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EXHIBIT 10.12
Project No: .... GRA01530..........
R&D START GRANT DEED
INDUSTRY
RESEARCH AND
DEVELOPMENT
BOARD PARTICULAR CONDITIONS
---------------------
PARTIES
THE BOARD INDUSTRY RESEARCH AND DEVELOPMENT BOARD on
behalf of the Commonwealth of Australia
- - postal address Mr A B Baker
Regional Director NSW
AusIndustry
GPO Box 9839
Sydney NSW 2001
- - street address Mr A B Baker
Regional Director NSW
AusIndustry
Level 17, MSB Tower
207 Kent Street
Sydney NSW 2000
THE GRANTEE Chip Application Technologies Limited
- - ACN ACN 057 883 333
- - postal address Level 4, Ballarat House
68 Wentworth Avenue
Surry Hills
NSW 2010
- - street address Level 4, Ballarat House
68 Wentworth Avenue
Surry Hills
NSW 2010
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OPERATIVE PROVISIONS
This Grant is made under the R&D Start Program to the Grantee respect of the
Project described in schedule 1. The Grant is made on the terms and conditions
contained in this deed, which incorporates the GENERAL CONDITIONS applying to
R&D Start Program grants as at 1 September 1998, as modified by the Special
Conditions in schedule 6.
The Grantee acknowledges receipt of a copy of the General Conditions.
If there is an inconsistency between these Particular Conditions and the General
Conditions these Particular Conditions prevail to the extent of the
inconsistency.
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ACCEPTANCE OF TERMS
EXECUTED AS A DEED
Date of deed: 17th February 2000
BOARD
SIGNED, SEALED AND
DELIVERED on behalf of the
COMMONWEALTH OF
AUSTRALIA By A B Baker a delegate
of the INDUSTRY RESEARCH AND
DEVELOPMENT BOARD in the
presence of:
/s/ M. CHENG
- -----------------------------------------
Signature of witness /s/ [SIGNATURE ILLEGIBLE]
M Cheng -----------------------------------
- -----------------------------------------
Name Of Witness (block letters)
Level 17, 207 Kew Street, Sydney, ???
- -----------------------------------------
Address of witness
Customer Service Manager
- -----------------------------------------
Occupation of witness
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GRANTEE
SIGNED, SEALED AND
DELIVERED by CHIP APPLICATION [COMMON SEAL LOGO]
TECHNOLOGIES LIMITED ACN 057 883
333 whose COMMON SEAL is
affixed in accordance with its Articles
of Association in the presence of
/s/ DAVID C. MAC SMITH /s/ JOHN WEIHEN
- ----------------------------------- -----------------------------------
Signature of director Signature of secretary
(director/secretary)
David C. Mac Smith John Weihen
- ----------------------------------- -----------------------------------
Name of director (block letters) Name of secretary (block letters)
58 View Street 17 Bayswater Road
[Illegible] Lindfield, NSW
- ----------------------------------- -----------------------------------
Address of director Address of director/secretary
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SCHEDULES
SCHEDULE 1 PROJECT SUMMARY
SCHEDULE 2 REFERENCE SCHEDULE
SCHEDULE 3 PROJECT BUDGET
SCHEDULE 4 FUNDING OF PROJECT AND PAYMENT DATES
SCHEDULE 5 REPORTING REQUIREMENTS
SCHEDULE 6 SPECIAL CONDITIONS
SCHEDULE 7 COMMERCIALISATION STRATEGY
SCHEDULE 8 REPAYMENT OF REPAYABLE CONTRIBUTION
UNDER START PREMIUM
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SCHEDULE 1 - PROJECT SUMMARY
1.1 PROJECT TITLE Internet Capable Multi Application Smartcard System
1.2 PROJECT REFERENCE NUMBER GRA 01530
1.3 PROJECT DURATION 18 months
Agreed Start Date 23 July 1999
Agreed Completion Date 31 December 2000
1.4 PROJECT DESCRIPTION
This project researches and develops systems for a multi application smartcard
scheme that operates in the internet and real world domains. It enables
cardholders to use the same smartcard on the Internet as they use in day to day
store transactions. Functions such as electronic purse, loyalty tickets,
membership and access are available seamlessly to the customer wherever they
are. Merchants can maximise their brand awareness and link their customers
whether they are on-line or in-store. This expands the merchant's marketing
possibilities and increases benefits to their customers.
1.5 COMPANY TURNOVER
- - Grantee and Related Bodies Corporate have a combined turnover of less
than $50 million in each Relevant Year--Core Start
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1.6 MAJOR ACTIVITIES
Activity
Finish Eligible
Major Activity Start Date Date Expenditure $
-------------- ---------- ------ -------------
1 Proof of concept model research [*] [*] [*]
2 System architecture design; [*] [*] [*]
3 Phase 1 Product Development, Integration & [*] [*] [*]
Testing
4 Phase 2 Product Development, Integration & [*] [*] [*]
Testing
5 In house trials [*] [*] [*]
6 Beta site trials [*] [*] [*]
Total [*]
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An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
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1.7 MAJOR MILESTONES
Milestone
Eligible
Achievement Cumulative
Major Milestone Date Expenditure $
--------------- ----------- -------------
1 Demonstrable Proof of Concept model [*] [*]
2 System design documentation complete: [*] [*]
- functional specification
- high level design documentation
3 Phase 1 Products Development complete: [*] [*]
- Java Card applets and card creation,
- POS terminal integration,
- Web enquiries for members and
merchants,
- Web transactions for members.
4 Phase 2 Products Development complete: [*] [*]
- Merchant maintenance via web
- Online customer database product,
- Online member POS transactions,
- Online member internet enquiries and
transactions.
5 In house Trials complete: [*] [*]
- Phase 1 and phase 2 demonstrations plus
evaluation reports
6 Beta site Trials complete: [*] [*]
- Phase 1 and phase 2 installations
complete plus evaluation reports
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confidential treatment filed separately with the Securities and Exchange
Commission.
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1.8 MAJOR ACTIVITIES
1. PROOF OF CONCEPT MODEL
The major activities for this part of the project include;
- - Development of a Functional Requirement Specification detailing the
required functionality of the final system.
- - Research of the likely approaches to implement requirements,
- - Develop functional prototypes to demonstration standard for the Web
Enquiries, Web transactions and PDA (Personal Digital Assistants)
products.
- - Evaluate the effectiveness and update Functional Requirements as needed.
- - Demonstrate prototypes to key potential clients and enhance
specifications according to market feedback.
2. SYSTEM ARCHITECTURE DESIGN
The prime activities here are to;
- - Refine the Functional Requirements Specification so it can be used as the
source document for project plans and test plans.
- - Design the system architecture to ensure interoperability between products
and adequate security.
- - Generate high level designs of the software for each product.
PHASE 1 PRODUCT DEVELOPMENT, INTEGRATION & TEST
Phase 1 of the Product Development activities includes software and system
development, integration and testing of the following products;
- - Java Card applets and card creation process.
- - Point of Sale terminal integration.
- - Web enquiries for members and merchants.
- - Web transactions for members.
