10-12G

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

Universal Biosensors, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	98-0424072 (I.R.S. Employer Identification Number)
Universal Biosensors, Inc. 103 Ricketts Road, Mt Waverley, 3149, Victoria
Australia	Not Applicable
(Address of principal executive offices)	(Zip Code)

Telephone: +61 3 8542 9000
(Registrant’s telephone number,
including area code)

Securities to be registered pursuant to Section 12(b) of the Act:

None
Title of each class of securities to
be registered Not applicable
Name of each exchange on which each
class is to be registered

Securities to be registered pursuant to Section 12(g) of the Act:

Shares of common stock, par value US$0.0001

Title of each class of securities to be registered

TABLE OF CONTENTS

		Page
EXPLANATORY NOTE		3
FORWARD-LOOKING STATEMENTS		4
ITEM 1.	BUSINESS	5
ITEM 1A.	RISK FACTORS	28
ITEM 2.	FINANCIAL INFORMATION	35
ITEM 3.	PROPERTIES	46
ITEM 4.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	47
ITEM 5.	DIRECTORS AND EXECUTIVE OFFICERS	49
ITEM 6.	EXECUTIVE COMPENSATION	54
ITEM 7.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	61
ITEM 8.	LEGAL PROCEEDINGS	64
ITEM 9.	MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDERS MATTERS	65
ITEM 10.	RECENT SALES OF UNREGISTERED SECURITIES	68
ITEM 11.	DESCRIPTION OF SECURITIES TO BE REGISTERED	70
ITEM 12.	INDEMNIFICATION OF DIRECTORS AND OFFICERS	73
ITEM 13.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	76
ITEM 14.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	77
ITEM 15.	FINANCIAL STATEMENTS AND EXHIBITS	78
SIGNATURES		78

     Unless otherwise noted, references in this general form for registration of securities on Form 10 (“Registration Statement”) to “Universal Biosensors” the “Company,” “we,” “our” or “us” means Universal Biosensors, Inc. a Delaware corporation and, when applicable, its wholly owned Australian operating subsidiary, Universal Biosensors Pty Ltd. Our principal place of business is located at 103 Ricketts Road, Mt Waverley, Victoria 3149, Australia. Our telephone number is +61 3 8542 9000. Unless otherwise noted, all references in this Registration Statement to “$”, “U.S.$” or “dollars” and dollar amounts are references to United States dollars. References to “A$” are references to Australian dollars.

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EXPLANATORY NOTE

     We are filing this Registration Statement to register our common stock, par value U.S.$0.000l, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Section 12(g) requires registration pursuant to the Exchange Act within 120 days after the last day of the first fiscal year in which an issuer has total assets exceeding U.S.$10,000,000 and a class of equity security held of record by 500 or more persons. Our assets and stockholder profile reached these thresholds as of December 31, 2006. Accordingly, we are required to file this Registration Statement and other reports and documents required by the Exchange Act with the Securities Exchange Commission (“SEC”).

     Once we have completed this registration, we will be subject to the requirements of Regulation l3A under the Exchange Act, which will require us to file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, amendments to any of those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.

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FORWARD-LOOKING STATEMENTS

     This Registration Statement contains forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. All statements, other than statements of historical facts, are forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

• our business and product development strategies;

• the progress of our research and development programs and our contract research and development program with LifeScan, Inc.;

• our expectations with respect to regulatory submissions and approvals;

• our expectations with respect to corporate collaborations, including revenues expected from such collaborations;

• our estimates regarding our research and development expenses;

• our ability to protect our intellectual property; and

• our estimates regarding our capital requirements, the sufficiency of our cash resources and our need for additional financing.

     The words “anticipates,” believes,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “projects,” “should,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Registration Statement. The forward-looking statements included in this Registration Statement do not guarantee our future performance, and actual results could differ from those contemplated by these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in cautionary statements throughout this Registration Statement, particularly those set forth in section “Item 1A — Risk Factors.” However, new factors emerge from time to time and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We do not undertake to update or revise any forward-looking statements.

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ITEM 1. BUSINESS.

The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this Registration Statement. This discussion and analysis contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in the section entitled “Item 1A — Risk Factors” and elsewhere in this Registration Statement.

Business overview

     We are a specialist medical diagnostics company focused on the development, manufacture and commercialization of in vitro diagnostic test devices for point-of-care use. In vitro diagnostic testing involves the testing outside of the body of a body fluid (e.g. blood or saliva) or tissue sample (biopsies or swabs). The diagnostic blood test devices we are developing comprise a novel disposable test strip and a reusable meter. The devices are designed to be used near to or at the site of the patient (at the “point-of-care”) to provide accurate and quick results to enable new or existing treatments to be immediately reviewed. We have rights to an extensive patent portfolio comprising a number of patent applications owned by our wholly owned Australian subsidiary, Universal Biosensors Pty Ltd, and a large number of patents and patent applications licensed to us by LifeScan, Inc. (“LifeScan”) an affiliate of Johnson & Johnson.

     We are developing a C-reactive protein test for the diagnosis and management of inflammatory conditions and a prothrombin time test for monitoring the therapeutic range of the anticoagulant, warfarin. We also intend to leverage our intellectual property platform to develop additional immunoassay based point-of-care test devices by taking proven disease biomarkers currently used in the central laboratory environment and adapting those diagnostic tests to the point-of-care setting. We also provide contract research and development services to LifeScan in the areas of diabetes management and the development of a blood glucose test for diabetics.

General development of our business

     We were incorporated as a corporation in the State of Delaware pursuant to the Delaware General Corporation Law on 14 September 2001. Our wholly owned subsidiary and primary operating vehicle, Universal Biosensors Pty Ltd ACN 098 234 309, was incorporated as a proprietary limited company in Australia under the Corporations Act 2001 (Commonwealth of Australia) on 21 September 2001. Our research and development activities are undertaken in Melbourne, Australia, by Universal Biosensors Pty Ltd. Our shares of common stock in the form of CHESS Depositary Interests (“CDIs”) were quoted on Australian Securities Exchange Ltd (“ASX”) on December 13, 2006. Our securities are not currently traded on any other public market.

     Our principal place of business is 103 Ricketts Road, Mount Waverley, Victoria 3149, Australia. Universal Biosensors Pty Ltd has entered into a lease for new facilities at 1 Corporate Avenue, Rowville, Victoria 3178 in Melbourne, Australia which are expected to become our principal place of business in the second half of 2007. Our principal telephone number in Australia is +61 3 8542 9000. Our agent for service in the United States is Corporation Service Company of 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware, United States. We also maintain a web site at www.universalbiosensors.com. The information contained in, or that can be accessed through, our web site is not part of this Registration Statement.

     In April 2002, Universal Biosensors Pty Ltd employed a core scientific and technical team in Australia which, over the 10 years prior to our incorporation, had been integral to the development of the suite of novel electrochemical cell technologies owned by LifeScan and licensed to us.

     Also in April 2002, we entered into a license agreement with LifeScan (“License Agreement”) pursuant to which LifeScan granted us a worldwide, royalty free, exclusive license, with a limited right to sub-license, to certain electrochemical cell technologies in all fields of use excluding the fields of measurement of analytes for the purposes of diagnosing, managing and monitoring diabetes and the measurement of glucose in humans, the rights to which are retained by LifeScan. As consideration for the grant of the license by LifeScan, we granted LifeScan a worldwide, royalty free, irrevocable, non-exclusive license to any improvements to the licensed electrochemical cell technologies in the fields of measurement of analytes for the purposes of diagnosing, managing and monitoring diabetes and the measurement of glucose in humans.

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     Also in April 2002, we entered into a development and research agreement with LifeScan (“Development and Research Agreement”) pursuant to which we agreed to undertake contract research and development for LifeScan in the area of diabetes management and the development of a blood glucose test for diabetics. The research and development activities are supervised by a steering committee comprised of representatives from both LifeScan and us. The research and development activities are undertaken by Universal Biosensors Pty Ltd pursuant to a development subcontract with us. In consideration of us undertaking the research and development activities, LifeScan makes quarterly payments to us. Between April 2002 and December 2006, we have received contract research funding from LifeScan of approximately U.S.$7,652,826 pursuant to the Development and Research Agreement. The quantum of the quarterly payments over this period has varied and will continue to vary over time. The initial term of the Development and Research Agreement was for two years. This term was subsequently extended by written amendment until December 31, 2006, following which, the agreement automatically renews for successive one year periods on the same terms and conditions unless either LifeScan or us gives written notice of termination not less than nine months prior to the end of the relevant one year period, or the agreement is otherwise terminated in accordance with its terms.

     In June 2003 we acquired certain plant and equipment from Memcor Australia Pty Ltd (a subsidiary of Water Application and Systems Corporation). This plant and equipment included some pilot scale manufacturing equipment designed for research and development as well as office and laboratory furniture and equipment. We issued shares to Water Application and Systems Corporation valued at U.S.$1,000,000 in consideration of this plant and equipment.

     In August 2003, we established office and research and development facilities at 103 Ricketts Road in Melbourne, Australia. We continue to occupy these premises. The lease for the Ricketts Road premises expires on September 6, 2007. Universal Biosensors Pty Ltd has recently entered into a lease for larger office, research and development and manufacturing facilities at 1 Corporate Avenue, Rowville in Melbourne, Australia. The new facilities are in the process of being fitted out and are expected to be ready for occupation in the second half of 2007. Once fitted out, these facilities will be suitable for continued research and development activities as well as commercial scale manufacture of our point-of-care test devices.

     During 2006, we ordered the construction of large scale custom designed manufacturing equipment. Some of this equipment has been delivered and more is scheduled to be delivered in the first half of 2007. From September 2001 to December 2006 we have spent approximately U.S.$6,087,000 relating to the acquisition of manufacturing equipment.

     In addition to carrying out research and development activities for LifeScan pursuant to the Development and Research Agreement, since 2004, we have carried out research and development activities on a point-of-care immunoassay blood test for C-reactive protein for the diagnosis and management of inflammatory conditions and, since early 2005, we have carried out research and development activities on a point-of-care prothrombin time blood test for monitoring the therapeutic range of the anticoagulant, warfarin. We have developed working prototypes of both of these tests. Both tests draw on the intellectual property licensed to us under the License Agreement in addition to intellectual property owned by Universal Biosensors Pty Ltd.

     Our founding stockholder was The Principals Cornerstone Fund Pty Ltd, an Australian company which holds shares on trust for Messrs Denver, Hanley, Kiefel and Dr Adam, all of whom are our directors. In mid 2002 we issued shares to Water Application and Systems Corporation worth U.S.$1,000,000 in consideration of the acquisition of plant and equipment. Between incorporation and November 2006, we have secured investment from private and venture capital investors in Australia, the United States and a limited number of other jurisdictions totaling an aggregate of approximately U.S.$14,309,509. On December 5, 2006, we closed an initial public offer of our shares in Australia in which we raised approximately U.S.$14,243,400 (equivalent to A$18,000,000). At the same time, we closed a private placement of our shares in the United States in which we raised a further approximately U.S.$3,165,200 (equivalent to A$4,000,000). On December 13, 2006, we were admitted to the official list of ASX and our shares in the form of CHESS Depositary Interests, or CDIs, were quoted on ASX. Our CDIs continue to be quoted on ASX under the trading code “UBI”. Between April 2002 to April 2007, in addition to the funding from LifeScan, Universal Biosensors Pty Ltd has also received a grant of U.S.$904,591 through an Australian Commonwealth Government R&D Start Grant which is reflected as a reduction of our costs.

     With the exception of the first year of our operations when we made a small profit of U.S.$110,670, we have incurred net losses since our inception. We recognized a net loss of U.S.$56,422, U.S.$36,966 and U.S.$2,219,039 in the years ended December 31, 2004, 2005 and 2006, respectively. Our accumulated losses from inception to December 31, 2006 are U.S.$2,387,877. We expect to incur increasing losses in the foreseeable future as we continue the development of our point-of-care tests and expand our organization and develop a commercial manufacturing capability.

Our Strategy

     We are a specialist medical diagnostics company focused on the development, manufacture and commercialization of in vitro diagnostic test devices for point-of-care use. Key aspects of our strategy include:-

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• completing the development and undertaking product validation of our C-reactive protein test and the prothrombin time test and, if development and product validation efforts are successful, seeking regulatory clearance for those tests. If we are successful in obtaining regulatory clearance for our C-reactive protein test and the prothrombin time test, we intend to sell those tests using specialist distributors in Europe, the United States and elsewhere internationally.

• developing a commercial scale manufacturing capability to enable us to manufacture our own point-of-care devices as well as being able to manufacture point-of-care devices on behalf of third parties.

• to continue to undertake contract research and development work on behalf of LifeScan with a view to being capable of commercially manufacturing a blood glucose test at volumes suited to the market. If successful in our development and regulatory activities with respect to a blood glucose test, we will seek to negotiate an agreement with LifeScan in relation to the manufacturing and supply of blood glucose tests.

• leveraging our intellectual property platform to seek to develop additional immunoassays tests by taking proven disease biomarkers currently used in the central laboratory environment and adapting those diagnostic tests to the point-of-care setting, using our platform of electrochemical cell technologies. If appropriate, we may seek commercial partners to assist in the development or sales and distribution of our existing and future tests.

• seeking to develop additional point-of-care devices for chronic illnesses where current practice is suboptimal or unnecessarily expensive. We will seek to focus on the development of devices for diseases which do not rely on the development of new medicines or treatments, but where existing therapies or practice can be enhanced significantly by simple and accurate diagnostic tools.

Plan of Operations for the Remainder of the Fiscal Year Ending December 2007

Our plan of operation over the remainder of the fiscal year ending December 2007 is to:

• continue research and development activities with respect to our C-reactive protein test and prothrombin time test;

• continue development and product validation activities in relation to the blood glucose test pursuant to the Development and Research Agreement with a view to being capable of commercially manufacturing the blood glucose test at volumes suited to the market;

• seek certification of our quality management system under ISO 13485:2003;

• potentially to perform a clinical trial of the blood glucose test;

• complete the establishment of our new leased premises at Corporate Avenue in Melbourne Victoria and to move into those premises in the second half of 2007;

• complete the acquisition, commissioning and validation of our recently acquired manufacturing equipment; and

• continue preparations to seek regulatory clearance of the blood glucose test.

     As at April 1, 2007 we employed 30 employees. As we increase our manufacturing capability and accelerate our research and development activities, we expect that we will need to increase the number of our employees by at least 10 full time employees in the remainder of the fiscal year ending December 2007.

Financial information about segments

     We operate in one segment. Our principal activities are the research, development, manufacture and commercialization of in vitro diagnostic test devices for point-of-care use. We operate predominantly in one geographical area, being Australia. For details of our revenues, profit and loss and total assets for financial years ending December 31, 2004, 2005 and 2006, refer to “Item 2. Financial Information”.

