and those persons access to its records relating to the Project;

 

(d)                                SFBR
will return to Autogen all documents relating to Autogen Background Technology,
including all copies except that SFBR will retain a single copy solely to
determine legal obligations;

 

(e)                                 Autogen
will return to SFBR all documents relating to SFBR Background Technology,
including all copies except that Autogen will retain a single copy solely to
determine legal obligations; and

 

(f)                                   Autogen
may, by notice in writing to SFBR, require SFBR to assign any Project
Intellectual Property not already owned by Autogen to Autogen by the date
specified in the notice.

 

16.2

 

Where Autogen terminates this Agreement under
clause 15.2, it may make funds available to SFBR to allow the Project to
be reasonably wound up.

 

16.3

 

Except as expressly provided in this
Agreement, termination of this Agreement or expiry of the Term will not affect
the ownership of any Project Intellectual Property or Autogen’s exclusive
license to use and commercialize the Project Intellectual Property pursuant to
clause 9.6.

 

16.4

 

In the event of termination under clause
15.1(d), and provided that the parties have otherwise complied with all of
their obligations under this Agreement as at the effective

 

20

 

date of termination, the parties will
continue to comply with their obligations to pay royalties, where relevant,
pursuant to clauses 9.7 and 9.10.

 

16.5

 

In the event of termination under clause
16.4, the license to Autogen to use and commercialize the Project Intellectual
Property pursuant to clause 9.6 will become non-exclusive, and both parties are
released from any obligations to pay royalties pursuant to clauses 9.7 and
9.10.

 

17.          CO-OPERATION AND
ASSISTANCE

 

17.1

 

SFBR shall, and shall use reasonable efforts
to ensure that all persons employed or contracted by SFBR working on the
Project shall, co-operate fully with Autogen both during the Term of this
Agreement and for twelve months after the termination of this Agreement to
provide Autogen with such information concerning the Project as Autogen may
require from time to time and such assistance as Autogen may require
in applying for Intellectual Property rights throughout the world.

 

17.2

 

SFBR shall, and shall use reasonable efforts
to ensure that all persons employed or contracted by SFBR working on the
Project shall, ensure that all information concerning the Project is promptly
communicated to Autogen and that Autogen is provided with all necessary
technical explanations and data to ensure that Autogen is fully informed as to
the progress and status of the Project.

 

17.3

 

SFBR shall, and shall use reasonable efforts
to ensure that all persons employed or contracted by SFBR working on the
Project (in this clause called “the Researchers”) shall, provide such
assistance to Autogen as may be required by Autogen both during the term of
this Agreement and thereafter during the commercialization period in the
commercialization of the results of the Project.  The assistance referred to in this clause
18.3 shall include, but is not be limited to:

 

(a)            assistance in the preparation and prosecution of patent applications
and other applications for Intellectual Property including signing all
necessary documentation;

 

(b)           assistance in all aspects of the commercialization process; and

 

(c)            the provisions of consultancy services to Autogen to problem solve
and advise.

 

Where it is, the reasonable opinion of
Autogen, appropriate to do so, Autogen may enter into commercial arrangements
with the Researchers to provide the assistance and consultancy services
referred to in clauses 17.3(b) and 17.3(c), and Autogen shall reimburse
the Researchers for any reasonable costs incurred by the Researchers in
providing the assistance and consultancy services referred to in this
clause 17.3.

 

21

 

17.4

 

After the expiration or earlier termination
of this Agreement, Dr. Blangero shall not be engaged in any research
project similar to the Project using the Research Expertise and will not
compete against Autogen for a period of six months thereafter throughout
Australia unless such research has begun prior to the Commencement Date of this
Agreement.

 

18.          GENERAL

 

18.1

 

This Agreement shall be governed by, and
construed in accordance with the laws of the State of Victoria, Australia, and
the parties hereto submit to the non-exclusive jurisdiction of the courts of
such State.  All disputes arising between
the parties out of or in connection with this Agreement in any way, shall also
be resolved or determined according to the laws of the State of Victoria, or if
those laws are inapplicable, then the laws of the Commonwealth of Australia.

 

18.2

 

If it is held by a court of competent
jurisdiction that:

 

(a)            any part of this Agreement is void, voidable, illegal or
unenforceable; or

 

(b)                                  this Agreement would be void, voidable, illegal or unenforceable
unless any part of this Agreement was severed from this Agreement,

 

that part shall be severable from and shall
not affect the continued operation of the rest of this Agreement.