PHASE 2 PRODUCT DEVELOPMENT, INTEGRATION & TEST
Phase 2 of the Product Development activities includes software and system
development, integration and testing of the following products;
- - Merchant maintenance of their application programs via the web.
- - Online customer database.
- - Online member point of sale transactions.
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- - Online member internet enquiries and transactions.
IN HOUSE TRIALS
The activities for in house trials include;
- - Installation of phase 1 products in house at arms length from the
development team.
- - Testing the individual products by setting up a simulated environment and
exercising the product with life like operational activity.
BETA TRIALS
Beta trials of the various products include the following activities;
- - Installation of the products at a friendly Beta site.
- - Operation of the products by people not involved in the development of
the products.
- - Evaluation of the products to assess usability and functional
completeness.
1.9 INELIGIBLE ASSOCIATED WORK
The majority of ineligible work is associated with bringing the products to the
marketplace. This includes;
- - Marketing documentation, sales force training, trade show presentations
and sales campaigns.
- - Enhancements to the existing system patents and their registration in
other countries,
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Schedule 2 - Reference Schedule
2.1 TYPE OF GRANT
Core Start
2.2 GRANT
A maximum amount of $860,150
2.3 GRANT PERCENTAGE
50%
2.4 REPAYABLE CONTRIBUTION (IF ANY).
0 %
2.5 INTEREST RATE
7.7 % (FIXED RATE), but for any period that the bank variable small business
loan rate set out in Table F4 (Indicator Lending Rates) published in the Reserve
Bank Bulletin (FLOATING RATE) is less than the Fixed Rate, the Interest Rate
will be the Floating Rate from time to time during that period.
If the Floating Rate index referred to above is no longer published, the
Floating Rate will reflect another index determined by the Commonwealth.
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2.6 ADDRESSES FOR SERVICE OF NOTICES
COMMONWEALTH
Regional Director NSW
Ausindustry
GPO Box 9839
Sydney NSW 2001
Facsimile: (02) 9252 3652
GRANTEE
Project Manager: Mark Hallinan
Address: Level 4 Ballarat House
68 Wentworth Avenue
Surry Hills
NSW 2010
Facsimile: 02 9281 1242
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SCHEDULE 3 - PROJECT BUDGET
3. 1 SUMMARY OF PROJECT ELIGIBLE EXPENDITURE
ESTIMATED EXPENDITURE
$
-------------------------- TOTAL
HEAD OF EXPENDITURE 99-00 00-01 $
------------------- --------- ------- ----------
R&D Salary Expenditure [*] [*] [*]
Contract Expenditure [*] [*] [*]
Plant Expenditure [*] [*] [*]
Prototype Expenditure [*] [*] [*]
Other Expenditure [*] [*] [*]
PROJECT ELIGIBLE EXPENDITURE [*] [*] [*]
3. 2 GLOBAL BUDGET
ESTIMATED EXPENDITURE
$
-------------------------- TOTAL
99-00 00-01 $
--------- ------- ----------
Project Eligible Expenditure [*] [*] [*]
Project Ineligible Expenditure [*] [*] [*]
TOTAL PROJECT COST [*] [*] [*]
An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
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SCHEDULE 4 - FUNDING OF PROJECT AND PAYMENT DATES
4. 1 PROJECT FUNDING
CONTRIBUTION
SOURCE 99-00 00-01 TOTAL
------------ --------- ------- ---------
R&D Start Grant [*] [*] [*]
Grantee [*] [*] [*]
TOTAL PROJECT EXPENDITURE [*] [*] [*]
Note: The amount to be paid by the Commonwealth to the Grantee under this
deed will not exceed the Grant Percentage of Eligible Expenditure
incurred on the Project. At any stage of the Project the Grantee must
contribute towards the Eligible Expenditure an amount which equals or
exceeds the Grant Percentage and must pay for 100% of the ineligible
expenditure of the Project.
4.2 INITIAL GRANT PAYMENT
4.2.1 The initial Grant payment will be the total of:
(a) the Grant Percentage of Eligible Expenditure incurred between the
date of the Application and the last day of the quarter
immediately before the quarter in which this deed is executed (if
any); and
(b) the Grant Percentage of Eligible Expenditure for the quarter in
which this deed is executed set out in the Budget approved under
clause 4.15.
4.2.2 The Commonwealth must make the initial Grant payment on the later of:
(a) 30 days of the date of this deed; and
(b) if the initial Grant payment includes a component under item 4.2
1(a), the provision of a Project Progress Report which is
accepted as satisfactory by the Commonwealth and, where necessary,
an Audited Acquittal Report.
4.2.3 The Commonwealth may pay the component of the initial Grant payment under
item 4.2. 1(a) before the time set out in item 4.2.2.
4.3 SUBSEQUENT PAYMENTS
FOR GRANTEES WITH A QUARTERLY REPORTING SCHEDULE
The amount of each subsequent payment will be calculated in accordance with the
following:
Quarterly payment = Total Eligible Expenditure (cumulative) to the end
of the quarter which has just been completed,
multiplied by the Grant Percentage
Minus Total amount of Grant paid to date
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confidential treatment filed separately with the Securities and Exchange
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Plus Quarterly Budget for the quarter in which the
payment is intended to be made, multiplied by the
Grant Percentage.
and reduced if necessary to allow for withholding of the Retention Amount given
in item 4.5 of schedule 4.
4.4 RETENTION PERCENTAGE
5% of the amount given in 2.2 of schedule 2.
4.5 RETENTION AMOUNT [*]
The total Retention Amount is withheld from the final payment(s) and the amount
will be paid to the Grantee upon satisfactory provision and acceptance of the
audited Final Financial Acquittal Report and the End of Project Report.
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An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
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SCHEDULE 5 - REPORTING REQUIREMENTS (CLAUSES 4.8 AND 4.9)
5.1 QUARTERLY REPORTING SCHEDULE
DUE REPORTS FOR PERIOD
- --- ------- ----------
[*] Project Progress Report [*]
[*] Project Progress Report [*]
[*] Draft budget by quarter [*]
(Clause 4.14)
[*] Project Progress Report [*]
[*] Audited Acquittal Report [*]
[*] Project Progress Report [*]
Within 6 weeks of End-of Project Report N/A
Agreed Completion Audited Final Financial
Date or termination Acquittal Report
date
Note: The reporting schedules above represent the preference of the Board.
The guiding principle is that larger projects will report more
frequently. This also means that they will be paid more frequently
(that is, quarterly). During agreement-making, Grantees will indicate
their preferred reporting schedule and delete the one which is not
applicable. The Commonwealth reserves the right to require a
quarterly or half-yearly reporting REGIME from a Grantee.
5.2 REPORTS
PROJECT PROGRESS REPORT
The Project Progress Report is made up of:
1. The Technical Progress Report;
2. The Financial Acquittal Report; and
3. A report on Commercialisation Progress.
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1. The Technical Progress Report must set out:
(a) progress of the Project (including milestones achieved, progress
on Project activities, the expected completion date, and expected
progress of the Project for the next reporting period); and
(b) any other matters required by the Commonwealth.