Description of our business

     We are a specialist medical diagnostics company focused on the development, manufacture and commercialization of in vitro diagnostic test devices for point-of-care use. The diagnostic blood test devices we are developing comprise a novel disposable test strip and a reusable meter. The test devices are designed to be used at the point-of-care to provide accurate and quick results to enable potential or existing treatments to be immediately reviewed. Each of the tests in development utilizes an electrochemical cell at the end of the test strip which is able to detect and measure electrical signals generated in a sample of blood when the analyte is reacted with the chemistry contained on the strip. The signal is then recorded by the meter and converted into a reading which is displayed on the meter.

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Novel technologies

     The majority of current point-of-care blood tests have electrodes positioned within the electrochemical cell in a traditional side-by-side or “co-planar” layout. The side-by-side layout is designed to minimize the electrical interference between the electrodes. The electrodes in the electrochemical cell in the test strips which we are developing have a parallel and opposing configuration. The novel configuration of the electrodes in the electrochemical cell is designed to allow for greater accuracy while retaining other critical features including the ability to obtain results quickly using only a small finger prick sample of blood. Data is produced almost immediately and can be reviewed at the point-of-care allowing new or existing treatment to be immediately reviewed. The configuration of the electrodes has allowed for increased miniaturization of the electrochemical cell and is designed to enable our test strips to be manufactured in a continuous and considerably simplified process.

Industry background

     Amongst other things, diagnostic tests are currently used for:

• screening for risk factors or the presence of disease indicators which may permit early intervention;

• diagnosis, to help establish or help exclude the presence of, or help determine the severity of a condition in a patient or to monitor or detect the reoccurrence of a condition or disease; and

• ongoing disease management, to determine whether a prescribed medication is producing the intended physiological effect and to help select and adjust therapies and dosages of medications.

     In vitro diagnostics tests are tests performed on samples removed from the human body. The samples may be body tissue such as biopsies or swabs, or fluids such as blood, urine and saliva. Traditionally, samples have been sent to a centralized pathology laboratory where analysis is performed by a trained laboratory professional. Pathology tests generally produce accurate results, however, the results may not be generated quickly enough to enable the doctor to review and make a decision regarding the results at the time of the initial presentation of the patient. As a result of advances in technology, it has become possible for some testing to be performed, results to be generated for review and action to be taken at the “point-of-care”, either by doctors, or in certain situations, by the patients themselves. Point-of-care testing is “real-time” diagnostic testing that is performed near to or at the site of the patient. The key objective of point-of care testing is to generate an accurate and quick result so that appropriate treatment can be implemented immediately, leading to an improved clinical and/or economic outcome. Our diagnostic blood tests in development are designed for use by patients and healthcare professionals in a number of point-of-care settings including doctors’ offices, emergency rooms, and health clinics or at a patient’s home.

Point-of-care tests in development

The following table summarizes the point-of-care tests we are currently developing and the applicable development stage of the applicable test. All time periods set forth in the table below refer to calendar years and anticipated milestone dates are indicative only.

Point-of-care Test	Development Stage	Next Anticipated Milestones
Immunoassay C-reactive protein test	·    Development work undertaken since 2004	·     Commence product validation in 2009
	·     Working prototype developed	·     Establish manufacturing process
	·     A minimum of two additional years of development/product validation work required
Prothrombin time test
	·     Development work undertaken since early 2005	·     Commence product validation in 2009
	·     Working prototype developed	·     Establish manufacturing process
	·     A minimum of two additional years of development/product validation work required
Blood glucose test	·     Since April 2002, we have undertaken contract research and development in the area of diabetes management and the development of a blood glucose test for diabetics for LifeScan	·     Seek regulatory clearance in 2007/2008 of a blood glucose test, although there can be no assurance that this will be the case ·     Seek to negotiate rights to manufacture and supply test strips for LifeScan

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Immunoassay for C-reactive Protein Test

     Immunoassay testing is used to detect or quantify a specific substance utilizing an antibody-antigen reaction in the blood. Typically the substances being tested for are molecules such as proteins, enzymes or hormones. By incorporating different antibodies specific to different molecules in an immunoassay test, it is possible to build a wide variety of immunoassay tests. We estimate that the total worldwide immunoassay segment of the in vitro diagnostic market has sales of approximately U.S.$5.7 billion in 2005 (‘The worldwide market for in vitro diagnostic tests’ Kalorama Information, April 2006, 5th Edition., New York, New York).

     We have developed a working prototype of an immunoassay point-of-care test to measure the amount of C-reactive protein in the blood which we have been developing since 2004. C-reactive protein is an established biomarker found in the blood that is routinely used in pathology laboratories for indication of inflammatory conditions. It is most prominently associated with infection and cardiovascular disease. Rather than being undertaken in a pathology laboratory, the C-reactive protein test we are developing would be undertaken in a doctor’s setting with the results being interpreted by healthcare professionals.

     If the development efforts continue to be successful, we expect to be in a position to commence formal validation phase of the C-reactive protein test in 2009 a process requiring at least one year, following which, we will commence the process to seek regulatory clearance for this test. If appropriate, we may seek commercial partners to assist in the development of this test. We intend selling the C-reactive protein test using specialist distributors in Europe, the United States and internationally.

     In the United States, the Food and Drug Administration, or “FDA”, has granted clearance to sell for certain C-reactive protein tests for use as an aid in the identification and assessment of individuals at risk of cardiovascular disease. We believe that there is a significant, future market opportunity with respect to the use of C-reactive protein tests for use as an aid in the identification and assessment of atherosclerosis, a cardiovascular disease now understood to have a significant inflammatory component as well as a buildup of fatty deposits or plaques on the inside walls of the arteries. This build up reduces the flow of blood to the heart, brain and other tissues and can therefore cause serious diseases and complications such as heart attack or stroke. Atherosclerosis is the leading cause of death in the developed world and is responsible for more than half the yearly mortality in the United States (Atherosclerosis, in e-Medicine, F Brian Boudi, M.D. August 2006). We believe that C-reactive protein may in the future be utilized not just in its existing role as a risk predictor, but also in the active management of atherosclerosis when used in conjunction with statins. Statins, which are a class of medication usually prescribed to lower cholesterol, were recently observed to have an independent anti-inflammatory effect. If C-reactive protein levels can be shown to directly correlate with the effectiveness of statins in reducing death, we consider it likely that the utility of C-reactive protein testing will be considerably extended. A worldwide study called the JUPITER study (Justification for the Use of statins in Primary prevention: an Intervention Trial Evaluating Rosuvastatin) is currently underway to evaluate the effectiveness of statin therapy on the reduction of major cardiovascular events among individuals with average or normal cholesterol levels and elevated C-reactive protein levels. This key study is due to report its findings in 2007 or 2008.

     The C-reactive protein test draws on patents and patent applications licensed from LifeScan as well as know-how, patents and patent applications owned by Universal Biosensors Pty Ltd.

Prothrombin Time Test

     Prothrombin time tests are a blood test widely used for monitoring the therapeutic range of the long-term anticoagulant, warfarin. Warfarin is a blood thinning medication commonly administered to patients with certain types of irregular heartbeats, patients who have had heart valve replacement surgery or people at risk of a stroke or cardiac event.

     We have developed a working prototype of a point-of-care prothrombin time test which we have been developing since early 2005. If the development efforts continue to be successful, we expect to be in a position to commence the formal validation phase of the prothrombin time test in 2009 a process requiring at least one year, following which, we will commence the process to seek regulatory clearance for the test. If appropriate, we may seek commercial partners to assist in the development of this test. We currently intend selling the prothrombin time test using specialist distributors in Europe, the US and elsewhere internationally.

     Warfarin was first synthesized in 1948 and remains the primary drug for the prevention of thrombosis. It is the most prescribed oral anticoagulant in the United States with approximately 17 million prescriptions reported to have been written in 2005 (http://www.rxlist.com/top200.htm). The safety and effectiveness of warfarin depends on maintaining “prothrombin time” within a specific therapeutic range, which can be challenging if not actively managed. If the warfarin dose is too high, there is a risk of hemorrhage or uncontrolled bleeding, which can be fatal. If the dose is too low, it will be ineffective in reducing the risks associated with blood clots from the underlying condition.

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     We have estimated that there are an estimated 2.5 million people in the United States suffering from the heart condition known as atrial fibrillation (an abnormal heart rhythm or cardiac arrhythmia) with less than 60% of these patients are taking warfarin (Decision Memo for Prothrombin Time (INR) Monitor for home anticoagulation measurement (CAG-00087N), September 2001, US Centers for Medicare and Medicaid Services). The point-of-care market for prothrombin time tests is made up of both professional and self-tests. In 2005, we estimated worldwide sales of point-of-care prothrombin time self-tests were U.S.$125 million which is expected to grow by approximately 8% per annum to an estimated U.S.$185 million in 2010 (‘The worldwide market for in vitro diagnostic tests’ Kalorama Information, April 2006, 5th Edition., New York, New York). The American College of Chest Physicians recommends that warfarin be monitored at least once every four weeks once a patient’s response to warfarin has stabilized (Ansell, J. et al (2004): The pharmacology and management of the vitamin K antagonists: The seventh ACCP conference on antithrombotic and thrombolytic therapy. Chest. 126: 204-233).

     We believe that there is growing support for the use of patient self-monitoring of prothrombin time, in conjunction with monitoring by healthcare professionals, on the basis that with more frequent testing, patients are more likely to remain in the correct therapeutic range. The United States Centers for Medicare and Medicaid Services has observed that monthly testing is inadequate for the majority of patients on chronic warfarin therapy and have recently indicated that they consider prothrombin time testing may be undertaken no more frequently than once per week (Decision Memo for Prothrombin Time (INR) Monitor for home anticoagulation measurement (CAG-00087N), September 2001, US Centers for Medicare and Medicaid Services).

     The prothrombin time test draws on patents and patent applications licensed from LifeScan as well as know-how, patents and patent applications owned by Universal Biosensors Pty Ltd.

Additional immunoassay tests

     We also intend to develop additional point-of-care immunoassay tests by taking proven disease biomarkers currently used in the central laboratory environment and adapting those tests to the point-of-care setting, using our novel platform of electrochemical cell technologies. We propose to focus on the development of products for chronic illnesses which do not rely on the development of new medicines or treatments, but where existing therapies or practice can be enhanced significantly by simple and accurate diagnostic tools.

Blood Glucose Test

     Since April 2002, we have been undertaking contract research and development in the area of diabetes management and the development of a blood glucose test for diabetics for LifeScan. LifeScan has the rights to commercialization of the blood glucose test.

     We plan to develop the blood glucose test to the point where we have the capacity to commercially manufacturing the test at volumes suited to the market. We are undertaking preparations to seek regulatory clearance of the blood glucose test. We will seek to negotiate a manufacturing and supply agreement with LifeScan. We are establishing a commercial scale manufacturing capability with a view to being able to manufacture for LifeScan, as well as being able to manufacture our own point-of-care tests. Failure to secure a manufacturing and supply agreement with LifeScan will mean that we would not derive any revenues from the commercialization of any blood glucose test that has or may be developed. In this event, we will focus on the development of our own products.

     The largest point-of-care diagnostic market, and the largest segment within the in vitro diagnostic market, is blood glucose monitoring. We estimated worldwide sales of blood glucose point-of-care tests to be U.S.$7.7 billion in 2005 (‘The worldwide market for in vitro diagnostic tests’ Kalorama Information, April 2006, 5th Edition., New York, New York). We estimate that in 2005, the total prevalence of diabetes in the United States across all ages was approximately 20.8 million people or approximately 7% of the United States population (National Diabetes Information Clearinghouse http://diabetes.niddk.nih.gov/dm/pubs/statistics/#7). Of this total, an estimated 14.6 million people in the United States have actually been diagnosed with diabetes and an estimated 6.2 million people in the US remain undiagnosed (National Diabetes Information Clearinghouse http://diabetes.niddk.nih.gov/dm/pubs/statistics/#7). The point-of-care market for blood glucose tests is made up of both hospital based testing and self-tests.

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Development of Manufacturing Capability

     We are in the process of establishing a commercial scale manufacturing capability to manufacture test strips for any of the point-of-care tests we are developing. This capability includes the establishment of new premises, the acquisition of custom designed commercial scale manufacturing equipment and the recruitment of additional manufacturing and other personnel. We consider that a commercial scale manufacturing capacity is a necessary prerequisite to being able to seek to negotiate in a meaningful way for the manufacture and supply of point-of-care tests for third parties, such as LifeScan, and is also required in order to undertake the commercialization of our own point-of-care tests. If at any time LifeScan indicates that it will not proceed with commercialization of a blood glucose test, or if we consider that we will be unable to conclude an agreement with LifeScan on fair and equitable terms, we will focus the manufacturing equipment being acquired by us for use in the manufacture of our C-reactive protein test or prothrombin time test. Funds that would otherwise have been used in product validation of the blood glucose test will be applied to accelerate the development of our C-reactive protein and prothrombin time tests, and to commence development of new tests. From September 2001 to December 2006 we spent approximately U.S.$6,702,280 on capital items. Of this, approximately U.S.$6,087,000 relates to the acquisition of manufacturing equipment.

Facilities

     We currently occupy premises at 103 Ricketts Road, Mt Waverley in Melbourne, Australia. We commenced leasing the premises at 103 Ricketts Road in August 2002 and our current lease expires September 6, 2007. Universal Biosensors Pty Ltd has entered into a lease for approximately 5,000 square meters of office, research and development and manufacturing facilities at 1 Corporate Avenue, Rowville in Melbourne, Australia. The new facilities are in the process of being fitted out and are expected to be ready for occupation in the second half of 2007. The lease for the 1 Corporate Avenue expires on March 31, 2014 with two options to renew the lease for successive five year periods. We will continue to occupy the premises at 103 Ricketts Road, Mt Waverley until fit out of the new premises is complete. We are currently upgrading the capacity of this facility at an estimated cost of approximately U.S.$3,700,000.

Quality management systems

     In order to manufacture or supply point-of-care tests, we must develop a quality management system and operate under a recognized Good Manufacturing Practice, or “GMP”, regime. ISO (International Organization for Standardization ) 13485:2003, ‘Quality Systems – Medical devices – System requirements for regulatory purposes’ is a key international standard for the development, manufacture, quality control and commercialization of medical devices. ISO 13485:2003 is not a product standard but rather a process standard. Therefore, we are required to not only establish a quality management system that complies with the ISO 13485:2003 standard, but also comply with all relevant product and service oriented technical standards and regulations. To comply we will need to:

• establish a quality management system that is oriented towards the design, development, production, and installation of medical devices and related services;

• demonstrate our ability to supply medical devices and related services that meet customer expectations and comply with regulatory requirements;

• evaluate how well we are able to meet customer expectations and comply with regulatory requirements; and

• become certified or registered.

     We have installed a quality management system that is designed to comply with ISO 13485:2003 and plan to seek certification by regulatory authorities in 2007. Certification under ISO 13485:2003 is one of the prerequisites required for the commercial sale of medical devices, including point-of-care diagnostic tests.

Manufacture of test strips, handheld meters and control solution

     We intend to manufacture the disposable test strips for each of our existing and future point-of-care tests using custom manufacturing equipment. The test strips would be manufactured using a highly automated proprietary process using freely available starting materials sourced by us from third party suppliers. Final assembly, quality assurance and the initial packaging of the test strips would be conducted in our new facility in Corporate Avenue in Melbourne.