 

18.3

 

SFBR is not and agrees to not claim or imply
that it is a partner, employee, joint venturer, or agent of Autogen or
otherwise able to bind or represent Autogen. 
SFBR will not purport to bind or represent Autogen, and will ensure that
no person employed or engaged by SFBR purports to bind or represent
Autogen.  Nothing in this Agreement will
act to impose any obligation upon Autogen in respect of any other person who
has contributed any funds to SFBR for the purposes of the Project.

 

18.4

 

A party’s failure or delay to exercise a
power or right does not operate as a waiver of that power or right.  The exercise of a power or right does not preclude
either its exercise in the future or the exercise of any other power or
right.  A waiver is not effective unless
it is in writing.  Waiver of a power or
right is effective only in respect of the specific instance to which it relates
and for the specific purpose for which it is given.

 

18.5

 

Subject to Autogen’s rights in clause 9.6,
neither party may assign, license or otherwise deal with the benefit of any of
its rights under this Agreement to any person without the prior written
approval of the other party, which shall not be unreasonably withheld.

 

22

 

18.6

 

This Agreement is the entire agreement
between the parties in relation to the Project and any representation,
warranty, condition, promise, undertaking or other provision not expressly set
out in this Agreement shall have no force or effect.

 

18.7

 

Each party will do all things reasonably
necessary on its part to ensure the effective performance of this Agreement
(including consents given, or deemed to have been given, by this Agreement) and
to assure, to the other, the rights granted by this Agreement or the other’s
rights in any Project Intellectual Property. 
This obligation includes the doing of acts (including the signing of
documents).  To the extent that a party’s
performance of this clause would require it to incur an expense which it should
not reasonably incur, then performance of this clause will be at the expense of
the other party.

 

19.          DISPUTES

 

19.1

 

The parties record their intention that, if
any dispute or difference arises out of or in relation to this Agreement, it is
to be resolved in a spirit of good faith and on a commercially realistic basis
by negotiation or mediation.

 

19.2

 

A mediator must be an independent person
chosen by the parties or, at their request, by the Australian Commercial
Disputes Centre.

 

19.3

 

The role of a mediator is to assist the
parties in negotiating a mutually satisfactory resolution of any dispute or
difference, but not make a binding decision.

 

19.4

 

Each party must bear its own costs in
resolving any dispute under this clause and the parties must bear equally the
costs of any mediator appointed in accordance with clause 19.2.

 

20.          VARIATION
OF PROJECT OR THIS AGREEMENT

 

20.1

 

SFBR will not without the prior written
agreement of Autogen, change, add to or delete from the objectives, or
methodology of the Project or otherwise vary the Project.

 

20.2

 

If, in the opinion of SFBR, any significant
variation of the objectives or methodology of the Project, or any other
variation of the Project is required or justified, SFBR will promptly notify
Autogen in writing giving full details of the proposed variation, the

 

23

 

reasons for the proposed variation and the effect
or likely effect of the proposed variation on any of the matters included in
the R&D Program.

 

20.3

 

Subject to clause 20.1, the parties may
at any time agree to vary any provision of this Agreement, but a variation is
of no force or effect unless it is in writing and signed by or on behalf of
Autogen and SFBR.

 

20.4

 

A variation may be signed on behalf of
Autogen by its nominated representative and on behalf of SFBR by their
Treasurer .

 

21.          INFRINGEMENT
AND THIRD PARTY PROCEEDINGS

 

Each party will give the other notice of:

 

(a)                                 any claim or allegation that the exercise of any rights under this
Agreement constitute an infringement of the rights of any third party; and

 

(b)                                any actual or possible infringement, by a third person, of Autogen
Background Technology, SFBR Background Technology or the Project Intellectual
Property,

 

of which it becomes aware.