2. The financial Acquittal Report must set out:
(a) details:
(i) of Eligible Expenditure by the Grantee on the Project;
(ii) of other expenditure on the Project;
(iii) explaining any variation between Eligible Expenditure
incurred and budgeted Eligible Expenditure; and
(iv) of revised budgeted expenditure if the total Eligible
Expenditure is expected to change by 20% or more; and
(b) any other matters required by the Commonwealth.
3. The report on Commercialisation Progress must set out:
(a) progress achieved in the reporting period towards the
commercialisation of the Project with reference to the
commercialisation strategy in schedule 7 (if any);
(b) details of domestic and export sales relating directly to the
Project;
(c) any other matters required by the Commonwealth.
AUDITED ACQUITTAL REPORT
The Audited Acquittal Report means a Financial Acquittal Report which has been
audited in accordance with clause 4.10.
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SCHEDULE 6 - SPECIAL CONDITIONS
The is no condition specified by the Board at the time of approval
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SCHEDULE 7 - COMMERCIALISATION STRATEGY (CLAUSE 6)
COMMERCIALISATION
Income generated by the comnmercialisation of this project will arise in two
ways The first is by the direct sale of software licences to use the products
and systems. The second is by way of revenue derived from Chip Application
Technologies (C.A.T.) operating the system and providing clients with bureau
services. Software licences for the products the system only extend a right to
use. They do not confer any rights to the Intellectual Property or the software
source code.
IMPLEMENTATION
As each of the products in this project reaches a commercial standard, it is
transferred to the sales and marketing teams who will use the technical
documentation and their own marketing material to present the products to
prospective customers. Many of these customers have already been approached and
have indeed contributed to the definition of the products.
Demonstration sites will be established in Australia and the US. These will be
used by the sales teams to demonstrate the complete feature set of the products
in a fully functional environment. C.A.T. will market the products in Australia
and New Zealand while Catuity Inc. will market them in North America. Catuity
Inc. is the US registered parent company of C.A.T.
Catuity Inc. will make use of the reseller network already established in the US
by C.A.T. This includes resellers such as IBM and associates such as Visa and
FDC.
Clients may wish to run the system themselves, in which case they would purchase
an operating software licence. Alternatively they may wish to have C.A.T. run
the system, in such cases they would purchase bureau services. In both
situations income is derived by charging clients based on the number of
cardholders or members and the volume of transactions run by the system. In
addition, there is a setup charge to cover installation at the client's site or
configuration bureau services.
The majority of clients are expected to use the products for the direct benefit
of their own customers. However, a small number may set themselves up as service
providers and run the system for other people's customers. Either way, the
commercialisation process is progressed and income is generated.
COMPLETION
The income derived from the commercialisation process continues for as long as
the clients are using the products. The licences are renewed annually with
provisions to adjust the agreements for fees and service charges. Further
commercial opportunities present themselves by way of system maintenance fees
and consulting charges. In time, the installed systems will be upgraded,
providing further income streams from business analysis and software
enhancements.
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INTELLECTUAL PROPERTY
Chip Application Technologies is the owner of the Intellectual Property for
these products and the underlying technology. Australian and New Zealand sales
are conducted directly by C.A.T. while Catuity Inc conducts North American and
European sales. An agreement exists between C.A.T. and Catuity Inc. allowing
Catuity to licence the products to its clients. There is no transfer of IP or
source code. These remain the property of C.A.T.
COMMERCIALISATION TIMETABLE
The first products of this project will begin commercialisation early in 2000.
As subsequent products are released from development, they also proceed into the
commercialisation phase. It is expected that each product will start
commercialisation within a matter of weeks of being released from development.
PRODUCT SCHEDULED RELEASE FROM DEVELOPMENT
------- ----------------------------------
Java Card applets and card creation [*]
POS terminal integration, [*]
Web enquiries for members and merchants, [*]
Web transactions for members. [*]
Merchant maintenance via web [*]
Online customer database product [*]
Online member POS transactions [*]
Online member internet enquiries and [*]
transactions.
The generation of income from software licence sales is expected once
prospective clients have finalised their requirements and committed to the
product. This process is likely to take upwards of 6 months.
RISKS
A serious marketing risk was the barrier of, not invented here' being imposed by
the US marketplace. Marketing to the US through-Catuity Inc. and the US based
resellers, has now largely mitigated this problem.
Another potential risk to rapid market take-up centres on possible
customisations required to the products. These may come about as a requirement
to integrate the products with existing customer systems and processes.
Although standard interfaces have been incorporated into the products and sample
clients have been quizzed on their needs, the potential for customisations still
exists. Such enhancements could slow the commercialisation process for a
particular client, but probably not prevent sales.
There is always a risk that a competing product may overtake us in the
marketplace. This risk is best mitigated by being first to market with a good
product. Towards that end, the marketing strategy is to release individual
products, as they become available over a 12 month period, rather than waiting
to collect an entire suite and launching as a single entity.
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FAILURE
This project can be deemed a commercialisation failure if the combined income
from sales does not exceed development costs plus the marketing costs plus a
commercial return on investment.
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SCHEDULE 8 - REPAYMENT OF REPAYABLE CONTRIBUTION UNDER START PREMIUM (CLAUSE 13)
[ NOT-APPLICABLE ]
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Industry
Research and R&D START GRANT
Development
Board
GENERAL CONDITIONS
PROGRAM OBJECTIVES
PROJECT AND GRANT 2
OPERATIVE PROVISIONS: 2
1 Interpretation 2
2 Warranties 8
3 Payment of Grant 8
4 Conduct of Project 9
Permitted expenditure 9
Project performance 9
Variations 9
Reporting 10
Budget of expenditure 10
Bank account 11
Records to be kept 11
Inspection and audit 11
Other participants 12
5 Evaluation 12
6 Commercialisation 12
7 Other Financial Assistance 13
8 Acquittal of Grant 13
9 Termination 13
Limits on Liability 14
Termination by mutual deed 14
10 Notices 14
11 Assignment and Protection of Intellectual Property 15
12 Grantee's and Others Funding Contribution to the Project 15
13 Start Premium: Repayable Contribution 15
14 Acknowledgment and Public Statements 16
15 Waiver and Variation 16
16 Dispute Resolution 16
17 Governing law and jurisdiction 17
18 Term of Deed 17
19 Exercise of Discretions 17
20 GST 17
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PROGRAM OBJECTIVES
The Commonwealth has established the R&D Start Program which aims to:
(a) increase the number of research and development projects having a
high commercial potential that are undertaken by companies;
(b) foster greater commercialisation of outcomes of those projects;
(c) increase the level of research and development activity that is
commercialised in Australia; and
(d) provide national benefits.
PROJECT AND GRANT
The Grantee proposes to undertake the Project. The Industry Research and
Development Board has awarded the Grant under the R&D Start Program for
the Project on the terms and conditions contained in this deed.
The Grant is made to the Grantee pursuant to the Industry Research and
Development Act 1986 (the Act), and the relevant Ministerial Directions
issued under sections 19 and 20 of the Act.