     During 2006, we ordered the construction of large scale custom designed manufacturing equipment some of which has been delivered. Our manufacturing equipment is based on pilot manufacturing equipment developed and tested by our scientists and engineers. Depending on the specific point-of-care test and the number of strips required to be manufactured, it may become necessary in the future for us to acquire additional large scale equipment to satisfy demand. We expect that with minor modifications, the manufacturing equipment would have the functionality to commercially manufacture the tests strips for the three tests currently being developed by us and is likely to be able to be used for any future tests that may be developed.

11

     The raw materials for the blood glucose test strips comprise webs for constructing the strips and chemicals. We obtain the webs from two established companies in the United States and we anticipate regular supply of materials from these suppliers. A number of non-reactive chemicals can be sourced from any one of a number of chemical suppliers. The key chemical in the test strip is an enzyme which we currently source from a supplier in Japan. Whilst this company is the only company currently able to supply the enzyme we use, it is an established company and we expect to have a reliable supply of the enzyme.

     We intend to outsource to contractors, the manufacture of the reusable meters and the control solution used to confirm accurate operation of the meters. We believe that outsourcing the manufacture of the meters and the control solution will minimize the capital investment required by us yet maintain quality standards, help control costs and take advantage of the expertise such third parties have in the design and production of meters and control solutions.

Regulatory clearances

     In all major territories of the world, regulatory clearances are required prior to marketing diagnostic tests. The regulatory clearance requirements vary from country to country and product to product, however, regulatory clearances typically require a satisfactory “technical file”, which provides the regulatory bodies with details of the design and previous testing of the product including safety and efficacy data; the conduct of trials which show the suitability for use of the product by non-professionals and demonstration of an appropriate quality management system. Assessment of the technical file and the quality management system usually takes place during an on-site inspection. There is no common international regulatory body and we would be required to be inspected by regulators from several of the jurisdictions in which we seek to market our products. For example, for Europe, a “notified body” assesses the quality system and product technical file whereas in the United States, the Food and Drug Administration, or “FDA”, is the regulatory body responsible for the examination of the design and performance of the device and for assessment of our quality system.

     In the case of point-of-care tests, there are often additional requirements that a manufacturer must meet such as an examination of certain aspects affecting test suitability for non-professional users. In Europe, certain codified standards describe the requirements of tests whilst in the United States, tests to be used by non-laboratory professionals must gain waiver status under the United States Clinical Laboratory Improvement Amendments of 1988. Amongst other clearances, we will also require clearance for export of medical devices from the Therapeutics Goods Administration, or “TGA”, in Australia.

The importance and duration of all our patents, trademarks and licenses

     We rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality agreements, to establish and protect our proprietary rights. Our continued success depends to a large extent on our owned and licensed patents and patent applications.

     Our point-of-care tests in development draw upon an extensive portfolio of patents and patent applications as well as know-how. We patent the technology, inventions and improvements that we consider important to the development of our business. Universal Biosensors Pty Ltd currently owns 18 patent applications. Pursuant to the License Agreement, we have an exclusive license from LifeScan of approximately 183 patents and 227 patent applications and know-how to use and exploit the licensed patents, patent applications and know-how in all fields of use excluding the fields of diagnosing, managing and monitoring diabetes and the measurement of glucose in humans, the rights to which are retained by LifeScan. The exclusive license is subject to LifeScan having retained the right to make, have made, use, and sell under and exploit in any way the patents, patent applications and know-how owned by LifeScan. As consideration for the grant of the license by LifeScan, we have granted to LifeScan a worldwide, royalty free, irrevocable, non-exclusive license to use and exploit in any way, any improvements to the licensed electrochemical sensor technologies made by us, in the fields of diagnosing, managing and monitoring diabetes and the measurement of glucose in humans.

     Pursuant to the Development and Research Agreement, we have a limited license to the patents, patent applications and know-how the subject of the License Agreement, in the field of diagnosing, managing and monitoring diabetes and the measurement of glucose in humans but only for the purpose of carrying out research and development activities for LifeScan.

     Universal Biosensors Pty Ltd’s owned patent applications and the patents and patent applications licensed to us by LifeScan are essential in the manufacturing and commercialization of each of the point-of-care diagnostic tests being developed by us.

The following sets out details of our owned and licensed patents and patent applications, based on information current as at December 2006.

12

Patent Families owned by Universal Biosensors Pty Ltd

     Patent Family 1 – Electrochemical Detection Method (derived from International Patent Application No. PCT/AU04/00048). This patent family relates to an electrochemical detection method for detecting agglutination.

Country	Status
Australia	Pending
Canada	Pending
China (Peoples Republic)	Pending
European Patent Convention Designating: all contracting states	Pending
India	Pending
Japan	Pending
Malaysia	Pending
Taiwan	Pending
United States of America	Pending

Patent Family 2 – Strip Ejection System (derived from United States of America provisional patent application no.60/545,161 and International Patent Application No. PCT/IB2005/000403). This patent family relates to a system that enables a disposable strip for a meter based sensor device to be transported within the device, moved to a use position and ejected for disposal after use without the operator directly contacting the disposable strip.

Country	Status
Australia	Pending
Canada	Pending
China	Pending
European Patent Convention Designating all contracting states	Pending
India	Pending
Japan	Pending
Malaysia	Pending
Mexico	Pending
Thailand	Pending
Taiwan	Pending
United States of America	Pending

Unpublished Patent Applications Owned by Universal Biosensors Pty Ltd

United States of America Provisional Patent Application No. 60/774,678 Entitled – Fluid Transfer Mechanism.

Patent Families owned by LifeScan and used under a license

Patent Family A – Electrochemical Cells (derived from International Patent Application No. PCT/AU95/00207). This patent family relates to an electrochemical cell which enables levels of analytes such as glucose to be measured whilst using a small volume of sample.

Country	Patent No.	Status	Expires
Australia	697214	Granted Jan 14, 1999	Apr 12, 2015
European Patent Convention	755511	Granted Oct15, 2003	Apr 12, 2015
Austria	755511	Granted Oct15, 2003	Apr 12, 2015
Belgium	755511	Granted Oct15, 2003	Apr 12, 2015
Denmark	755511	Granted Oct15, 2003	Apr 12, 2015
France	755511	Granted Oct15, 2003	Apr 12, 2015
Germany	695 31 938 T2	Granted Oct15, 2003	Apr 12, 2015
Greece	2003047531	Granted Oct15, 2003	Apr 12, 2015

13

Country	Patent No.	Status	Expires
Ireland	755511	Granted Oct15, 2003	Apr 12, 2015
Italy	755511	Granted Oct15, 2003	Apr 12, 2015
Luxembourg	755511	Granted Oct15, 2003	Apr 12, 2015
Monaco	755511	Granted Oct15, 2003	Apr 12, 2015
Netherlands	755511	Granted Oct15, 2003	Apr 12, 2015
Portugal	755511	Granted Oct15, 2003	Apr 12, 2015
Spain	755511	Granted Oct15, 2003	Apr 12, 2015
Sweden	755511	Granted Oct15, 2003	Apr 12, 2015
Switzerland	755511	Granted Oct15, 2003	Apr 12, 2015
United Kingdom	755511	Granted Oct15, 2003	Apr 12, 2015
European Patent Convention Divisional of 95 91 5068.1 Designating: Austria, Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Lichtenstein, Luxemburg, Monaco, Netherlands, Portugal, Sweden, Spain, Switzerland, United Kingdom	1310787	Pending
Hong Kong Derived from European Patent Application 03 07 5013.7		Pending
Japan	3574137	Pending
United States of America	5,863,400	Granted Jan 26, 1999	Apr 12, 2015

Patent Family B – Defining an Electrode Area (derived from International Patent Application No. PCT/AU96/00210). This patent family relates to a method for defining an electrode area in an electrochemical sensing device.

Country	Patent No.	Status	Expires
Australia	693678	Granted Dec 10, 1998	Apr 11, 2016
Canada	2216911	Granted Jun 6, 2006	Apr 11, 2016
China (Peoples Republic)	ZL 96193269.4	Granted Oct 13, 2004	Apr 11, 2016
China (Peoples Republic) Divisional of CN 96193269.4		Pending
China (Peoples Republic) Divisional of CN 96193269.4		Pending
European Patent Convention		Pending
Hong Kong Derived from CN 3125169.2		Pending
Japan		Pending
Singapore	45676	Granted Apr 27, 1999	Apr 11, 2016
United States of America	5,980,709	Granted Nov 9, 1999	Apr 11, 2016

Patent Family C – Electrochemical Cell (derived from International Patent Application No. PCT/AU96/00365). This patent family relates to a method and an electrochemical biosensor for determining the concentration of an analyte in a carrier.

Country	Patent No.	Status	Expires
Australia	712939	Granted Mar 2, 2000	Jun 19, 2016
Australia Divisional of 712939	735132	Granted Oct 11, 2001	Jun 19, 2016
Australia Divisional of 712939	741403	Granted Mar 14, 2002	Jun 19, 2016
Canada	2222525	Granted Aug 15, 2006	Jun 19, 2016
Canada		Pending
China (Peoples Republic)	ZL 96194874.4	Granted Jan 12, 2005	Jun 19, 2016
China (Peoples Republic) Divisional of 96194874.4		Pending
China (Peoples Republic) Divisional of 96194874.4		Pending
China (Peoples Republic) Divisional of 96194874.4	ZL02122766.7	Granted July 19, 2006	Jun 19, 2016
China (Peoples Republic) Divisional of 2122766.7		Pending
China (Peoples Republic) Divisional of 2122767.5		Pending
European Patent Convention	873514	Granted Apr 9, 2003	Jun 19, 2016
		in certain designated states
European Patent Convention Divisional of 96 91 7287.3		Pending

14

Country	Patent No.	Status	Expires
Hong Kong		Pending
Korea, Republic of		Pending
Korea, Republic of Divisional of 10-1997-709488	10-483093	Granted Apr 4, 2005	Jun 19, 2016
Korea, Republic of Divisional of 10-2003-7011440	10-0491283	Granted May 16, 2005	Jun 19, 2016
Japan		Pending
Mexico		Pending
Singapore	53339	Granted Aug 17, 1999	Jun 19, 2016
United States of America	6,284,125	Granted Sep 4, 2001	Jun 19, 2016
United States of America Continuation of 08/981,385	6,413,410	Granted Jul 2, 2002	Jun 19, 2016
United States of America Continuation of 09/618,515	6,960,289	Granted Nov 1, 2005	May 31, 2017
United States of America Continuation of 10/035,924		Pending
United States of America Continuation of 10/035,924		Pending
United States of America Continuation of 10/035,924		Pending

Patent Family D1 – Electrochemical Method (derived from International Patent Applications No. PCT/AU96/00723). This patent family provides an improved method and biosensor for determination of the concentration of an analyte in a carrier which provides improved accuracy, reliability and speed over prior techniques.

Country	Patent No.	Status	Expires
Australia	705165	Granted Aug 26,1999	Nov 15, 2016
Brazil		Pending
Brazil Divisional of PI9611513-0		Pending
Canada		Pending
China (Peoples Republic)	1204400	Granted Apr 9,2003	Nov 15, 2016
China (Peoples Republic) Divisional of 96199076.7		Pending
European Patent Convention	882226	Granted June 4, 2003	Nov 15, 2016
		in certain designated states
European Patent Convention Divisional of 96 93 7918.9		Pending
Hong Kong Derived from EP96 93 7918.9	HK1018096	Granted Dec 19,2003	Nov 15, 2016
Hong Kong Derived from EP02 07 6325.6		Pending
Israel	124495	Granted Dec 25, 2003	Nov 15, 2016
Israel — Divisional of 124495	132089	Granted Aug 13, 2004	Nov 15, 2016
Israel — Divisional of 124495		Pending
Israel — Divisional of 133994		Pending
Japan		Pending
Korea, Republic of	10-468550	Granted Jan 19, 2005	Nov 15, 2016
Mexico	218180	Granted Dec 16, 2003	Nov 15, 2016
Russian Federation	2174679	Granted Apr 20, 2003	Nov 15, 2016
Singapore	53703	Granted Sep 19, 2000	Nov 15, 2016
United States of America	5,942,102	Granted Aug 24,1999	Nov 15, 2016
United States of America Continuation of 08/852,804	6,174,420	Granted Jan 16, 2001	Nov 15, 2016
United States of America Continuation of 09/314,251	6,521,110	Granted Feb 18, 2003	Nov 15, 2016
United States of America Continuation of 09/709,968	6,863,801	Granted Mar 8, 2005	Nov 15, 2016
United States of America Continuation of 09/840,624		Pending
United States of America Continuation of 10/843,956		Pending

15

Patent Family D2 – Electrochemical Cell (derived from International Patent Applications No. PCT/AU96/00724). This patent family relates to an electrochemical cell for determining the concentration of an analyte in a carrier.

Country	Patent No.	Status	Expires
Australia	705313	Granted Aug 26, 1999	Nov 15, 2016
Australia Divisional of 705165 and 705313	738128	Granted Dec 20, 2001	Nov 15, 2016
Brazil		Pending
Canada	2236850	Granted Jun 1, 2004	Nov 15, 2016
China (Peoples Republic)	106399	Granted Apr 2, 2003	Nov 15, 2016
China (Peoples Republic)	ZL 99123109.0	Granted Aug 4, 2004	Nov 15, 2016
China (Peoples Republic)		Pending
China (Peoples Republic) Divisional of 03103571.X		Pending
European Patent Convention		Pending
European Patent Convention Divisional of 96 93 7919.7	967480	Granted Jul 2, 2002 in certain	Nov 15, 2016
		designated states
European Patent Convention Divisional of 96 93 7919.7		Pending
Korea, Republic of		Pending
Korea, Republic of Divisional of 10-1998-7.3701		Pending
Korea, Republic of Divisional of 10-2001-7014495		Pending
Korea, Republic of Divisional of 10-2001-7014495		Pending
Hong Kong Derived from EP96 93 7919.7		Pending
Hong Kong Derived from CN 99123109	1028914	Granted Feb 8, 2005	Nov 15, 2016
Hong Kong Derived from EP03 07 7244.6		Pending
Israel	124494	Granted Dec 3, 2000	Nov 15, 2016
Japan		Pending
Mexico	218479	Granted Jan 8, 2004	Nov 15, 2016
Mexico Divisional of 983881	226090	Granted Feb 3, 2005	Nov 15, 2016
Russian Federation	2202781	Granted Apr 20, 2003	Nov 15, 2016
Russian Federation Divisional of 98111492	2243545	Granted Dec 27, 2004	Nov 15, 2016
Russian Federation Divisional of 98111492		Pending
Singapore	53702	Granted May 22, 2002	Nov 15, 2016
United States of America	6,179,979	Granted Jan 30, 2001	Nov 15, 2016

Patent Family E – Analytic Cell (derived from International Patent Application No. PCT/AU97/00599). This patent family relates to a device for the determination of ionic activities and/or concentrations in a solution containing ions and in particular an inexpensive means to facilitate the convenient measurement of pH.