 

22.          NOTICES

 

22.1

 

Any Notice (which expression shall also
include a demand, request, consent or instrument required or authorized to be
given to or served on any party under this Agreement):

 

(a)                                   shall be in writing and signed by or in the case of a facsimile
transmission shall be a true copy of an original signed by (in the case of a
notice by Autogen) any director or the secretary of Autogen; or (in the case of
a notice by SFBR) by the Treasurer of SFBR;

 

(b)           shall be given either:

 

(i)                                     by being delivered by hand to (in the case of a notice to Autogen)
its above mentioned address, attention: 
Company Secretary; or (in the case of a notice to SFBR) its above
mentioned address, attention: Treasurer; or

 

(ii)                                  by facsimile transmission to (in the case of Autogen) 613 5227 1322,
attention:  Company Secretary; or (in the
case of SFBR) 210-670-3322 attention: 
Treasurer;

 

and a notice given by facsimile transmission
shall be deemed to have been given upon the issue to the transmitter of a
satisfactory transmission control report indicating due transmission without
error.

 

24

 

22.2

 

The under-mentioned signatories hereby
acknowledge that they have not received notice of the revocation of the
authorization under which they have respectively executed this Agreement.

 

23.          CONTINUING OBLIGATIONS

 

The provisions of clauses 4.7, 4.8, 4.12, 6,
9, 10, 13, 14, 16, 18.7 and 21 shall remain in full force and effect, and shall
continue to bind each of the parties, notwithstanding that this Agreement may
have been terminated, or one of the parties may have ceased to be a party to
this Agreement for any reason.

 

25

 

IN WITNESS WHEREOF, AUTOGEN and SFBR have duly
executed this agreement as of the day and year first written above.

 

	
  SOUTHWEST FOUNDATION
  FOR

  	
  AUTOGEN LTD

  
	
   

  	
   

  
	
  BIOMEDICAL RESEARCH

  	
   

  
	
   

  	
   

  
	
  7620 NW Loop 410

  	
  Pigdon’s Road

  
	
  San Antonio,
  Texas 78227-5301, USA

  	
  Geelong,
  Victoria 3217, Australia

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  John T. Speck, Jr.

  	
  Greg Collier, Ph.D.

  
	
  Treasurer

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:   December 20,
  2002

  
	
  Acknowledged and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  John Blangero, Ph.D.

  	
   

  
	
  Scientist

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
											

 

26

 

SCHEDULE 1: BUDGET

 

Item 1: Commencement Date January 1, 2003

 

Item 2: Total Budget for the Intial Term is US$[*],
payable in quarterly payments of $[*] (due January 1, 2003), $[*] (April 1,
2003), $[*] (July 1, 2003) and $[*] (October 1, 2003)

 

Personnel:

 

	
  John Blangero, Ph.D.

  	
  PI

  	
   

  	
  [*]

  	
  %

  	
  $

  	
  [*]

  	
   

  
	
  Tom Dyer, Ph.D.

  	
  Co-I/Senior Prog.

  	
   

  	
  [*]

  	
  %

  	
  $

  	
  [*]

  	
   

  
	
  TBN

  	
  Research Assistant

  	
   

  	
  [*]

  	
  %

  	
  $

  	
  [*]

  	
   

  
	
   

  	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  

 

Supplies:

 

	
  Computer supplies (cables, paper, printer supplies,
  miscellaneous software)

  	
   

  	
  $

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Communication (phone, express mail, video
  conferencing)

  	
   

  	
  $

  	
  [*]

  	
   

  
	
  Total

  	
   

  	
  $

  	
  [*]

  	
   

  

 

Equipment:

 

	
  Autogen Sub Cluster: 300 processors

  	
   

  	
  $

  	
  150,000

  	
   

  

 

 

Computers will consist of 150 dual processor AMD
Athlon 1800+s. Each computer will be equipped with 1Gb memory, 40Gb disk, CD
drive, and a network card. This will provide 300 dedicated processors.

 

Rationale: Guaranteed access to this minimum number of
machines. The Project assumes access to approximately 300 processors.

 

	
  Total Personnel and Supplies:

  	
   

  	
  $

  	
  [*] 

  	
   

  
	
  Indirect Costs:

  	
   

  	
  $

  	
  [*] 

  	
   

  
	
  Equipment:

  	
   

  	
  $

  	
  150,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Grand Total:

  	
   

  	
  $

  	
  [*] 

  	
   

  

 

27

 

SCHEDULE 2:
PROJECT

 

Autogen
Center for Statistical Genomics:

 

Southwest
Foundation for Biomedical Research

 

Research Aims:

 

1)              Establishment of
Autogen Center for Statistical Genomics including dedicated computing
resources.