OPERATIVE PROVISIONS:
1 INTERPRETATION
1.1 Unless the contrary intention appears:
AGREED COMPLETION DATE means the agreed completion date set out in
item 1.3 of schedule 1.
APPLICATION means the application submitted by the Grantee (and, if
applicable, other persons) in respect of which the Grant was
awarded.
AUDITED ACQUITTAL REPORT means a Financial Acquittal Report which
has been audited in accordance with clause 4. 1 0.
BUDGET means the budget approved by the Commonwealth from time to
time under clause 4.15 and the budget set out in schedule 3.
CONTROL means control of a corporation through the possession
directly or indirectly of the power, whether or not having
statutory, legal or equitable rights, directly or indirectly to
control more than 50% of the membership of the board of directors of
the corporation or more than 50% of the voting shares (as defined in
the Corporations Law) of the corporation whether by means of trusts,
deeds, arrangements, understandings, practices, the ownership of any
interest in shares or stock of that corporation or otherwise.
CORE START means the program of financial assistance for research
and development projects of non-tax exempt companies with turnovers
of less than $50 million in each relevant year.
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DEAL WITH means:
(a) sell, transfer, declare a trust over or otherwise dispose or
procure or effect the disposal of, or in any way whatever deal
with, any legal or equitable interest in, or any right in respect
of, any subject matter; or
(b) effect a change in the beneficial interest or beneficial unit
holding under a trust the trustee of which has an estate or
interest in the subject matter.
ELIGIBLE EXPENDITURE has the meaning given in clause 4(l) of the R&D Start
Program Directions No. 1 of 1998 (DIRECTIONS), given under the Act, and
the relevant Industry Research and Development Board policies effective at
the date of this deed
ENCUMBRANCE means any Security Interest, notice under sections 218 or 255
of the Income Tax Assessment Act 1936 (or any corresponding section of the
Income Tax Assessment Act 1997) or under section 74 of the Sales Tax
Assessment Act 1992, profit a prendre, easements restrictive covenant,
equity, interest, garnishee order, writ of execution, right of set-off,
lease, licence to use or occupy, assignment of income or monetary claim,
and any deed to create any of them or allow them to exist.
END OF PROJECT REPORT means a report in the form and containing the
matters required by the Commonwealth.
EXIT SURVEY FORMS mean questionnaires sent to the Grantee at the end of
the Project to learn about its view of the quality of the services
rendered to it in respect of the Grant by officers of the Commonwealth
during the period of the Project.
FINANCIAL ACQUITTAL REPORT means a report in the form required by the
Commonwealth setting out:
(a) expenditure by the, Grantee on the Project;
(b) a tax invoice showing the GST payable on supplies to the
Commonwealth in connection with the project;
(c) details of input tax credits, if any, to which the Grantee is
entitled for creditable acquisitions made by the Grantee in
connection with supplies (or deemed supplies) to the Commonwealth in
connection with the Project;
(d) details of adjustment notes, if any, issued to the Grantee in
respect of creditable acquisitions made by the Grantee in connection
with supplies (or deemed supplies) to the Commonwealth in connection
with the Project;
(e) details of adjustment notes, if any, issued by the Grantee to the
Commonwealth in circumstances where the Grantee has previously been
issued with one or more adjustment notes in respect of creditable
acquisitions made by the Grantee in connection with supplies (or
deemed supplies) to the Commonwealth in connection with the Project;
and
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(f) any other maters required by the Commonwealth.
FINAL FINANCIAL ACQUITTAL REPORT means a Financial Acquittal Report
required at the end of the Project.
GRANT means the amount set out in item 2.2 of schedule 2, plus the GST, if
any, payable by the Grantee in respect of the supplies (or deemed
supplies) made by the Grantee to the Commonwealth in the course of
undertaking the project.
GRANT PERCENTAGE means the percentage of Eligible Expenditure to be paid
as a Grant, and:
(a) in the case of a Grant under Core Start, is an amount not exceeding
50% of Eligible Expenditure;
(b) in the case of a Grant under Start Plus, is an amount not exceeding
20% of the Eligible Expenditure;
(c) in the case of a Grant under Core Start and Start Premium is an
amount not exceeding 56.25% of the Eligible Expenditure;
(d) in the case of a Grant under Start Plus and Start Premium is an
amount not exceeding 56.25% of the Eligible Expenditure.
The Grant Percentage is set out in item 2.3 of schedule 2.
GST means any goods and services tax or similar value added tax imposed
pursuant to the A New Tax System (Goods and Services) Tax Act 1999
(Commonwealth) (as amended or regulations made under that Act on a supply
(or deemed supply) of any goods, property, service or any other thing.
INSOLVENCY EVENT means the happening of any of these events:
(a) an application is made to a court for an order or an order is
made that a body corporate be wound up; or
(b) an application is made to a court for an order appointing a
liquidator or provisional liquidator in respect of a body
corporate, or one of them is appointed, whether or not under
an order; or
(c) a receiver or receiver and manager is appointed in respect of
any part of the property of a body corporate; or
(d) except to reconstruct or amalgamate while solvent on terms not
prejudicial to its obligations and duties under this deed, a
body corporate enters into, or resolves to enter into, a
scheme of arrangement, deed of company arrangement or
composition with, or assignment for the benefit of, all or any
class of its creditors, or it proposes a reorganisation,
moratorium or other administration involving any of them; or
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(e) there occurs any event which the Commonwealth considers, with
the giving of notice, lapse of time or otherwise, would be or is
likely to become, a breach of this deed; or
(f) a body corporate resolves to wind itself up, or otherwise
dissolve itself, or gives notice of intention to do so, except to
reconstruct or amalgamate while solvent on terms not prejudicial
to its obligations and duties under this deed, or is otherwise
wound up or dissolved, or
(g) a body corporate is or states that it is insolvent; or
(h) as a result of the operation of section 459F(l) of the
Corporations Law, a body corporate is taken to have failed to
comply with a statutory demand; or
(i) a body corporate is, or makes a statement from which it may be
reasonably deduced that the body corporate is, the subject of an
event described in section 459C(2)(b) or section 585 of the
Corporations Law; or
(j) a body corporate takes any step to obtain protection or is
granted protection from its creditors, under any applicable
legislation or an administrator is appointed to a body corporate;
or
(k) a body corporate sells, or enters into negotiations to sell,
sufficient of its assets or resources so that, in the reasonable
opinion of the Commonwealth, it is unable to fulfill its
obligations under this deed; or
(1) a body corporate has a writ issued on any part of its assets
which would have, in the reasonable opinion of the Commonwealth,
a material adverse effect on its undertaking the Project and the
body corporate either does not contest the writ in good faith or
pay the creditor all amounts owing within 7 days; or
(m) anything analogous or having a substantially similar effect to
any of the events specified above happens under the law of any
applicable jurisdiction.
INTELLECTUAL PROPERTY means statutory and other proprietary rights in
respect of trade marks, patents, circuit layouts, copyrights, designs,
confidential information, Know-how, plant varieties and all other rights
with respect to intellectual property as defined in Article 2 of the July
1967 Convention Establishing the World Intellectual Property Organisation.
INTEREST RATE means the rate set out in item 2.5(a) of schedule 2.