Country	Patent No.	Status	Expires
Australia	719581	Granted Aug 24, 2000	Sep 11, 2017
Canada	2264288	Granted Nov 29, 2005	Sep 11, 2017
Canada Divisional of 2264288		Pending
European Patent Convention	929804	Pending
Japan	3751026	Granted Dec 16, 2005	Sep 11, 2017
United States of America	6,193,865	ranted Feb 27, 2001	Sep 11, 2017

Patent Family F – Sensor Connector Means (derived from International Patent Application No. PCT/AU98/00184). This patent family relates to a means for providing an electrical connection between a measuring device and a disposable electrochemical sensor of the type used for quantitative analysis, for example, of glucose levels in blood, for pH measurement.

16

Country	Patent No.	Status	Expires
Australia	745740	Granted Jul 11, 2002	Mar 20, 2018
Australia
Divisional of 66044/98	784485	Granted Jul 27, 2006	Mar 20, 2018
Brazil		Pending
Canada	2284634	Granted Aug 8, 2006	Mar 20, 2018
Canada Divisional of 2284634		Pending
China (Peoples Republic)	118728	Granted Aug 6, 2003	Mar 20, 2018
China (Peoples Republic) Divisional of 98804325.4	ZL03130618.7	Granted July 15, 2005	Mar 20, 2018
China (Peoples Republic) Divisional of 3130618.7		Pending
European Patent Convention		Pending
Hong Kong Derived from EP98 90 7775.5		Pending
Hong Kong Derived from CN3130618.7	HK 1064154	Granted Apr 7, 2006	Mar 20, 2018
Israel	131980	Granted Sep 25, 2003	Mar 20, 2018
Israel		Pending
Japan	3766109	Granted Feb 3, 2006	Mar 20, 2018
Korea, Republic of	10-0526086	Granted Oct 27, 2005	Mar 20, 2018
Korea, Republic of Divisional of 10-1999-7008615	576660	Granted Apr 27, 2006	Mar 20, 2018
Mexico	224386	Granted Nov 22, 2004	Mar 20, 2018
Mexico Divisional of PA/a/1999/008659		Pending
Russian Federation	2213345	Granted Aug 27, 2003	Mar 20, 2018
Russian Federation Divisional of 99122339		Pending
Singapore	68164	Granted Jan 26, 2002	Mar 20, 2018
United States of America	6,379,513	Granted Apr 30, 2002	Mar 20, 2018
United States of America Continuation of 09/399,512	7,045,046	Granted May 16, 2006	Mar 4, 2019
United States of America Continuation of 10/012,680		Pending
United States of America Continuation of 10/950,111		Pending

Patent Family G – Method of Filling an Amperometric Cell and Improved Electrochemical Cell (derived from International Patent Application No. PCT/AU98/00200). This patent family relates to disposable electrochemical sensors of the type used for quantitative analysis, for example, of glucose levels in blood, or the like.

Country	Patent No.	Status	Expires
Australia	723768	Granted Dec 21, 2000	Mar 25, 2018
Canada		Pending
European Patent Convention Designating:	1012590	Grant of Patent is intended
Japan	3703854	Granted Jul 29, 2005	Mar 25, 2018
United States of America	6,454,921	Granted Sep 24, 2002	Mar 25, 2018
United States of America Continuation of 09/404,119	6,592,744	Granted Jul 15, 2003	Jul 15, 2020
United States of America Continuation of 09/568,076	7,041,210	Granted May 9, 2006	May 16, 2019
United States of America Continuation of 10/387,212		Pending

Patent Family H – Method and Apparatus for Automatic Analysis (derived from International Patent Application No. PCT/AU98/00642). This patent family relates to a method for analyzing the concentration of an analyte in a sample and to an automatic analyzing apparatus.

Country	Patent No.	Status	Expires
Australia	758963	Granted Aug 14, 2003	Aug 13, 2018

17

Country	Patent No.	Status	Expires
Australia Divisional of 87203/98	781184	Granted Aug 25, 2005	Aug 13, 2018
Australia Divisional of 44461/02		Pending
Canada		Pending
European Patent Convention Designating: France, Germany, Ireland, Italy, Netherlands, Spain, United Kingdom		Pending
Japan	3691760	Granted Jun 24, 2005	Aug 13, 2018
United States of America	6,325,917	Granted Dec 4, 2001	Aug 13, 2018
United States of America Continuation of 09/502,907	6,852,212	Granted Feb 8, 2005	Aug 13, 2018
United States of America Continuation of 09/970,461		Pending

Patent Family I – Heated Electrochemical Cell (derived from International Patent Application No. PCT/AU99/00152). This patent family relates to a method and apparatus for determining the concentration of an analyte in a sample by heating the sample and measuring the concentration of the analyte or the concentration of a species representative thereof in the sample at a predetermined point on a reaction profile by means that are substantially independent of temperature.

Country	Patent No.	Status	Expires
Australia	743852	Granted May 23, 2002	Mar 11, 2019
Australia Divisional of 29124/99	779350	Granted May 26, 2002	Mar 11, 2019
Canada		Pending
European Patent Convention		Pending
Hong Kong Derived from EP99 91 0001.9		Pending
Japan		Published
Taiwan	I240071	Granted Sep 21, 2005	Mar 11, 2019
United States of America	6,475,360	Granted Nov 5, 2002	Mar 11, 2019
United States of America Continuation of 09/659,470	6,878,251	Granted Apr 12, 2005	Jun 26, 2023

Patent Family J – Sensor with Improved Shelf Life (derived from International Patent Application No. PCT/AU99/00166). This patent family relates to extending the shelf life of apparatus, such electrochemical cells, sensor elements and the like, comprising one or more metal electrodes by stabilizing the metal electrodes using a coating which includes a sulphur containing moiety in its molecular structure.

Country	Patent No.	Status	Expires
Australia	745414	Granted 4-Jul-2002	Mar 16, 2019
Canada		Pending
European Patent Convention		Pending
Hong Kong Derived from EP99 91 0013.4		Pending
Japan		Pending
Taiwan	201390	Granted 3-Sep-2004	Mar 19, 2019
United States of America	6,652,734	Granted 25-Nov-2003	Mar 16, 2019
United States of America Continuation of 09/664,688		Pending

Patent Family K – Electrochemical Methods and Devices for Use in the Determination of Haematocrit corrected Analyte Concentrations (derived from International Patent Application No. PCT/US01/02465). This patent family relates to analyte determination, particularly the electrochemical determination of blood analytes.

Country	Patent No.	Status	Expires
Australia	783311	Granted Feb 2, 2006	Jan 25, 2021
Australia Divisional of 783311		Pending
Canada		Pending
China (Peoples Republic)	ZL01803437.3	Granted Mar 16, 2005	Jan 25, 2021

18

Country	Patent No.	Status	Expires
Czech Republic		Pending
European Patent Convention	1252514	Granted Dec 21, 2005	Jan 25, 2021
Austria	1252514	Granted Dec 21, 2005	Jan 25, 2021
Belgium	1252514	Granted Dec 21, 2005	Jan 25, 2021
Czech Republic	1252514	Granted Dec 21, 2005	Jan 25, 2021
Denmark	1252514	Granted Dec 21, 2005	Jan 25, 2021
Estonia	1252514	Granted Dec 21, 2005	Jan 25, 2021
Finland	1252514	Granted Dec 21, 2005	Jan 25, 2021
France	1252514	Granted Dec 21, 2005	Jan 25, 2021
Germany	60114056.8	Granted Dec 21, 2005	Jan 25, 2021
Greece	1252514	Granted Dec 21, 2005	Jan 25, 2021
Ireland	1252514	Granted Dec 21, 2005	Jan 25, 2021
Italy	1252514	Granted Dec 21, 2005	Jan 25, 2021
Luxembourg	1252514	Granted Dec 21, 2005	Jan 25, 2021
Netherlands	1252514	Granted Dec 21, 2005	Jan 25, 2021
Portugal	1252514	Granted Dec 21, 2005	Jan 25, 2021
Spain	1252514	Granted Dec 21, 2005	Jan 25, 2021
Sweden	1252514	Granted Dec 21, 2005	Jan 25, 2021
Switzerland	1252514	Granted Dec 21, 2005	Jan 25, 2021
Turkey	1252514	Granted Dec 21, 2005	Jan 25, 2021
United Kingdom	1252514	Granted Dec 21, 2005	Jan 25, 2021
European Patent Convention Divisional of 01 90 5055.8		Pending
Hong Kong Derived from EP01 90 5055.8		Pending
Hong Kong Derived from EP05 07 7347.2		Pending
India		Pending
Israel	149662	Granted Oct 26, 2005	Jan 25, 2021
Israel
Divisional of 149662		Pending
Japan		Pending
Korea, Republic of		Pending
Malaysia		Pending
Mexico	225996	Granted Feb 2, 2005	Jun 10, 2022
Philippines		Pending
Poland		Pending
Russian Federation	2262890	Granted Oct 27, 2005	Jan 25, 2021
Russian Federation Divisional of 2002116217		Pending
Singapore		Pending
Taiwan	173024	Granted Feb 11, 2003	Feb 2, 2020
Thailand		Pending
United States of America	6,475,372	Granted Nov 5, 2002	Feb 2, 2020
United States of America Continuation of 09/497,304	6,890,421	Granted May 10, 2005	Jul 7, 2020
United States of America Continuation of 10/144,095		Pending

Patent Family L – Method and Device for Sampling and Analyzing Interstitial Fluid and Whole Blood Samples (derived from International Patent Application No. PCT/US01/09673). This patent family relates to a method and device for combining the sampling and analyzing of sub-dermal fluid samples, such as interstitial fluid or whole blood, in a device suitable for hospital bedside and home use.

Country	Patent No.	Status	Expires
Australia	2001249467	Granted Jul 7, 2005	Mar 26, 2021
Australia Divisional of AU 2001249467		Pending

19

Country	Patent No.	Status	Expires
Canada		Pending
China (Peoples Republic)	ZL01810247.6	Granted Jul 5, 2006	Mar 26, 2021
Czech Republic		Pending
European Patent Convention	1276412	Granted Dec 28, 2005
Austria	1276412	Granted Dec 28, 2005	Mar 26, 2021
Belgium	1276412	Granted Dec 28, 2005	Mar 26, 2021
Denmark	1276412	Granted Dec 28, 2005	Mar 26, 2021
Finland	1276412	Granted Dec 28, 2005	Mar 26, 2021
France	1276412	Granted Dec 28, 2005	Mar 26, 2021
Germany	60114281.1	Granted Dec 28, 2005	Mar 26, 2021
Greece	1276412	Granted Dec 28, 2005	Mar 26, 2021
Ireland	1276412	Granted Dec 28, 2005	Mar 26, 2021
Italy	1276412	Granted Dec 28, 2005	Mar 26, 2021
Luxembourg	1276412	Granted Dec 28, 2005	Mar 26, 2021
Netherlands	1276412	Granted Dec 28, 2005	Mar 26, 2021
Portugal	1276412	Granted Dec 28, 2005	Mar 26, 2021
Spain	1276412	Granted Dec 28, 2005	Mar 26, 2021
Sweden	1276412	Granted Dec 28, 2005	Mar 26, 2021
Switzerland	1276412	Granted Dec 28, 2005	Mar 26, 2021
Turkey	1276412	Granted Dec 28, 2005	Mar 26, 2021
United Kingdom	1276412	Granted Dec 28, 2005	Mar 26, 2021
European Patent Convention Divisional of 1276412		Pending
Hong Kong Derived from EP01 92 2697.6	1054310	Granted Aug 4, 2006	Mar 25, 2021
Hong Kong Derived from EP05 07 7129.4		Pending
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Mexico		Pending
Poland		Pending
Russian Federation	225639	Granted Jul 20, 2005	Mar 26, 2021
Russian Federation Divisional of RU 2002128734		Pending
Singapore	92054	Granted Oct 29, 2004	Mar 26, 2021
Taiwan	206376	Granted Jun 21, 2004	Apr 12, 2021
United States of America	6,612,111	Granted Sep 2, 2003	Mar 27, 2020
United States of America Continuation of 09/536,235	6,939,312	Granted Sep 6, 2005	May 22, 2020
United States of America Continuation of 10/166,487		Pending
United States of America Continuation of 10/166,487		Pending
United States of America Continuation of 10/369,120		Pending

Patent Family M – Method of Preventing Short Sampling of a Capillary or Wicking Fill Device (derived from International Patent Application No. PCT/US01/09675). This patent family relates to a device, and a method for using the device, for ensuring that a capillary or wicking fill device, such as a capillary or wicking action filled electrochemical sensors suitable for use in analyzing blood or interstitial fluids, is fully filled.

Country	Patent No.	Status	Expires
Australia	2001249468	Granted Jan 13, 2006	Mar 26, 2021
Canada		Pending
China (Peoples Republic)	1431933	Granted Aug 10, 2005	Mar 26, 2021
Czech Republic		Pending
European Patent Convention		Published

20

Country	Patent No.	Status	Expires
Hong Kong Derived from EP01 92 2698.4		Pending
India		Pending
India Divisional of IN/PCT/2002/0118		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Mexico	231515	Granted Oct 21, 2005	Mar 26, 2021
Mexico Divisional of PA/A/200200956		Pending
Poland		Pending
Russian Federation		Published
Russian Federation Divisional of 2002128735		Pending
Singapore	92164	Granted Sep 30, 2005	Mar 26, 2021
Singapore Divisional of 200205970-7		Pending
Taiwan	160272	Granted Nov 20, 2002	Apr 12, 2021
Taiwan Divisional of 90108733		Pending
United States of America	6,571,651	Granted Jun 3, 2003	Mar 27, 2020
United States of America Continuation of 09/536,234	6,823,750	Granted Nov 30, 2004	Apr 4, 2023
United States of America Divisional of 09/536,234	7,043,821	Granted May 16, 2006	May 13, 2024
United States of America Divisional of 09/536,234		Allowed Jun 23, 2006

Patent Family N1 – Electrochemical Method for Measuring Chemical Reaction Rates (derived from International Patent Applications No. PCT/US01/21314). This patent family relates to the measurement of the progress of a chemical reaction that generates an electroactive reaction product that is subsequently detected at an electrode amperometrically or coulometrically.

Country	Patent No.	Status	Expires
Australia	2001273197	Granted Sep 7, 2006	Jul 6, 2021
Australia Divisional of 2001273197		Pending
Canada		Pending
China (Peoples Republic)		Pending
Czech Republic		Pending
European Patent Convention		Published
Hong Kong Derived from EP01 95 2446.1		Pending
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Mexico	238490	Granted Jul 7, 2006	Jul 6, 2021
Norway		Pending
Poland		Pending
Russian Federation	2267120	Granted Dec 27, 2005	Jul 6, 2021
Russian Federation Divisional of 2003104355		Pending
Singapore	94951	Granted Jul 29, 2005	Jul 6, 2021
Singapore Divisional of 200300631 9		Pending
United States of America	6,44,115	Granted Sep 3, 2002	Jul 14, 2020
United States of America Continuation of 09/616,556	7,022,217	Granted Apr 4, 2006	Jan 1, 2022

Patent Family N2 – Antioxidant Sensor (derived from International Patent Applications No. PCT/US01/21961). This patent family relates to a device and method for measuring oxidant and antioxidant analytes in a fluid sample.