 

In order to meet the needs of Autogen’s Human
Genomics program, a computer cluster comprising 300 processors (described in
the Budget in Item 2 of Schedule 1) will be added to the extant processor
cluster at SFBR. While it will be completely integrated into the larger
computer system (and thus benefit from an existing administrative structure),
these processors will be available as required for Autogen statistical genomics
research. These computers will be placed in the new SBC Genomics Computing
Center building (projected opening date: February 14, 2003).  Secure Internet access will be established
between Autogen’s Australian facilities and the SFBR computer cluster so that Dr. Blangero
will have continuous access to the computational facilities even when he is in
Australia.

 

Milestone:  The successful online implementation of the
Autogen Center for Statistical Genomics computer cluster. This is anticipated
to occur by the end of March 2003.

 

2)              Analysis of 4 ISR
Candidate Genes for Diabetes/Obesity in Human Populations.

 

In order to conclusively test for the effects of
variation in Autogen proprietary genes on diabetes/obesity related phenotypes
in humans, we will perform an exhaustive series of statistical genomic analyses
on human samples. The possible sample sources (to be negotiated independently
of this document) for these studies include (but are not limited to) the
Wisconsin families from the MRCOB study, Mexican American families from the San
Antonio Family Heart Study, and Autogen’s extant samples from Pacific Island
populations.

 

Tasks:

 

a)              Genotype
cleaning: Mendelian error checking, elimination of double recombinants. This
task is limited to family-based samples.

 

b)             Haplotype
inference and genotype imputation.

 

c)              Quantitative
trait nucleotide analysis using the Bayesian model selection/model averaging
approach.

 

d)             Conditional
linkage analysis to test whether best SNP Gene Action model accounts for
linkage.  This task is limited to
family-based samples.

 

These analyses will allow us to determine whether or
not variants in a given gene appear to have functional effects on relevant
human phenotypes and whether or not the gene completely identifies the
underlying human QTL.  Final analyses
will include estimates of the posterior probability that a given variant has
functional effects for each DNA variant examined. It is anticipated that the
expected total time per ISR gene for completion of these tasks is 16 weeks.

 

Milestones: For
each gene, the completion of tasks a – d will be considered a substantial
milestone.

 

3)              Gene Discovery for
Diabetes/Obesity in Human Families

 

28

 

This aim launches a gene discovery research program
based around samples from human families. 
We plan to take existing well defined and localized QTLs and attempt
identification of novel genes in the original family material. It is
anticipated (although not mandatory) that these analyses will be performed on
samples from current Autogen collaborations (including the MRCOB Wisconsin
family study or the San Antonio Family Heart Study).

 

Tasks:

 

a)              Additional
STR genotype cleaning and map integration. It is anticipated that approximately
5 additional markers will be analyzed per QTL region.

 

b)             Identity-by-descent
probability calculation for region including new STRs.

 

c)              Quantitative
trait linkage analysis using the additional STRs to refine localization
interval.

 

d)             Strategy 1: Focal positional candidate gene
approach. For SNPs within positional candidate genes chosen via bioinformatic
methods, a similar set of tasks to those described in Aim 2 will be performed.
These will include genotype cleaning, haplotype inference and genotype
imputation, quantitative trait nucleotide analysis, and conditional linkage
analysis to verify QTL dissection. The total time per QTL (assuming 3 genes
will be analyzed exhaustively) is 48 weeks.

 

e)              Strategy 2: Positional candidate region
approach without obvious candidate genes. For QTL regions, which lack obvious
positional candidate genes, a general SNP coverage strategy will be pursued. :
Specific analytical tasks to be performed include: analysis of linkage
disequilibrium followed by optimal choice of independent SNPs; preliminary
association analysis of 200 individuals for 5 SNPs per gene for 30 genes; SNP
analyses within families including genotype cleaning, haplotype inference and
genotype imputation, QTN analysis and conditional linkage analysis per gene = 2
weeks. The total time per QTL (assuming 2 genes ultimately will be analyzed
exhaustively) is 48 weeks.

 

Milestones:
Specific milestones for each QTL will include reporting of: 1) refined QTL
localization, 2) QTN analysis of any positional candidate gene, and 3)
identification of the QTL. While the first two of these milestones are
guaranteed results, the last one is not.

 

29

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