KEY PROJECT PERSONNEL means a person or persons engaged for the Project
whose technical or scientific skills are crucial to the success of the
Project.
KNOW-HOW means expertise, knowledge, skills, techniques, methods,
procedures, ideas and concepts.
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PARTICULAR CONDITIONS means those conditions which are specific to the
Grant and the Project, and which are set out in the Schedules to this
deed.
POST-PROJECT REPORT FORMS mean forms to be completed by the Grantee to
evaluate whether the objectives of the R&D Start program are being met
through the Post-Project performance of grantees.
PRODUCT means any goods or services the production or supply of which
involves the exercise of Project Intellectual Property.
PROJECT PROGRESS REPORT means a report to be given under clause 4.8, which
includes information on financial acquittal, significant changes in
budgeted Eligible Expenditure, technical progress of the Project, and
progress on commercialisation.
PROJECT means the project described in schedule 1.
PROJECT INTELLECTUAL PROPERTY means all Intellectual Property created in
the course of the Project including any improvements, inventions or
discoveries (whether serendipitous or otherwise) arising out of the
conduct of the Project.
R&D START PROGRAM means the program of business research and development
assistance administered under that name by the Commonwealth, through the
Industry Research and Development Board.
RELATED BODY CORPORATE has the same meaning as in the Corporations Law.
RELEVANT YEAR for a Grantee means:
(a) if when the Application is made, the Grantee has been
incorporated for each of the three years preceding the Year of
income in which the Application was made -- each of those years;
and
(b) if when the Application is made, the Grantee has been
incorporated for fewer than three Years of income preceding the
Year of income in which the application was made -- each of those
years in which the Applicant was incorporated.
REPAYABLE CONTRIBUTION means that part of the Grant which is made under
Start Premium, which is:
(a) that percentage by which the Grant exceeds 50% of the Eligible
Expenditure on the Project, where provided in conjunction with
Core Start; or
(b) that percentage by which the Grant exceeds 20% of the Eligible
Expenditure on the Project, where provided in conjunction with
Start Plus.
The Repayable Contribution is set out in item 2.4 of schedule 2.
29
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SECURITY INTEREST means any bill of sale (as defined in any
statute), mortgage, charge, lien, pledge, hypothecation, title
retention arrangement, trust or power, as or in effect as
security for the payment of a monetary obligation or the
observance of any other obligation.
START PLUS means the program of financial assistance for
research and development projects of non-tax exempt companies
with turnover of $50 million or more in one, or more than one,
Relevant Year.
START PREMIUM means the program of financial assistance:
(a) for high merit research and development projects
in non tax-exempt companies; and
(b) that is repayable to the Commonwealth.
START PREMIUM INTEREST RATE means the rate set out in item
2.5(b) of schedule 2.
SUPPLY has the meaning given by the A New, Tax System (Goods
and Services) Tax Act 1999 (Cth).
TECHNICAL PROGRESS REPORT means a report required as part of
the Project Progress Report.
YEAR OF INCOME of a Grantee means the period of 12 months to
which the income tax returns of the company relate.
1.2 INCLUDING, INCLUDES and IN PARTICULAR do not limit the words which
precede them or to which they refer.
1.3 Unless the contrary intention appears:
(a) A PERSON includes a firm, a body corporate, an unincorporated
association or an authority;
(b) a deed, representation or warranty in favour of two or more
persons is for the benefit of them jointly and severally;
(c) a deed, representation or warranty on the part of two or more
persons binds them jointly and severally;
(d) the singular includes the plural and vice versa;
(e) a reference to a statute, ordinance, code or other law
includes regulations and other instruments made under it and
consolidations, amendments, re-enactments or replacements of
any of them; and
(f) a reference to a financial year means the period beginning on
1 July and ending on 30 June in the following calendar year.
1.4 Headings are inserted for convenience of reference only and are not
to be used in the interpretation of this deed.
1.5 A reference to a schedule is a reference to a schedule to the
Particular Conditions
30
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2 WARRANTIES
2.1 The Grantee warrants that:
(a) the Grantee is:
(i) incorporated under a law of the Commonwealth
or a State or Territory; and
(ii) not exempt from income tax;
(b) the Project consists of research and development
activities;
(c) it does not have any interests or obligations that
conflict with its interests or obligations under
this deed;
(d) all information it provides to the Commonwealth
from time to time (including in the Particular
Conditions and the Application) is true and
correct;
(e) the Grantee, has and will have, at all times, all
the necessary rights in respect of the
Intellectual Property and all technical
information, including but not limited to, all
designs, specifications, data, drawings, plans,
reports, models, prototypes and other things that
will be required to conduct the Project and to
commercialise the Project's outcome;
(f) the turnover of the Grantee and related companies
for each Relevant Year is as stated in item 1.5 of
schedule 1,
(g) is not aware of any circumstances, which
adversely affect or might adversely affect the
Grantee's ability to fulfil its obligations under
the deed.
and the Grantee warrants that the statements set out
above are true and correct at the date of this deed, and
each day during the term of this deed.
2,2 If the Grantee becomes aware of a breach of warranty,
the Grantee must immediately notify the Commonwealth of
that breach.
3 PAYMENT OF GRANT
3.1 Subject to parliamentary appropriation, the Grant is
payable in quarterly or six monthly instalments in
accordance with schedule 4.
3.2 The Commonwealth is not obliged to make a payment under
\ clause 3.1 if:
(a) any milestone set out in schedule 1 to be
completed before the date for payment has
not been achieved; or
(b) the total of all Grant payments made to date, and
the next scheduled Grant payment, would exceed the
Grant Percentage of:
(i) the Eligible Expenditure incurred to date;
and
(ii) the budgeted Eligible Expenditure for the
next 3 months,
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9
as determined by the Commonwealth; or
(c) the Grantee is otherwise in default under this
deed (including the failure to submit any report);
or
(d) the Commonwealth has issued a notice under clause
4.11 pending the submission of a satisfactory
report; or
(e) the Grantee has not provided a Budget which has
been approved by the Commonwealth under clause
4.15.
3.3 The Commonwealth's determination of the Eligible
Expenditure under clause 3.2(b) is final.
4 CONDUCT OF PROJECT
4.1 The Grantee agrees to undertake the Project:
(a) diligently;
(b) in accordance with schedule 1; and
(c) in accordance with any representations made in
the Application.
PERMITTED EXPENDITURE
4.2 The Grantee must use the Grant solely for the Project
and in accordance with the Budget.
PROJECT PERFORMANCE
4.3 The Grantee must notify the Commonwealth if a milestone
is not achieved by the date for completion set out in
schedule 1. The notice must set out:
(a) the reason for the delay;
(b) the Grantee's proposed action to address the
delay;
(c) the expected date for achievement of the
milestone;
(d) the expected effect the delay will have on
subsequent milestones;
(e) the expected effect the delay will have on the
Project and the Budget; and
(f) Key Project Personnel changes not reported under
4.3(a) of this clause.