21

Country	Patent No.	Status	Expires
Argentina		Pending
Australia	2001276888	Granted June 29, 2006	Jul 12, 2021
Canada		Pending
Czech Republic		Pending
European Patent Convention		Pending
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Malaysia		Pending
Mexico		Pending
Norway		Pending
Poland		Pending
Russian Federation	2263904	Granted Nov 10, 2005	Jul 12, 2021
Singapore	94958	Granted May 31, 2005	Jul 12, 2021
Singapore Divisional of 200300639 2		Pending
Taiwan	I238890	Granted Sep 1, 2005	Jul 12, 2021
Thailand		Pending
United States of America Continuation in part of 09/314,251	6,638,415	Granted Oct 28, 2003	Nov 15, 2016
United States of America Continuation of 09/615,691		Pending

Patent Family N3 – Haemoglobin Sensor (derived from International Patent Applications No. PCT/US01/21964). This patent family relates to relates to a device and method for measuring haemoglobin in a fluid sample, such as whole blood.

Country	Patent No.	Status	Expires
Canada		Pending
China (Peoples Republic)		Pending
European Patent Convention		Pending
Hong Kong Derived from EP01 95 3454.4		Pending
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Russian Federation	2271536	Granted Mar 10, 2006	Jul 12, 2021
Russian Federation Divisional of 2003104357		Pending
Singapore	94959	Granted Jul 29, 2005	Jul 12, 2021
Singapore Divisional of 200300640 0		Pending
United States of America Continuation in part of 09/314,251	6,632,349	Granted Oct 14, 2003	Nov 15, 2016
United States of America Continuation of 09/616,512		Pending

Patent Family N4 – Immunosensor (derived from International Patent Applications No. PCT/US01/22202). This patent family relates to a device and method for performing immunoassays. The device is a quantitative, inexpensive, disposable immunosensor that requires no wash steps and thus generates no liquid waste.

Country	Patent No.	Status	Expires
Canada		Pending
China (Peoples Republic)	ZL01812804.1	Granted Apr 19, 2006	Jul 13, 2021
European Patent Convention	1315967	Pending
Hong Kong Derived from EP 01 96 1641.6		Pending

22

Country	Patent No.	Status	Expires
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Russian Federation		Pending
Singapore Divisional of 200300642 6		Pending
United States of America Continuation of 09/616,433		Pending
United States of America Continuation in part of 10/830,841		Pending

Patent Family O – Electrochemical Cell (derived from International Patent Application No. PCT/US02/31289). This patent family relates to electrochemical cells including two working and counter electrodes for determining the concentration of a reduced or oxidized form of a redox species with greater accuracy than can be obtained using an electrochemical cell having a single working and counter electrode.

Country	Patent No.	Status	Expires
Canada		Pending
China (Peoples Republic)	ZL02803637.9	Granted Dec 21, 2005	Oct 1, 2022
China (Peoples Republic) Divisional of 2803637.9		Pending
China (Peoples Republic) Divisional of 2803637.9		Pending
European Patent Convention	1442289	Pending
Hong Kong Derived from EP02 77 8416.4		Pending
Hong Kong Derived from CN 2803637.9	1066062	Granted Aug 25, 2006	Oct 1, 2022
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Russian Federation		Pending
Singapore	97412	Granted Jun 30, 2006	Oct 1, 2022
Taiwan	I227066	Granted Jan 21, 2005	Oct 7, 2022
United States of America		Pending

Patent Family P – Electrochemical Cell Connector (derived from United States of America Provisional Patent Application No. 60/345,743). This patent family relates to a connector to provide electrical connection between an electrochemical cell of a strip type sensor and meter circuitry.

Country	Patent No.	Status	Expires
Canada		Pending
China (Peoples Republic)		Pending
European Patent Convention		Pending
Hong Kong Derived from EP03 25 0047.2		Pending
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Russian Federation		Pending
Singapore		Published
Singapore Divisional of 200207895 4		Pending
Taiwan		Pending
United States of America	6,946,067	Granted Sep 20, 2005	Dec 9, 2022
United States of America Continuation of 10/317,036		Published

23

Patent Family Q – Direct Immunosensor Assay (derived from United States of America Patent Application No. 10/105,050). This patent family relates to relates to a disposable immunosensor and method for performing immunoassays.

Country	Patent No.	Status	Expires
Australia		Pending
Canada		Pending
China (Peoples Republic)		Pending
European Patent Convention		Published
Hong Kong Derived from EP 03 25 1762.5		Pending
India		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Mexico		Pending
Norway		Pending
Poland		Pending
Russian Federation		Pending
Singapore		Pending
Taiwan		Pending
United States of America		Pending
United States of America Continuation in part of 10/105,050		Pending

Patent Family R – Mediator Stabilized Reagent Compositions and Methods for Their Use in Electrochemical Analyte Detection Assays (derived from United States of America Patent Application No. 10/242951). This patent family relates to electrochemical reagent formulations in which the mediator is storage stabilized. The electrochemical reagent formulations enable an extended storage life for test strips for analyte determination, such as determination of blood glucose concentration.

Country	Patent No.	Status	Expires
Canada		Pending
China (Peoples Republic)		Pending
European Patent Convention		Pending
Hong Kong		Pending
Israel		Pending
Japan		Pending
Korea, Republic of		Pending
Singapore		Pending
Taiwan		Pending
United States of America		Pending

Patent Family S – Method and Apparatus for Electrochemical Analysis (derived from United States of America Patent Application No. 11/138,080).

Country	Patent No.	Status	Expires
United States of America		Pending
United States of America Continuation in part of 11/138,080		Pending

24

Unpublished Patent Applications Owned by LifeScan

Patent Application T — Unpublished United States of America Patent Application No. 11/204,797 entitled — Method and Apparatus for Rapid Electrochemical Analysis. This patent application relates to an improved method and apparatus for electrochemical analysis. The Unpublished United States Patent Application No. was filed on September 30, 2005.

Patent Application U- Unpublished United States of America Patent Application No. 11/278,341 entitled – Methods and Apparatus for Analyzing a Sample in the Presence of Interferents. This patent application relates to methods and apparatus for determining analyte concentrations in a rapid and accurate manner. The unpublished United States Patent Application was filed on March 31, 2006.

Patent Application V — Unpublished United States of America Patent Application No. 11/278,333 entitled – Systems and Methods for Discriminating Control Solution from a Physiological Sample. This patent application relates to systems and methods for discriminating between a control solution and a blood sample. The unpublished United States Patent Application was filed on March 31, 2006.

     We will continue to file and prosecute patent applications when and where appropriate to attempt to protect our rights in our proprietary technologies. Pursuant to the License Agreement, LifeScan has responsibility for prosecution of the licensed patent applications. In the event that LifeScan elects not to proceed with the prosecution of a patent application, we have the right to assume and continue at our own expense the prosecution of any patent or patent applications. LifeScan is responsible for payment of maintenance fees for all licensed patents in all agreed jurisdictions. In the event LifeScan discontinues such maintenance payments, we may maintain the licensed patent solely at our own expense.

     Our ability to build and maintain our proprietary position for our technology and products will depend on our success in obtaining effective claims and enforcing those claims once granted. The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. Some countries in which we may seek approval to sell point-of-care tests that we have developed, or license our intellectual property, may fail to protect our owned and licensed intellectual property rights to the same extent as the protection that may be afforded in the United States or Australia. Some legal principles remain unresolved and there has not been a consistent policy regarding the breadth or interpretation of claims allowed in patents in the United States, the United Kingdom, the European Union, Australia or elsewhere. In addition, the specific content of patents and patent applications that are necessary to support and interpret patent claims is highly uncertain due to the complex nature of the relevant legal, scientific and factual issues. Changes in either patent laws or in interpretations of patent laws in the United States, the United Kingdom, the European Union or elsewhere may diminish the value of our intellectual property or narrow the scope of our patent protection.

Seasonality

     Our tests in development have not been approved for marketing or sale by any regulatory authorities and as such have not been sold in any jurisdiction. However, if approved for sale, we do not expect sales of the diagnostic tests in development to be materially impacted by seasonality.

The practices of the registrant and the industry (respective industries) relating to working capital items.

     We currently undertake research and development activities and only hold limited inventory. We are in the process of scaling up our commercial scale manufacturing capability to enable us to undertake the manufacture of test strips. As part of this process, we will establish practices with respect to working capital items. If we are successful in obtaining regulatory clearance and negotiating a manufacturing and supply agreement with respect to the blood glucose test with any LifeScan, we will be required to satisfy the contractual obligations with respect to inventory and the supply of tests as may be agreed in any such agreement, if any.

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The dependence of the segment upon a single customer, or a few customers, the loss of any one or more of which would have a material adverse effect on the segment.

     We currently receive a significant portion of our income from LifeScan pursuant to the Development and Research Agreement. Between April 2002 and December 2006, we have received contract research funding from LifeScan of approximately U.S.$7,652,826. We recognized income under the Development and Research Agreement of U.S.$1,816,813, U.S.$2,086,013 and U.S.$2,000,000 in the fiscal years ending December 31, 2004, 2005 and 2006 respectively. Income from the Development and Research Agreement represented 95%, 92% and 84% of our income for the fiscal years ending December 31, 2004, 2005 and 2006, respectively. We expect that we will receive in the order of U.S.$1,000,000 under the Development and Research Agreement for the fiscal year ending December 31, 2007. The payment is anticipated to be less in the fiscal year ending December 31, 2007 than in the fiscal years ended December 31, 2006, 2005 and 2004 as the blood glucose test has reached the product validation stage and research and development activities to be funded by LifeScan are expected to be reduced over the fiscal year ending December 31, 2007. The Development and Research Agreement currently automatically renews for successive one year periods each December on the same terms and conditions unless either LifeScan or us gives written notice of termination not less than nine months prior to the end of the relevant one year period (in which case the agreement terminates at the end of the relevant one year period), or the agreement is otherwise terminated in accordance with its terms. If we are successful in obtaining regulatory clearance for a blood glucose test and negotiating a manufacture and supply agreement with LifeScan, we will become increasingly dependent on LifeScan for revenue from the manufacturing and supply of test strips for the blood glucose tests.

A description of any material portion of the business that may be subject to renegotiation of profits or termination of contracts or subcontracts at the election of the Government.

     Universal Biosensors Pty Ltd currently receives grant funding under two grant agreements with the Commonwealth of Australia and the State of Victoria, Australia. We receive the Commonwealth of Australia grants as compensation for expenses incurred in respect of certain research activities into dry chemistry immunosensors. Such grants reduce the related research and development expenses as and when the relevant research expenses are incurred. We have received a reduction in our costs of U.S.$904,591 under the Commonwealth of Australian grant and U.S.$0 under a more recent grant from the State of Victoria, Australia. The Commonwealth of Australia and the State of Victoria may terminate their respective grant agreement on different bases, including by giving us written notice of termination if we are in breach of the relevant agreement and if the breach is not capable of being remedied, or if capable of being remedied it is not remedied after receipt of written notice, if we fail to submit reports as required under the relevant grant agreement, if our research and development activities or the quality of those activities do not satisfy the grant eligibility criteria, if there is a change of control of us or if we become insolvent. In certain limited circumstances where we fail to use our best endeavors to commercialize the development program within a reasonable time of completion of the program or upon termination of a grant due to our breach of agreement or our insolvency, we may be required to repay some or all of the grant. If required to repay the grant amounts, we may be required to reallocate funds needed to continue the commercialization of our products and such repayment may have a material adverse effect on our cash position and us. To date, we have not been required to repay any amounts paid to us under these grants. We consider that the likelihood of being required to repay grant funding is remote because we continue to act in good faith with respect to the grants.

Competitive conditions of our business

     Whilst our diagnostic tests are designed to be carried out at the point-of-care, most in vitro diagnostic tests are still carried out in hospitals and pathology laboratories, particularly in circumstances where a suitable technology does not exist for the tests to be undertaken at the point-of-care or where performing the tests or interpretation of the results is complicated and requires specialized healthcare personnel. For example, immunoassay testing still predominantly requires testing in a central pathology laboratory and interpretation of results by a healthcare professional. Our primary competitors with respect to our C-reactive protein test and our prothrombin time test are, and will likely remain, hospitals and pathology laboratories.

26

     We will face competition from approved and marketed products as well as products in development. We expect our C-reactive protein test will compete primarily with pathology laboratories as testing for C-reactive protein in pathology laboratories is a well established practice and the results of any testing C-reactive protein testing must be interpreted by healthcare professionals. In pathology laboratories, automated testing for C-reactive protein is the most common modality, and all the major competitors in the sector provide reagents that run on automated analyzers. These companies include Dade Behring Holdings, Inc., Roche Holding Ltd, Olympus Medical Systems Corporation, Abbott Laboratories, Beckman Coulter, Inc. and Siemens AG. All these companies have well established brand recognition, sales and marketing forces, and have significant resources available to support their product. To compete, we will need to show that our C-reactive protein test is effective and is a time and cost saving alternative. Even if we can show competitive product advantages, customers may be resistant to changing their supplier. We also expect our C-reactive protein test to compete with existing point-of-care technologies from competitors such as Cholestech Corporation, Orion Corporation and Axis-Shield plc.

     We expect our prothrombin time test will compete primarily with pathology laboratories or small analyzers used in specialist clinics. Two large, well established companies, Roche Holding Ltd and Thoratec Corporation (through its wholly owned subsidiary International Technidyne Corporation), have greater than 90% of world wide sales of prothrombin time patient self-testing. Both companies have significant resources they can bring to bear. Other smaller technology companies such as Hemosense, Inc. are dedicated specifically to addressing this market and are likely to provide competition. Inverness Medical Innovations, Inc. has announced that it intends to enter the prothrombin time point-of-care market. Furthermore, a number of large drug companies are actively developing a new class of oral anticoagulant (direct thrombin inhibitors), which do not need monitoring. Although it is unknown if they will be approved or favorably reimbursed, or perform as well as warfarin, they have the potential to significantly limit or render obsolete the current prothrombin time market.

     To the extent part of our strategy includes manufacturing point-of-care tests for third parties, we will likely face competition from other manufacturers including specialized outsourced manufacturers and manufacturers that are affiliates of the third parties in securing and maintaining the right to manufacture point-of-care tests.

Material effects that compliance with Federal, State and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment

Not Applicable.

Employees

     At April 1, 2007 we had 30 employees in our Melbourne facility, spanning engineering, quality, research and development and administration. Our team has a track record in technical innovation and experience in all aspects of the development and commercialization of point-of-care diagnostic tests.

Financial information about geographic areas

     We operate in one segment being the research, development, manufacture and commercialization of in vitro diagnostic test devices for point-of-care use. We operate predominantly in one geographical area, being Australia.

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ITEM 1A. RISK FACTORS.