4.4 Nothing in this clause 4 affects the Commonwealth's
rights under clause 3.2 or clause 9.
VARIATIONS
4.5 The Grantee may change or improve its work methods or
procedures to achieve efficiency, economy or improved
quality. However, the Grantee must not materially change
the Project as described in schedule 1 without the
Commonwealth's consent.
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4.6 The Grantee may, by notice to the Commonwealth, propose
a variation to the Project, the Budget, the date for
achievement of a milestone or completion of the Project
or any other variation to the milestones. Any
such variation must be either approved or rejected by
the Commonwealth within 60 days of receipt from the
Grantee.
4.7 The Grantee may reallocate expenditure between heads of
expenditure listed in the Budget without obtaining the
Commonwealth's consent if the total re-allocation from a
particular head of expenditure does not exceed 20% of
the total allocated to that particular head of
expenditure in the Budget. Where the proposed
re-allocation will exceed 20% the Grantee must seek
approval in writing from the Commonwealth. Any such
request must be either approved or rejected by the
Commonwealth within 60 days of receipt from the Grantee.
REPORTING
4.8 The Grantee must give the Commonwealth reports in
accordance with schedule 5 in the form required by the
Commonwealth from time to time.
4.9 Within 6 weeks of the Agreed Completion Date, or the
date of termination of this deed, whichever is the
earlier, the Grantee must give the Commonwealth an End
of Project Report and an audited Final Financial
Acquittal Report.
4.10 A report that is required by this clause 4 to be
audited must be audited by a member of the Institute of
Chartered Accountants in Australia, or the Society of
Certified Practising Accountants, who is not an
employee of the Grantee.
4.11 If in the Commonwealth's opinion either the form or the
content of a report is not adequate for the
Commonwealth's purposes, the Commonwealth may require
the Grantee to submit a revised report satisfactory to
the Commonwealth within 30 days of notice to the
Grantee.
4.12 Pursuant to clause 5, post-Project reporting is also
required of the Grantee.
BUDGET OF EXPENDITURE
4.13 The grantee must give the Commonwealth a draft budget:
(a) for the first financial year of the Project,
within 30 days of the date of this deed; and
(b) for every subsequent financial year of the
Project, on July 31 of that year.
4.14 The draft budget must:
(a) be in a form approved by the Commonwealth;
(b) set out expenditure incurred and proposed to be
incurred on the Project for the financial year to
which the draft budget relates; and
(c) divide expenditure into four quarters (July -
September, October - December, January - March,
April - June).
33
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4.15 The Commonwealth must approve or reject the draft
budget within 60 days of receipt from the Grantee.
4.16 The Grantee must give the Commonwealth an amended budget
within 30 days of receipt of notification from the
Commonwealth that the draft budget has been rejected.
The amended budget is subject to clause 4.15 and this
clause 4.16.
BANK ACCOUNT
4.17 The Grantee must establish a bank account for the sole
purpose of handling the Grant and interest on the Grant,
and disclose to the Commonwealth within 7 days of
request the location and details of that account.
4.18 The Grantee must pay all instalments of the Grant into
the account and not use the account for any purpose
other than the deposit and withdrawal of the Grant and
any interest.
RECORDS TO BE KEPT
4.19 The Grantee must keep to the Commonwealth's satisfaction
the records (including original receipts and invoices)
necessary to provide a complete, detailed record and
explanation of;
(a) expenditure by the Grantee on the Project;
(b) Project activities;
(c) the technical progress of the Project,
(d) any amounts of GST paid by the Grantee in respect
of any supply made to the Commonwealth under this
deed,
and any other records required by the Commonwealth.
4.20 Those records must be retained by the Grantee for the
term of the deed and at least 3 years following the
last payment of the Grant.
INSPECTION AND AUDIT
4.21 The Commonwealth or its auditor may at reasonable times
and on reasonable notice enter the Grantee's premises
and inspect the records kept by the Grantee, and
progress with the Project, to review the Grantee's
compliance with this deed.
4.22 The Grantee must give the Commonwealth and its auditor
all necessary facilities and assistance to enable them
to conduct an audit.
4.23 In conducting a review under clause 4.2 1, the
Commonwealth or its auditor may take copies of any
records (books, documents, invoices, receipts and any
other papers) that the Commonwealth or the auditor
considers relevant to the Project.
4.24 The Commonwealth must ensure that it and anyone
authorised by it under 4.21 uses confidential
information to which they are given access, only for
the purposes of this deed and does not disclose or use
it for any other purpose unless required by law.
34
12
OTHER PARTICIPANTS
4.25 The Grantee must require any other participants engaged
for tile Project to keep like records to those required
to be maintained by the Grantee under clause 4.19 and
to give the Commonwealth similar access to their
premises and records pertaining to the Project.
5 EVALUATION
5.1 The Grantee must cooperate with any evaluation of the
R&D Start Program by the Commonwealth. The Grantee
must, if requested by the Commonwealth, provide
information and completed survey forms relating to:
(a) the Project; and
(b) the R&D Start Program,
during the Project and for five years after the Agreed
Completion Date.
5.2 The Grantee must comply with a request under clause 5.1
within 28 days of receiving the request.
6 COMMERCIALISATION
6.1 The Grantee must use its best endeavours to
commercialise the Project within a reasonable time of
completion of the Project.
6.2 The Grantee will be taken to have complied with its
obligations under clause 6.1 if it has complied with
schedule 7 and the conditions (if any) set out in
schedule 6 regarding the commercialisation obligations
of the Grantee.
6.3 If:
(a) at any time the Grantee decides that it will not
commercialise the Project; or
(b) the Grantee has not commercialized the Project
in accordance with schedule 7,
the Grantee must notify the Commonwealth and give the
Commonwealth details of the reasons for making that
decision or for not commercialising the Project, as the
case may be.
6.4 For the purposes of this deed, "commercialise the
Project" means to:
(a) manufacture, sell, or hire a product; or
(b) provide a service; or
(c) exploit a process; or
(d) license a third party as specified in schedule 7
to do any of paragraph (a), (b) or (c); or
35
13
(e) otherwise exploit the Project,
through a direct or an indirect application of the
Project Intellectual Property to obtain a commercial
return. Unless specified in schedule 7, to Deal With the
Project Intellectual Property under this deed shall not
be accepted as a means to "commercialise the Project".
6.5 If the Commonwealth receives a notice under clause 6.3,
or if the Grantee has not commercialised the Project to
the Commonwealth's satisfaction within the time referred
to in schedule 7, the Commonwealth may by notice to the
Grantee require the Grantee to repay some or all of the
Grant paid to the Grantee, together with interest at the
Interest Rate. Interest is calculated on daily rests
from the date of payment by the Commonwealth of an
amount under clause 3.1 to the date of repayment by the
Grantee,
6.6 If the Commonwealth does not give the Grantee a notice
under clause 6.5 within 3 months of receiving the notice
under clause 6.3, it will be taken to have accepted that
the Grantee has complied with clause 6.1.
7 OTHER FINANCIAL ASSISTANCE
7.1 The Grantee must give the Commonwealth details of any
financial assistance for the Project it receives from
another Commonwealth, State or Territory government
source or agency after the date of this deed. The
Commonwealth may reduce the size of the Grant after
taking into account the other government financial
assistance.
8 ACQUITTAL OF GRANT
8.1 If at any time the amount paid to the Grantee under this
deed exceeds the Grant (as initially determined or
varied), or the Grant Percentage of the Eligible
Expenditure incurred to date, the Commonwealth may by
notice to the Grantee require the Grantee to repay the
amount of the excess to the Commonwealth,
8.2 If the Grantee expends the Grant other than in
accordance with this deed the Commonwealth may by
notice require the Grantee to repay the Grant or so much
of the Grant as the Commonwealth determines.
8.3 If the Commonwealth gives the Grantee a notice under
clause 8.1 or 8.2, the Grantee must pay the
Commonwealth the excess within 28 days of receipt of the
notice,
9 TERMINATION
9.1 Subject to clause 9.3 the Commonwealth may terminate
this deed by notice to the Grantee if:
(a) the Grantee is in breach of this deed, that breach
is capable of being remedied and the Grantee fails
to remedy that breach within 21 days of receipt of
a notice from the Commonwealth requiring it to do
so (or within any longer period specified in the
notice); or
(b) the Grantee is otherwise in breach of this deed;
or
36
14
(c) tile Grantee is in breach of a warranty set out in
this deed; or
(d) an Insolvency Event occurs in respect of the
Grantee.
9.2 On termination of this deed:
(a) the Commonwealth's obligation to pay any amount
of the Grant that is unpaid as at the date of
termination ceases;
(b) the Grantee must give the Commonwealth:
(i) a Financial Acquittal Report as at the date
of termination; and
(ii) a report on the Project and its progress,
in a form satisfactory to the Commonwealth,
(c) the Commonwealth may by notice to the Grantee
require the Grantee to repay some or all of the
Grant paid to the Grantee, together with interest
at the Interest Rate; and
(d) interest payable under clause 9.2(c) is
calculated on daily rests from the date of
payment by the Commonwealth of an amount under
clause 3.1 to the date of repayment by the
Grantee.
LIMITS ON LIABILITY
9.3 The Commonwealth may not take action under clause 9 for
a breach of this deed due to a cause or causes beyond
the Grantee's reasonable control which does not continue
for more than 12 weeks in the aggregate.
TERMINATION BY MUTUAL DEED
9.4 This deed may be terminated at any time by the mutual
written deed of the parties.
10 NOTICES
10.1 A notice, approval, consent or other communication in
connection with this deed must be:
(a) in writing; and
(b) left at the address of the addressee, or sent by
prepaid ordinary post (airmail if posted to or from
a place outside Australia) to the address of the
addressee or sent by facsimile to the facsimile
number of the addressee (or if the addressee
notifies another address or facsimile number then
to that address or facsimile number).
The address and facsimile number of each party is set
out in item 2.6 of schedule 2.
10.2 A notice, approval, consent or other communication takes
effect from the time it is received unless a later time
is specified in it.
10.3 A letter or facsimile is taken to be received:
37
15
(a) in the case of a posted letter, on the third
(seventh, if posted to or from a place outside
Australia) day after posting, and
(b) in the case of facsimile, on production of a
transmission report by the machine from which the
facsimile was sent which indicates that the
facsimile was sent in its entirety to the
facsimile number of the recipient.
11 ASSIGNMENT AND PROTECTION OF INTELLECTUAL PROPERTY
11.1 The Grantee must not Deal With, assign, grant or create
any Encumbrance over:
(a) its rights under this deed; or
(b) its Interest in any Project Intellectual Property,
other than in accordance with any special conditions set
out in schedule 6, or the commercialisation strategy set
out in schedule 7, without the prior written consent of
the Commonwealth.
11.2 A change in Control of the Grantee is taken to be
Dealing With the Grantee's rights under this deed.
11.3 If a change in Control of the Grantee occurs and the
Commonwealth reasonably considers that the change in
Control adversely affects or may adversely affect the
objectives from time to time of the R&D Start Program,
the Board may require the Grantee to repay the Grant to
the Commonwealth together with interest at the Interest
Rate. Interest payable under this clause 11.3 is
calculated on daily rests from the date of payment by
the Commonwealth of an amount under clause 3.1 to the
date of repayment by the Grantee.
11.4 The Commonwealth may impose conditions in giving its
consent under clause 11.1. A breach of those conditions
is a breach of this deed.
11.5 Subject to this deed, the Grantee must take all
reasonable steps to protect the Project Intellectual
Property and must not do anything to diminish or destroy
its commercial value without the prior written consent
of the Commonwealth.
12 GRANTEE'S AND OTHERS' FUNDING CONTRIBUTION TO THE PROJECT
12.1 The Grantee and the Contributors must spend money on the
Project in accordance with item 4.1 of schedule 4.
12.2 The Grantee must notify the Commonwealth in the next
Progress Report if the Grantee or any of the
Contributors fails to comply with clause 12.1.
13 START PREMIUM: REPAYABLE CONTRIBUTION
13.1 The Grantee must repay the Repayable Contribution
together with interest at the Start Premium Interest
Rate to the Commonwealth in accordance with schedule 8.
38
16
14 ACKNOWLEDGMENT AND PUBLIC STATEMENTS
14.1 The Grantee must acknowledge the financial assistance
received from the Commonwealth under the R&D Start
Program in any public statements about the Project or
any products, processes or inventions developed as a
result of it,
14.2 The Commonwealth may publicise the awarding of the
Grant.
14.3 The Commonwealth may include in press releases and
general announcements about the Grant and in its annual
report, the following information:
(a) the name of the Grantee,
(b) the amount of the Grant; and
(c) the title and a brief description of the Project.
14.4 The provisions of this clause continue for a period of 5
years after payment of the last instalment of the Grant.
15 WAIVER AND VARIATION
15.1 A provision of, or a right created under, this deed may
not be:
(a) waived except in writing signed by the party
granting the waiver; or
(b) varied except in writing signed by the parties.
16 DISPUTE RESOLUTION
16.1. A party who gives another party notice that a dispute
has arisen under this deed must include in that notice
the name of a representative with authority to negotiate
the dispute on the first party's behalf
16.2 A party who receives a notice under clause 16.1 must
promptly, and in any case within 14 days of receipt of
the notice, notify the first party of a representative
with authority to negotiate the dispute on the other
party's behalf.
16.3 The representatives must seek to resolve the dispute
as soon as possible.
16.4 If the dispute is not resolved within 30 days of the
notice referred to in clause 16.2 (or within such
further period as the parties agree), the
representatives must seek to agree on a process for
resolving the dispute through a means other than
litigation or arbitration (such as further
negotiations, mediation, conciliation, independent
expert resolution or mini-trial).
16.5 If the representatives are not able to agree on such a
process within a further 14 days (or within such
further period as the representatives agree), if the
process agreed upon fails to resolve the dispute, then
either party may take such action as it sees fit with
respect to the dispute without further reference to
this clause.
39
17
16.6 This clause 16 does not prevent a party from taking
legal action if it considers not to do so would
prejudice its interests.