Investing in our shares or CDIs involves a high degree of risk. Before you invest in our shares or CDIs, you should understand the high degree of risk involved. You should carefully consider the following risks and other information in this Registration Statement, including our financial statements and related notes appearing elsewhere in this Registration Statement, before you decide to invest in our shares or CDIs. If any of the events described below actually occurs, our business, financial condition and operating results could be harmed. In such an event, the market price of our CDIs would likely decline and you could lose part or all of your investment.

There is a significant degree of technical risk associated with the development of our C-reactive protein test and prothrombin time tests.

     The development of our C-reactive protein test and our prothrombin time test and any new diagnostic test devices which we develop will take a number of years to complete, will be costly to develop and the outcomes of our development activities will be uncertain. We have undertaken in excess of two years of development work with respect to both our C-reactive protein test and our prothrombin time test and have developed a working prototype of both tests. However, we still need to undertake significant additional product development work which is expected to take a further two years and then undertake product validation. Both tests still have a significant degree of technical risk and development work and product validation may not be successful or the outcomes of the development activities may not warrant the commercialization of the relevant product. As a result, significant monies invested and management time may be rendered unproductive and worthless.

There is no guarantee that we will be able to successfully complete commercial negotiations for the manufacture and supply of any products for third parties on acceptable terms or at all.

     We are seeking to develop a commercial scale manufacturing capability that will enable us to manufacture test strips for point-of-care tests. We consider that establishing this manufacturing capability is an important prerequisite in being able to enter into meaningful negotiations regarding the manufacture and supply of test strips or point-of-care tests for third parties, including LifeScan. Specifically in relation to the blood glucose test, as a result of the existing relationship with LifeScan we receive and make proposals in relation to new business opportunities with LifeScan from time to time. However, there is no guarantee that we will be able to successfully conclude a manufacturing and supply arrangement with LifeScan in relation to a blood glucose product, on acceptable terms or at all.

     LifeScan have the commercial rights to the blood glucose test being developed by us for LifeScan. Failure to secure a manufacturing and supply agreement with LifeScan will mean that we would not derive any revenues from any commercialization of the blood glucose test and, as a result, significant monies invested and management time may be rendered unproductive and worthless. In this event, we will focus on the development of our own products. Any such failure may also be perceived negatively by investors and may have an adverse affect on the value of our shares and the trading price of our securities.

     If we are able to secure rights to manufacture and supply point-of-care tests on behalf of any third parties, we will be subject to a range of new undetermined risks associated with such manufacturing and supply arrangements including risks associated with the commercial manufacture and supply, regulatory risks as well as a range of other undetermined contractual risks.

Diagnostic tests are subject to extensive regulation and we may not be successful in obtaining clearances for some or all of the point-of-care tests we are developing.

     The development, manufacturing, sales and marketing of diagnostic tests are subject to extensive regulation in all major markets. The process of obtaining regulatory clearance is costly and time consuming and we may not be successful in obtaining clearances for some or all of the point-of-care tests we are developing. Products cannot be sold without regulatory clearance. We are proposing to seek regulatory clearance for the blood glucose test being developed for LifeScan in addition to our own point-of-care tests. If we are not able to obtain necessary clearances to sell or if the clearances are delayed, revoked or subject to unacceptable conditions, we may not be in a position to commercialize our own products or to satisfy any manufacturing and supply commitments we may have with third parties, which would have a material adverse effect on us.

28

     Regulatory oversight continues once products have been brought to market. Failure to comply with regulatory requirements may result in administrative or judicially imposed sanctions. There may be a need in the future to require the recall of released products which have been developed by us in the event of material defects in design or manufacture or quality-related issues, or failure by us to comply with regulatory requirements. Any such recalls may have a material adverse effect on us. Furthermore, regulatory requirements are subject to change and some changes may have adverse effects on us.

Termination of our License Agreement would restrict or eliminate our ability to develop our existing or future point-of-care tests.

     Pursuant to a License Agreement, we currently hold a license from LifeScan to a range of patents, patent applications and know-how in all fields excluding the fields of diagnosing, managing and monitoring diabetes and the measurement of glucose in humans. The License Agreement imposes material obligations on us, including a best endeavors obligation to exploit the licensed intellectual property. If we were to breach the License Agreement and LifeScan was entitled to, and did, validly terminate the License Agreement, this would seriously restrict or eliminate our ability to develop and commercialize our C-reactive protein test or our prothrombin time test or any future tests we intend to develop because we would cease to hold the necessary key licenses to commercialize these tests. The termination of the License Agreement would have a material adverse effect on us.

We do not currently have any revenue from the sale or manufacturing of point-of-care tests.

     We are at an early stage of our development as a specialist medical devices company. We were incorporated in 2001 and have a limited operating history on which to evaluate our business and prospects. To date, we do not have, and may never have, any products that generate revenues. To date, we have funded our operations through the issue of shares, from payments received under the Development and Research Agreement and from government grants received by Universal Biosensors Pty Ltd.

     With the exception of the first year of our operations when we made a small profit of U.S.$110,670, we have incurred losses in each year since our inception. We incurred losses of approximately U.S.$56,422, U.S.$36,966 and U.S.$2,219,039 in the fiscal years ended December 31, 2004, 2005 and 2006, respectively. Our accumulated losses from inception to December 31, 2006 are U.S.$2,387,877. These losses, among other things, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

     We have not yet completed the development of any of our point-of-care tests and do not have any commercial agreements to manufacture and supply tests for third parties. Our ability to generate revenues in the future will be subject to a number of factors, including without limitation:

• the successful scale up of our commercial manufacturing capabilities;

• our capacity to manufacture the necessary quality and quantities of our point-of-care tests or the point-of-care tests of third parties;

• the successful development, product validation and regulatory clearance of our C-reactive protein test and prothrombin time test and future point-of-care tests;

• the success of sales and marketing efforts and adequate market uptake of our C-reactive protein test and prothrombin time test and future point-of-care tests;

• the successful completion of product validation and regulatory clearance of a blood glucose test being developed for LifeScan;

• whether or not LifeScan decides to commercialize the blood glucose test we are developing and, if so, whether or not we are successful in negotiating any rights of manufacture and supply with respect to that test and ultimately, whether or not LifeScan is successful in the sale of the blood glucose test;

• in the event that any of our tests being developed are commercialized, our ability to maintain regulatory clearance, pass regular audits and respond to any issues that are raised by regulators from time to time.

     We expect to continue to incur significant and increasing operating losses in the short term and for the foreseeable future. Because of the numerous risks and uncertainties associated with the development, manufacture, sales and marketing of point-of-care test, we may experience larger than expected future losses and may never become profitable. If we fail to become and remain profitable, or if we are unable to fund our continuing losses, the holders of our shares could lose all or part of their investment.

29

Our Development and Research Agreement with LifeScan provides an ongoing source of income for us, the termination of which would result in the loss of a significant source of income.

     We undertake contract research and development activities for LifeScan pursuant to a Development and Research Agreement. The Development and Research Agreement is expected to remain an ongoing source of income for us in the short to medium term. However, the Development and Research Agreement may be terminated either for cause or with nine months notice prior to the end of each rolling one year period. If terminated, we would lose a significant source of income.

We are likely to require substantial additional capital which may not be available in the future.

     If additional commercial manufacturing capacity was required or if we are successful in advancing more than one point-of-care test to regulatory clearance, significant additional capital will be required to increase our manufacturing capacity. There can be no assurance that the funds will be available on a timely basis, on favorable terms, or at all. If we are unable to raise adequate funds, we may have to delay, reduce the scope of or eliminate some or all of our development programs or commercialization efforts or liquidate some or all of our assets.

Currency fluctuations may expose us to increased costs.

     The functional currency of the Company changed to Australian dollars with effect from December 1, 2006. Prior to December 1, 2006, the functional currency of the Company was United States dollars. The functional currency of Universal Biosensor Pty Ltd is and has been Australian dollars for all years. For details in relation to our functional currency, refer to our financial statements in this Registration Statement. Appreciation of United States dollars reporting currency against Australian dollars could result in increased expenses as it is calculated using the average exchange rate during the year.

     Our business could otherwise be affected by fluctuations in foreign exchange rates causing increased costs. The majority of our cash reserves are in Australian dollars and the majority of our expenses are incurred in Australian dollars although we continue to expend cash in other currencies. In particular, large scale manufacturing equipment is purchased in both United States dollars and Euros and any appreciation in these currencies against the Australian dollar will increase our cost of acquiring such equipment but may have a positive effect on any revenues which we source from the U.S. or Europe (as applicable). The same principles apply in respect of our costs and revenues in other jurisdictions. We do not currently have any plans to hedge the effect of currency fluctuations on our overseas expenditures. We manage our currency risks by settling foreign currency payables within a short period of time upon recognition of a foreign currency liability.

There may be delays in the manufacture and supply of diagnostic tests if components are not available on commercially acceptable terms, if there is a supply interruption or if we are unable to obtain alternative suppliers when required.

     We rely heavily on third parties to supply or manufacture certain key components of the point-of-care tests we are developing. In particular, we propose that the development and manufacture of the handheld test meters will be outsourced to a specialist international electronic medical equipment manufacturer. We also intend to outsource the preparation of the control solution used to confirm accurate operation of the meters. There may be delays in the development, manufacture and supply of diagnostic tests if components of the tests are not available on commercially acceptable terms, if there is a supply interruption or if we are unable to obtain alternative suppliers when required.

At present, we have limited test strip manufacturing capabilities and personnel. If we cannot produce an adequate supply of test strips, our growth will be limited and our business will be harmed.

     The primary components of our point-of-care tests in development are the meter and disposable test strips. We intend to manufacture the test strips at our new facility at 1 Corporate Avenue in Melbourne, Australia, and we intend to outsource the supply of the handheld test meter and control solution. To be successful, we must be successful in manufacturing our test strips in substantial quantities and at acceptable costs. We currently have limited experience manufacturing our test strips, and no experience manufacturing the test strips in the commercial quantities that we anticipate we will need in the foreseeable future, should we be successful in developing our own point-of-care tests or should we be successful in entering into a commercial manufacturing agreement with a third party.

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     There are technical challenges to increasing our manufacturing capacity in a significant manner, including:

• maintaining the consistency of our incoming raw materials;

• equipment design and automation;

• material procurement;

• production yields; and

• quality control and assurance.

     Developing high volume manufacturing facilities will require us to invest substantial additional funds in establishing and fitting out our new manufacturing facilities and to hire and retain additional management, manufacturing and technical personnel who have the necessary qualifications and experience. We may not successfully complete any required increase in manufacturing capacity in a timely manner or at all, which may have a material adverse effect on us. If we are unable to manufacture a sufficient supply of test strips, maintain control over expenses or otherwise adapt to anticipated growth, or if we underestimate growth, we may not have the capability to satisfy market demand or improve our sales growth sufficiently to achieve profitability.

The performance of our point-of-care tests may not be perceived as being comparable with established laboratory methods, which may limit the market acceptance of our product.

     The majority of C-reactive protein and prothrombin time testing has, and continues to be, performed by large hospitals or commercial pathology laboratories. Healthcare professionals responsible for managing patients with an inflammatory disease or who are on warfarin therapy have experience with, and confidence in, the results generated by these hospitals and pathology laboratories. These healthcare professionals influence many treatment decisions, including aspects critical to our business including how often testing is to be performed, who is to perform the testing, and where testing is to be performed. In some instances, these decision makers may determine that our point-of-care test results lack the clinical history and reliability of hospitals and pathology laboratories. If we are unable to demonstrate to healthcare professionals’ satisfaction that the performance of our point-of-care tests closely match or provide some benefits over the testing undertaken by hospitals and pathology laboratories, market acceptance of our product will be limited and our business will suffer.

The success of our business, and, in particular, our prothrombin time test, is largely dependent upon the growth of the patient self-testing market. If that market fails to develop as we anticipate, our results will be adversely affected.

     Part of our business plan is targeted at the emerging prothrombin time patient self-testing market. Our point-of-care prothrombin time test in development has been designed to address that market. We cannot be sure that this market will grow as we anticipate. Such growth will require greater advocacy of patient self-testing from both healthcare professionals and patients than currently exists. Future research and clinical data may not sufficiently support patient self-testing as a safe or effective alternative to hospital based and pathology laboratory testing or point-of-care testing, which could inhibit adoption of patient self-testing. If healthcare professionals fail to advocate self-testing for their patients or if patients do not become comfortable with it, self-testing may fail to become common practice for prothrombin time measurement. If patient self-testing fails to be adopted at the rate we expect, our business anticipated growth will be adversely affected and our results will suffer.

We operate in a highly competitive market and face competition from large, well-established medical device manufacturers with significant resources. If we fail to compete effectively, our business will suffer.

     The market for point-of-care C-reactive protein testing, prothrombin time testing and blood glucose testing is intensely competitive, subject to rapid change, and affected by new product introductions and other activities of industry participants. Our point-of-care tests are likely to experience significant and continuing competition from traditional pathology laboratory based testing as well as other point-of-care tests. There can be no assurances given in respect of our ability to compete in the competitive markets in which we operate.

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     We will face competition from approved and marketed products as well as products in development. We expect our C-reactive protein test will compete primarily with pathology laboratories as testing for C-reactive protein in pathology laboratories is a well established practice and the results of any testing must be interpreted by healthcare professionals. In pathology laboratories, automated testing for C-reactive protein is the most common modality, and all the major competitors in the sector provide reagents that run on automated analyzers. These companies include Dade Behring Holdings, Inc., Roche Holding Ltd, Olympus Medical Systems Corporation, Abbott Laboratories, Beckman Coulter, Inc. and Siemens AG. All these companies have well established brand recognition, sales and marketing forces, and have significant resources available to support their product. To compete, we will need to show that our C-reactive protein test is an effective and time and cost saving alternative. Even if we can show competitive product advantages, customers may be resistant to changing their supplier. We also expect our C-reactive protein test to compete with existing point-of-care technologies from competitors such as Cholestech Corporation, Orion Corporation and Axis-Shield plc.

     We expect our prothrombin time test will compete primarily with pathology laboratories or small analyzers used in specialist clinics. Two large, well established companies, Roche Holding Ltd and Thoratec Corporation (through its International Technidyne division), have greater than 90% of worldwide sales of prothrombin time patient self-testing. Both companies have significant resources they can bring to bear. Other smaller technology companies such as Hemosense, Inc. are dedicated specifically to tackling this market and are likely to provide competition. Inverness Medical Innovations has announced that it intends to enter the prothrombin time point-of-care market. A number of large drug companies are actively developing a new class of oral anticoagulant (direct thrombin inhibitors), which do not need monitoring. Although it is unknown if they will be approved or favorably reimbursed, or perform as well as warfarin, they have the potential to significantly limit or render obsolete the current prothrombin time market.

     Additionally, these and other potential competitors hold intellectual property rights that could allow them to develop or sell the right to develop new products that could compete effectively with our point-of-care tests in development. All of these companies are larger than us and enjoy several competitive advantages, including:

• significantly greater name recognition;

• established relationships with healthcare professionals, patients and insurance providers;

• large, direct sales forces and established independent distribution networks;

• additional product lines and the ability to offer rebates, bundled products, and higher discounts or incentives;

• greater experience in conducting research and development, manufacturing and marketing activities; and

• greater financial and human resources for product development, sales and marketing and patent litigation.