17 GOVERNING LAW AND JURISDICTION
17.1 This deed and the transactions contemplated by this deed
are governed by the law in force in the Australian
Capital Territory.
17.2 Each party irrevocably and unconditionally submits to
the non-exclusive jurisdiction of the courts of the
Australian Capital Territory and courts of appeal from
them for determining any dispute concerning this deed or
the transactions contemplated by this deed. Each party
waives any right it has to object to an action being
brought in those courts, including claiming that the
action has been brought in an inconvenient forum or that
those courts do not have jurisdiction.
18 TERM OF DEED
Obligations under this deed, unless otherwise stated,
terminate ten years after the day this deed is made.
19 EXERCISE OF DISCRETIONS
The Commonwealth must act fairly, reasonably and in good faith
in exercising its discretions, making decisions and generally
in all dealings with the Grantee under this Deed.
20 GOODS AND SERVICES TAX
20.1 Any amount referred to in this deed is exclusive of GST
unless it is expressly included.
20.2 Subject to subclause 20.3, if GST is imposed on a
supply (or deemed supply) of any goods, property,
service or any other thing made under or in connection
with this deed, then the consideration for that supply
(or deemed supply) is increased by an amount equal to
the amount which would otherwise have been payable
multiplied by the rate at which GST is imposed in
respect of that supply (or deemed supply), having
regard to input tax credits and adjustments, if any,
applicable to creditable acquisitions made by the
Grantee in relation to that supply (or deemed supply).
The increased amount will be payable in the same manner
and at the same times as the amount which would
otherwise have been payable.
20.3 Tile party making the supply (or deemed supply) must
provide to the recipient of that supply (or deemed
supply) from time to time over the course of the Project
GST tax invoices and, if applicable, adjustments notes
as required by the A New, Tax System (Goods and
Services) Tax Act 1999 (Cth).
20.4 If, due to the acquisition by the Grantee of an input
tax credit, or the issue to the Grantee of an
adjustment note, in respect of a creditable acquisition
made by the Grantee in relation to a supply (or deemed
supply) or for any other reason, the additional amount
of GST paid by the Commonwealth to the Grantee exceeds
the amount of GST payable in respect of the relevant
40
18
supply (or deemed supply), the Grantee must repay the
excess amount to the Commonwealth and an off-setting
adjustment will be made at the time the next instalment
of the Grant is paid.
41
Chip Application Technologies Ltd Costcheck Summary
START GRANT - SUMMARY OF COST ESTIMATES
COMPANY: Chip Application Technologies Limited
PROJECT TITLE: Internet Capable Multi Application Smartcard System
PROJECT DURATION: 23.7, 1999 - 31.12.2000
- -------------------------------------------------------------------------------------------------------------
ASSESSED ESTIMATE OF EXPENDITURE
----------------------------------------------------------------
ITEM Claimed DISTRIBUTION BY FINANCIAL YEAR ENDING 30TH JUNE
Estimate of ----------------------------------------------------------------
Expenditure 1999-00 2000-01 NOTE TOTAL
---------- ---------- -------- ---- -----
Salary Expenditure [*] [*] [*] (1) [*]
Contract Expenditure [*] [*] [*] [*]
Net Plant Expenditure [*] [*] [*] (2) [*]
Net Prototype Expenditure [*] [*] [*] (3) [*]
Other Expenditure [*] [*] [*] (4) [*]
Total Project Expenditure [*] [*] [*] [*]
Grant authorised @ 50% [*] [*] [*] [*]
Reasons for adjustments to claimed estimates of expenditure
Note (1)-(4) - Please see attached cost check details
Page 1
An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
42
Chip Application Technologies Ltd Costcheck Detail
START GRANT - COST CHECK
Company: Chip Application Technologies Limited
Project: Internet Capable Multi Application Smartcard System
Project Duration: 23.7.1999 - 31.12.2000
Note (1) - R&D Salary Expenditure
Time on proj. Time on proj.
rate 99-00 [%] 00-01 [%]
[$/hour] starts 7.99 ends 30.12.00 1999-00 2000-01 Total
-------- ----------- ------------- ---------- -------- ----------
[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*]
Salary on costs at [*] [*] [*] [*]
Admin Support Costs at [*] [*] [*] [*]
Total Salary Expenditure [*] [*] [*]
Rounded [*] [*] [*]
(i) - Salary Expenditure is payable only on reconcilable salary
records. Individual employee time sheets, detailing task numbers,
milestone numbers, time spent and supervisor authorisations must be kept
by Chip Application Technologies. All source documents including pay
records, time sheets, master task lists, evidence of payments and group
certificates should be made available at the request of the Board's
Assessors on cost review visits.
Salary expenditure will be paid on actual time worked on the project
only, as all holiday, sick leaves are allowed through the on cost and
admin support costs
Increased in salary expenditure due to firming up of estimates
Page 1 of 3
An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
43
Chip Applicaon Technologies Ltd Costcheck Detail
Note (2) - R&D Contract Expenditure
1999-00 2000-01 Total
------ ------- ------
[*] [*] [*] [*]
[*]
------ ----- ------
Total Contract Expenditure [*] [*] [*]
Rounded [*] [*] [*]
====== ===== ======
Note (2) - R&D Plant Expenditure
1999-00 2000-01 Total
------ ------- ------
Date
Hardware purchased cost depn p.a.
[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
[*]
[*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*]
[*]
[*] [*] [*] [*]
[*] [*] [*] [*]
Total Plant Expenditure [*] [*] [*]
------ ----- ------
Rounded [*] [*] [*]
====== ===== ======
Reduction in expenditure due to firming up of estimates
Note (3) - Prototype Expenditure
1999-00 2000-01 Total
------ ------- ------
[*]
[*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*]
Total Prototype Expenditure [*] [*] [*]
----- ----- -----
Rounded [*] [*] [*]
===== ===== =====
Reduction in expenditure due to firming up of estimates
Note (4) - Other Expenditure
1999-00 2000-01 Total
------- ------- ------
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*]
------ ------ ------
Total other Expenditure (ii) [*] [*] [*]
Rounded [*] [*] [*]
====== ====== ======
(ii) - Chip Application Technologies Ltd is required to keep all source
documents including air ticket vouchers, itineraries, diaries, invoices,
receipts and correspondence regarding the purpose of travel. These
documents should be made available and accessible to the Board's
Assessors.
Reduction in expenditure due to reduction in audit certificate fees, travel
expenses and beta site testing as well as patent searches being disallowed.
page 2 of 3
An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
44
Chip Application Technologies Ltd Costcheck Detail
SUMMARY OF EXPENDITURES:
1999-00 2000-01 Total
--------- ------- --------
Salary Expenditure [*] [*] [*]
Contact Expenditure [*] [*] [*]
Plant Expenditure [*] [*] [*]
Prototype Expenditure [*] [*] [*]
Other Expenditure [*] [*] [*]
--------- ------- ---------
[*] [*] [*]
========= ======= =========
[*] [*] [*]
Page 3 of 3
An * indicates that information has been redacted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.