     To the extent part of our strategy includes manufacturing point-of-care tests for third parties, in securing and maintaining the right to manufacture point-of-care tests for third parties we will likely face competition from other manufacturers including specialized outsourced manufacturers and manufacturers that are affiliates of the third parties.

     We may not be able to compete effectively against these companies or their products and, if we fail to do so, our business will be harmed. Our commercial opportunity will be reduced or eliminated if our competitors develop and commercialize products that are more effective, are more convenient, are less expensive, that reach the market sooner than our products or that are otherwise preferred over our products. Developments by our competitors may render our C-reactive protein and prothrombin time tests and any other future products we may develop obsolete or noncompetitive. Further, public announcements regarding the development of any such competing products could adversely affect the market price of our securities on ASX. If our products obtain regulatory clearances, but do not compete effectively in the marketplace, our business will suffer.

If we are unable to maintain protection for our intellectual property or if LifeScan is unable to maintain protection of the intellectual property which it licenses to us, the value of our technology and diagnostic tests may be adversely affected.

     Our ability to obtain patents, maintain trade secret protection and operate without infringing the proprietary rights of third parties is an integral part of our business. Our diagnostic tests are based predominantly on intellectual property rights that have been licensed to us from LifeScan. LifeScan has a considerable degree of control in the manner that the intellectual property licensed to us is maintained and protected and, as a result, we have reduced control with respect of the maintenance and protection of our licensed patent portfolio.

     A number of companies, universities and research institutions have or may be granted patents that cover technologies similar to the technologies owned by or licensed to us. We may choose to seek, or be required to seek, licenses under third-party patents, which would likely require the payment of license fees or royalties or both. A license may not be available to us on commercially reasonable terms, or at all. We may also be unaware of existing patents or other proprietary rights of third parties that may be infringed by our point-of-care tests. As patent applications can take many years to issue, there may be other currently pending applications which may later result in issued patents that are infringed by our point-of-care tests.

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     There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the medical devices industry. Defending ourselves against third-party claims, including litigation in particular, would be costly and time consuming and would divert management’s attention from our business, which could lead to delays in our development or commercialization efforts. If third parties are successful in their claims, we might have to pay substantial damages, pay license fees, stop marketing the infringing product or take other actions that are adverse to our business.

     We may also be forced to bring an infringement action if we believe that a third party is infringing our protected intellectual property. Any such litigation will be costly, time consuming and divert management’s attention, and the outcome of any such litigation may not be favorable to us.

The loss of a key employee or the inability to recruit and retain high caliber staff to manage future anticipated growth could have a material adverse effect on our business.

     As with most growth companies, our future success is substantially dependent on our key personnel. Certain key personnel would be difficult to replace and the loss of any such key personnel may adversely impact the achievement of our objectives. Our ability to operate successfully and manage the business depends significantly on attracting and retaining additional highly qualified personnel. The loss of any key personnel may be disruptive or have a material adverse effect on the future of our business. The competition for qualified employees in scientific research and medical diagnostic industries is particularly intense and there are a limited number of persons with the necessary skills and experience.

Universal Biosensors faces the risk of product liability claims.

     We may be exposed to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of diagnostic tests. We intend to seek product liability insurance, however, adequate product liability insurance may not be available on commercially acceptable terms. Product liability claims may damage our reputation and, if insurance proves inadequate, the product liability claims may harm our business. Defending a suit, regardless of its merit, could be costly and could divert management attention.

Investors may be subject to Australian and/or US taxation.

     The receipt of dividends by Australian tax resident securityholders and any subsequent disposal of our securities by Australian tax resident may have both United States and Australian tax consequences depending upon their individual circumstances. This may result in a securityholder being subject to tax in both jurisdictions and a tax credit may or may not be available in one jurisdiction to offset the tax paid in the other jurisdiction depending upon the securityholder’s individual circumstances. Securityholders should obtain, and only rely upon, their own independent taxation advice about the United States and Australian consequences of receiving distributions on our shares or CDIs and disposing of securities in us having regard to their own specific circumstances. To date, we have not declared or paid any cash dividends on our shares or CDIs and currently intend to retain any future earnings, if any, for funding growth. We do not anticipate paying any dividends in the foreseeable future.

Our shares have been publicly traded on the ASX in the form of CHESS Depositary Interests, or CDIs, since December 2006 and have a limited trading history. We expect that the price of our common stock will fluctuate substantially.

     Our shares of common stock in the form of CDIs were quoted on ASX and began trading on December 13, 2006. As a result, we have a limited trading history. We expect that the price of our common stock in the form of CDIs will fluctuate substantially. The price at which our shares in the form of CDIs will trade on ASX and the price at which investors may receive for their securities will be influenced by a large number of factors including some which are specific to us and our operations, some which may affect the quoted medical diagnostic sector or quoted companies generally, and many which are outside our control.

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     Our securities are not currently traded on any United States public markets and there are currently restrictions on the ability of United States persons to acquire our securities on ASX.

     There is no public market for our shares in the United States or in any other jurisdiction other than Australia. We have not determined whether we will seek the quotation of our shares on any United States public trading market. We cannot assure you that we will seek to be quoted on any United States public trading market or that we would meet any applicable listing requirements. Even if our shares are in the future listed on a United States public market, the liquidity of our shares may not improve, and the United States market price may not accurately reflect the price or prices at which purchasers or sellers would be willing to purchase or sell our common stock.

     In addition, a substantial number of our shares are “restricted securities” having been issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”) or pursuant to Regulation S promulgated under the Securities Act. Therefore, resales of these shares to “U.S. Persons” as defined in Regulation S may only be made in an offshore transaction in compliance with Regulation S promulgated under the Securities Act, or pursuant to an effective registration statement under the Securities Act, or pursuant to an available exemption from the registration requirements of the Securities Act, and in each case, in accordance with all applicable securities laws.

We will be exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.

     Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and related regulations implemented by the SEC, have substantially increased legal and financial compliance costs. We expect that our efforts to comply with applicable laws and regulations, including the Exchange Act and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), will involve significant, and potentially increasing, costs. In particular, we will be evaluating our internal controls systems to allow management to report on, and our independent auditors to attest to, our internal controls. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. If we are not able to implement the requirements of Section 404 in a timely manner or adequately, we may be subject to sanctions or investigation by regulatory authorities, including the SEC. Any action of this type could adversely affect our financial results, investors’ confidence in our company and our ability to access capital markets, and could cause our stock price to decline.

A significant amount of our shares are controlled by individuals or voting blocks, and the interests of such individuals or voting blocks could conflict with those of the other stockholders.

     Because our shares are relatively illiquid, a single stockholder with significant holdings or relatively small groups of stockholders have the power to influence matters requiring the approval of stockholders. Approximately 17% of our outstanding shares of common stock are owned by The Principals Cornerstone Fund Pty Ltd, an Australian company, which holds shares on trust for Messrs Denver, Hanley, Kiefel and Dr Adam, who are directors. These directors also hold shares directly and through other vehicles. Mr. Andrew Jane is one of our directors and a partner of CM Capital Investments Pty Ltd which holds approximately 9% of our shares. As directors, these individuals have the power to influence significantly all matters requiring the approval of our stockholders, including the election of directors and the approval of other significant resolutions, and their interests may conflict with those of the other stockholders. In addition, control of a significant amount of our common stock by insiders could adversely affect the market price of shares. Johnson & Johnson Development Corporation holds approximately 14% of our shares. For details of our substantial stockholders and the interests of our directors, refer to “Item 4 – Security Ownership of Certain beneficial Owners and Management”.

We have never paid a dividend and we do not intend to pay dividends in the foreseeable future which means that holders of shares of common stock and CDIs may not receive any return on their investment from dividends.

     To date, we have not declared or paid any cash dividends on our shares or CDIs and currently intend to retain any future earnings, if any, for funding growth. We do not anticipate paying any dividends in the foreseeable future.

Our holders of CDIs are not stockholders and do not have stockholder rights.

     The main difference between holding CDIs and holding our underlying shares is that a CDI holder has beneficial ownership of the equivalent number of shares instead of legal title. Legal title is held by CHESS Depositary Nominees Pty Ltd (“CDN”) and the shares are registered in the name of CDN and held by CDN on behalf of and for the benefit of CDI Holders. CDN is a wholly owned subsidiary of ASX. CDI holders will be entitled to all the economic benefits of the shares underlying their CDIs, such as dividends (if any), bonus issues or rights issues as though they were holders of the legal title. CDN as a stockholder of record will receive notice of stockholder meetings and be entitled to attend and vote at stockholder meetings. CDI holders will likewise be sent notices of stockholder meetings and are entitled to attend stockholder meetings but are not permitted to vote other than by giving directions on how to vote to CDN or as a proxy holder for CDN.

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ITEM 2. FINANCIAL INFORMATION.

A. Selected Financial Data

     The following table represents our selected financial data for the dates and periods indicated. This data should be read together with, and is qualified in its entirety by reference to, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as our financial statements and notes thereto appearing in “Item 13. Financial Statements and Supplementary Data” of this Registration Statement. The selected financial data for the fiscal years ended December 31, 2004, 2005 and 2006 and the period from inception to December 31, 2006 has been derived from our consolidated audited financial statements, included elsewhere herein. Such financial statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and are presented in US dollars (except as otherwise noted).

																Period from
																inception to
	Year ended December 31,															December 31,
	2002			2003			2004			2005			2006			2006
	US$			US$			US$			US$			US$			US$
Statement of Operations Data:
Revenue		—			—			—			—			—			—
Operating expenses:
Research and development (1)	$	513,720		$	1,008,967		$	1,567,933		$	1,591,829		$	2,469,971		$	7,152,420
General and administrative		117,866			288,570			395,246			703,036			1,689,925			3,194,643
Fair value of stock options issued to employees related to:
Research and development		—			—			—			—			106,463			106,463
General and administrative		—			—			—			—			197,717			197,717
Total operating expenses		631,586			1,297,537			1,963,179			2,294,865			4,464,076			10,651,243
Research and development income		750,000			1,000,000			1,816,813			2,086,013			2,000,000			7,652,826
Profit/(loss) from operations		118,414			(297,537	)		(146,366	)		(208,852	)		(2,464,076	)		(2,998,417	)
Interest and other income		23,157			73,539			89,944			171,886			367,858			726,384
Net profit/(loss) before tax		141,571			(223,998	)		(56,422	)		(36,966	)		(2,096,218	)		(2,272,033	)
Income tax expense		(30,901	)		37,878			—			—			(122,821	)		(115,844	)
Net profit/(loss)	$	110,670		$	(186,120	)	$	(56,422	)	$	(36,966	)	$	(2,219,039	)	$	(2,387,877	)
Per Share Data:
Basic and diluted net loss per share	US$	0.00		US$	0.00		US$	0.00		US$	0.00		(US$0.04)			(US$0.06		)
Weighted average number of common stock used in calculating basic and diluted net loss per share (2)		36,919,286			43,533,269			43,533,269			45,573,580			49,408,822			43,050,568

(1)	Research and development expenses have been reduced by government research grants of US$0, US$0, US$0, US$468,576, US$436,015, in the fiscal years ended December 31, 2002, 2003, 2004, 2005, 2006 and US$904,591 for the period from inception to December 31, 2006, respectively.
(2)	All periods presented have been retroactively adjusted for an approximately 3,624.75 subdivision of our share capital effected immediately prior to the issue of shares under our initial public offering in Australian and concurrent US private placement in December 2006.

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	Year ended December 31,
	2002		2003		2004		2005		2006
	US$		US$		US$		US$		US$
Balance Sheet Data:
Cash and cash equivalents	$	499,139	$	3,197,621	$	3,225,446	$	3,253,426	$	23,885,198
Total assets		1,547,377		4,502,992		4,583,843		4,551,345		30,051,095
Long-term debt		—		—		—		—		—
Convertible preference shares (1)		—		3,000,000		3,000,000		3,000,000		—
Total stockholders’ (deficit) equity		1,359,831		4,406,521		4,327,608		4,167,079		27,914,725

(1) Convertible preference shares were converted to shares of common stock immediately prior to the issue of shares under our initial public offering in Australian and concurrent US private placement in December 2006.

B. Supplementary Financial Information

     Not Applicable.

C. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes that appear elsewhere in this Registration Statement. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Registration Statement, particularly in “Risk Factors.”

Results of Operations

Overview

     Established in 2001, we are a specialist medical diagnostics company focused on the development, manufacture and commercialization of in vitro diagnostic test devices for point-of-care use. We have carried out in excess of two years of research and development on a point-of-care immunoassay blood test for C-reactive protein to detect inflammation and a point-of-care prothrombin time blood test for monitoring the therapeutic range of warfarin and have developed working prototypes of both tests. In 2002, we entered into a Development and Research Agreement with LifeScan pursuant to which we undertake contract research and development in the area of diabetes management and the development of a blood glucose test for diabetics. At the same time in 2002, we also entered into a License Agreement with LifeScan pursuant to which LifeScan granted us a license to use certain intellectual property in connection with our point-of-care test devices.

     All of our operating activities are undertaken through our wholly-owned subsidiary, Universal Biosensors Pty Ltd which is located in Australia. To date, we have funded our operations primarily through the sale of our equity securities, payments from LifeScan in connection with the Development and Research Agreement and government grants.

Development and Research Agreement with LifeScan

     On April 1, 2002, we entered into a Development and Research Agreement with LifeScan pursuant to which we agreed to perform certain research and development activities for LifeScan in the area of diabetes management to extend and develop the glucose sensor technology owned by LifeScan. We have granted to LifeScan a perpetual, royalty free, paid up, exclusive, worldwide right and license to such know-how in the fields of measurement of analytes for the purposes of diagnosing, managing and monitoring diabetes and the measurement of glucose in humans (“LifeScan Fields”).

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     In consideration of undertaking the research and development, LifeScan makes quarterly payments to us. Since April 2002, we have received aggregate contract research funding from LifeScan of U.S.$7,652,826 as of December 31, 2006 (2002: U.S.$750,000, 2003: U.S.$1,000,000, 2004: U.S.$1,816,813, 2005: U.S.$2,086,013 and 2006: U.S.$2,000,000). The Development and Research Agreement automatically renews for successive one year periods on the same terms and conditions unless either party has given to the other party prior written notice of termination not less than nine months prior to the end of the relevant one year period, in which case the Development and Research Agreement will terminate at the end of the relevant one year period, or the agreement is otherwise terminated in accordance with its terms.

License Agreement with LifeScan

     In 2002, we entered into a License Agreement with LifeScan pursuant to which LifeScan granted to us a worldwide, royalty free, exclusive license to certain electrochemical cell technologies in all fields of use excluding the LifeScan Fields. LifeScan has retained all rights in the LifeScan Fields. Under the License Agreement, we have a limited right to sub-license, make, have made, use, and sell under and exploit in any way a range of key patents, patent applications and know-how owned by LifeScan, relating to electrochemical cell technologies in all fields excluding the LifeScan Fields, the rights to which are retained by LifeScan. We must pay LifeScan 50% of any royalties or payments we receive under any such sublicense. As additional consideration for the grant of the license by LifeScan, we have granted to LifeScan a worldwide, royalty free, irrevocable, non-exclusive license to make, have made, use, and sell under and exploit in any way in the LifeScan Fields, any improvements to the licensed electrochemical cell technologies made by us. We are also contractually bound to use our best efforts to exploit the licensed intellectual property outside the LifeScan Fields, for example, in our C-reactive protein and prothrombin times tests.

     The License Agreement may be terminated by LifeScan in the event that we fail to exploit the licensed patents and patent applications or if we are liquidated or wound up or commit a persistent and material breach of our obligations under the License Agreement and fail to rectify the breach within 90 days of written notice from LifeScan requiring it to do so. The License Agreement otherwise continues on a perpetual basis until the expiration of the last licensed LifeScan patent or patent application. LifeScan may also convert the license from an exclusive license to a non-exclusive license in certain limited circumstances where we fail to comply with the requirements of the License Agreement.

R&D Start Grant

     On October 1, 2004, Universal Biosensors Pty Ltd entered into a grant agreement with the Commonwealth of Australia under the R&D Start Grant Program. The Commonwealth of Australia has provided Universal Biosensors Pty Ltd with a grant of 50% of the eligible expenditure on a program for the development of a single step, disposable immunosensor platform up to a maximum grant amount of approximately U.S.$1,782,829 payable over the period to September 30, 2007, at which time the grant formally terminates. Universal Biosensors Pty Ltd has submitted an application for the grant to be extended to December 31, 2008. We have ongoing obligations beyond the program completion date, including continuing to use our best endeavors to commercialize the immunosensor platform on normal commercial terms within a reasonable time of completion of the program.

     Grant payments are made in accordance with an agreed schedule and are subject to the satisfaction by Universal Biosensors Pty Ltd of certain specified technical milestones and conditions and the Commonwealth of Australia having sufficient funding available. In addition, we are required to commit the necessary eligible expenditure, submit all progress reports due and demonstrate satisfactory progress and expenditure on the program. The Commonwealth of Australia may terminate the grant agreement for breach of the agreement by us, for failure to undertake the required research, if there is a change in control of Universal Biosensors Pty Ltd or us, or on the grounds of insolvency. In certain limited circumstances where Universal Biosensors Pty Ltd fails to use its best endeavors to commercialize the program within a reasonable time of completion or upon termination of the grant due to breach or insolvency, the Commonwealth of Australia may require Universal Biosensors Australia to repay some or the entire grant. We consider that the likelihood of being required to repay any of the grant funding is remote because we continue to act in good faith with respect to the grant. Research and development grants received were U.S.$0, U.S.$468,576, U.S.$436,015, in the fiscal years ended December 31, 2004, 2005, 2006 and U.S.$904,591 from inception to December 31, 2006, respectively.

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Victorian State Government Grant

     On October 28, 2006, Universal Biosensors Pty Ltd entered into an agreement with the State of Victoria acting through its Department of Innovation, Industry and Regional Development. The State of Victoria has agreed to grant payments up to approximately U.S.$440,000 to support the establishment of a medical diagnostic manufacturing facility in Victoria for the manufacture of new technologies for disease monitoring and to increase support of local and export markets. These payments are subject to the achievement of milestones, which include capital expenditure by us of predetermined minimum amounts. The State of Victoria may require Universal Biosensors Pty Ltd to refund any amounts paid under the grant together with interest should we commit a breach of its obligations under the grant agreement. The State of Victoria may also withhold, suspend, cancel or terminate any payment or payments upon a failure to comply with obligations or if we choose not to proceed with these initiatives or if we become insolvent. To date no amounts have been received under this grant.

Critical Accounting Estimates and Judgments

     Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, income, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.

     We believe that of our significant accounting policies, which are described in the notes to our consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, we believe that the following accounting policies are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.

Stock-Based Compensation

     We account for stock-based employee compensation arrangements using the modified prospective method as prescribed in accordance with the provisions of Statement of Financial Accounting Standards No. 123 (R), Accounting for Stock-Based Compensation (SFAS 123(R)).

Research and Development Expenditures

     Research and development expenses consist of costs incurred to further our research and development activities and include salaries and related employee benefits, costs associated with building prototypes including meter development, regulatory activities, research-related overhead expenses, costs associated with developing a commercial manufacturing process, costs for consultants and related contract research, facility costs and depreciation. Research and development costs are expensed as incurred.

     We receive grant funding under government research grant agreements to undertake work on the applicable grant programs. In order to receive the grant funding, our existing grant agreements require us to incur specified eligible expenditure in the conduct of the applicable grant program. There are circumstances where grant funding may not be payable and there are certain limited circumstances, such as when we fail to use our best endeavors to commercialize the program within a reasonable time of completion of the program or upon termination of a grant due to our breach of the agreement or our insolvency, where we may be required to repay some or all of the research grants. The grants are recognized against the related research and development expenses as and when the relevant research expenditure is incurred. Grants received in advance of incurring the relevant expenditure are treated as deferred income and included in “Current Liabilities” on the balance sheet as we do not control the monies until the relevant expenditure has been incurred. Grants due to us are recorded as accrued income and included in “Current Assets”.

Property, Plant and Equipment

     Property, plant and equipment are recorded at acquisition cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated on a straight-line basis over the estimated useful lives of the related assets, which are generally three to ten years. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the related assets. Maintenance and repairs are charged to operations as incurred.

Income Taxes

     We apply Statement of Financial Accounting Standards No. 109 – Accounting for Income Taxes (SFAS 109) which establishes financial accounting and reporting standards for the effects of income taxes that result from a company’s activities during the current and preceding years. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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     Where it is more likely than not that some portion or all of the deferred tax assets will not be realized the deferred tax assets are reduced by a valuation allowance. The valuation allowance is sufficient to reduce the deferred tax assets to the amount that is more likely than not to be realized.

Research and Development Income

     Research and development income for the fiscal years ended December 31, 2006, 2005 and 2004 were primarily derived from LifeScan under the Development and Research Agreement and totaled U.S.$2,000,000, U.S.$2,086,013 and U.S.$1,816,813, respectively. We expect that we will receive in the order of U.S.$1,000,000 under the Development and Research Agreement for the fiscal year ending December 31, 2007. The payment is anticipated to be less in the fiscal year ending December 31, 2007 than in the fiscal years ended December 31, 2006, 2005 and 2004 as the blood glucose test has reached the product validation stage and research and development activities to be funded by LifeScan are expected to be reduced over the fiscal year ending December 31, 2007.

Research and Development Expenses

     Our operating expenses to date have substantially been for research and development activities. Research and development expenses consist of costs associated with research activities, as well as costs associated with our product development efforts, including pilot manufacturing costs. All research and development costs, including those funded by the R&D Start Grant Program, are expensed as incurred. Research and development expenses include:

• consultant and employee related expenses, which include salary and benefits;

• external research and development expenses incurred under agreements with third party organizations and universities; and

• facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies.

     Research and development expenses for years ended December 31, 2004, 2005, 2006 and for period from inception to December 31, 2006 are as follows:

	Years ended December 31,								Period from
	2004		2005			2006			inception to 31
									December
									2006
	U.S.$		U.S.$			U.S.$			U.S.$
Research and development expenses		1,567,933		2,060,405			2,905,986			8,057,011
Research grants received recognized against related research and development expenses		—		(468,576	)		(436,015	)		(904,591	)
Research and development expenses as reported		1,567,933		1,591,829			2,469,971			7,152,420

     These expenses are related to developing our electrochemical cell platform technologies and diagnostic test pilot manufacturing production. We expect that our expenses will increase significantly during 2007 as we expand our research and development programs and expand our organization and develop a commercial manufacturing capability.

     We have not reported our internal historical research and development costs or our personnel and personnel-related costs on a project-by-project basis. Our programs share a substantial amount of our common fixed costs such as facilities, depreciation, utilities and maintenance. Accordingly, we do not track our research and development costs by individual research and development program.

     In addition, we expect research and development expenditures to grow as we advance our development programs and explore other commercial opportunities our technology platform can be applied to. We cannot predict what it will cost to complete our research and development programs or when they will be completed and commercialized. The timing and cost of any program is dependent upon achieving technical objectives, which are inherently uncertain and, both the C-reactive protein and prothrombin time tests still have a high degree of technical risk. In addition, our business strategy contemplates that if appropriate we may enter into collaborative arrangements with third parties for one or more of our programs. In the event that third parties assume responsibility for certain research or development activities, the estimated completion dates of those activities will be under the control of the third party rather than with us. We cannot forecast with any certainty, which programs if any, will be subject to future collaborative arrangements, in whole, or in part, and how such arrangements would affect our research and development plans or capital requirements.

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     As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development programs or when and to what extent we will receive cash inflows from the commercialization and sale of products. Our inability to complete our research and development programs in a timely manner or our failure to enter into collaborative agreements, when appropriate, could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to seek additional, external sources of financing from time to time in order to continue with our strategy. Our inability to raise additional capital on terms reasonably acceptable to us, would jeopardize the future success of our business.

General and Administrative Expenses

     General and administrative expenses currently consist principally of salaries and related costs for personnel in executive, finance, accounting, information technology and human resources functions. Other general and administrative expenses include patent related costs, facility costs not otherwise included in research and development expenses, consultancy fees and professional fees for legal and accounting services.

     General and administrative expenses were, U.S.$395,246, U.S.$703,036 and U.S.$1,689,925 in 2004, 2005 and 2006, respectively. We expect that our general and administrative expenses will increase as we expand our legal and accounting staff and marketing and sales staff, add infrastructure and incur additional costs related to operating as a company whose shares in the form of CDIs are quoted on ASX and compliance costs associated with being a domestic United States issuer subject to SEC reporting requirements.

Fair value of stock options issued to employees

     As of January 1, 2006, we adopted Statement No. 123(R), “Share Based Payment”, or SFAS 123(R). The impact of the change in accounting policy applied prospectively resulted in the stock option expense being U.S.$0, U.S.$0, U.S.$304,180 and U.S.$304,180 for the years ended December 31, 2004, 2005, 2006 and for the period from inception to December 31, 2006.

     The following table represents information relating to stock options outstanding under the plans:

						Options
		Options Outstanding				Exercisable
	Exercise Price	Shares		Weighted average remaining life in years		Shares
2004	U.S.$0.29		2,076,982		9.0		663,329
2005	U.S.$0.29		1,844,997		8.0		1,207,042
2006	U.S.$0.33		2,011,736		9.1		532,838
	U.S.$0.29		1,808,751		7.0		1,772,503

Comparison of the Years Ended December 31, 2006 and 2005

Research and Development Income

     Our research and development income for 2005 and 2006 was U.S.$2,086,013 and U.S.$2,000,000, respectively recognized pursuant to the Development and Research Agreement.

Research and Development Expenses

     Research and development expenses increased to U.S.$2,469,971 in 2006 from U.S.$1,591,829 in 2005. The increase was due primarily to increased tenancy costs at our leased premises and related operating expenses, as well as increased staffing and other personnel related costs to support our research and development program. We expect that research and development expenses for pilot manufacturing and stability testing of our point-of-care tests will continue to increase in 2007. Included in the research and development expenses are Australian research grants of U.S.$468,576 and U.S.$436,015 received for the R&D Start Grant Program for 2005 and 2006, respectively.

40

General and Administrative Expenses

     General and administrative expenses increased to U.S.$1,689,925 in 2006 from U.S.$703,036 in 2005. This increase in expenses reflects growth in the size and complexity of our operations, as well as the incremental costs of having our shares in the form of CDIs quoted on ASX and compliance costs associated with becoming and United States domestic filer. We expect that our general and administrative expenses will increase as we expand our legal and accounting staff and marketing and sales staff, add infrastructure and incur additional costs related to operating as a company whose shares in the form of CDIs are quoted on ASX, including directors’ and officers’ insurance, investor relations programs, increased director fees and increased professional fees.

Fair value of stock options issued to employees

     As of January 1, 2006, we adopted Statement No. 123(R), “Share Based Payment”, or SFAS 123(R). The impact of the change in accounting policy is an increase in non-cash expenses of U.S.$304,180. Prior to January 1, 2006, we applied Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations, in accounting for its fixed-plan stock options. For periods prior to January 1, 2006, we complied with the disclosure only provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation”, or SFAS 123 hence no compensation charge was required.

Interest and other income

     Interest and other income increased from U.S.$171,886 in 2005 to U.S.$367,858 in 2006. The increase in interest income is attributable to the greater level of funds invested during the year. We commenced the 2006 financial year with U.S.$3,253,426 in cash. The cash and bank balance at the end of the 2006 financial year was U.S.$23,885,198. The increase in cash and bank balance during the financial year is as a result of private placements in mid 2006 in which U.S.$9,990,000 was raised and a private placement of our shares to United States accredited investors in December 2006 in which approximately U.S.$3,165,200 (equivalent to A$4,000,000) raised and an initial public offering of our shares in Australia in December 2006 in which approximately U.S.$14,243,400 (equivalent to A$18,000,000) was raised.

Income tax expense

     Income tax expense during the 2006 year relates to the reversal of research and development credits.

Net loss

     Net loss increased from U.S.$36,966 in 2005 to U.S.$2,219,039 in 2006 as a result of increased activity during the 2006 financial year thus resulting in increased research and development expenses and general and administrative expenses.

Basic and diluted net loss per share

	2005		2006
Net loss		U.S.$36,966		U.S.$2,219,039
Weighted average number of ordinary shares used as denominator in calculating basic and diluted net loss per share		45,573,580		49,408,822
Basic and diluted net loss per share		U.S.$0.00		(U.S.$0.04	)

     The increase in basic and diluted net loss per share during the 2006 year is primarily due to increased losses sustained during the year.

Comparison of the Years Ended December 31, 2005 and 2004

Research and Development Income

     Our research and development income for 2004 and 2005 was U.S.$1,816,813 and U.S.$2,086,013 respectively recognized pursuant to the Development and Research Agreement.

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Research and Development Expenses

     Research and development expenses increased to U.S.$1,591,829 in 2005 from U.S.$1,567,933 in 2004. Included in the research and development expenses are Australian research grants of U.S.$0 and U.S.$468,576 received under the R&D Start Grant Program for 2004 and 2005, respectively. The higher expenses during 2005 were due primarily to increased spending on the development of the blood glucose test.

General and Administrative Expenses

     General and administrative expenses increased to U.S.$703,036 in 2005 from U.S.$395,246 in 2004. This increase was primarily due to increased staffing and other personnel related costs and increased professional fees incurred during 2004. We also incurred increased consultant costs to manage and support our growth.

Interest and other income

     Interest and other income increased to U.S.$171,886 in 2005 from U.S.$89,944 in 2004. The increase in interest income is attributable to the greater returns on funds invested during the year.

Liquidity and Capital Resources

     Since inception, our operations have mainly been financed through the issuance of equity securities. Additional funding has come through payments received from LifeScan under the Development and Research Agreement, research grants and interest on investments. Through to December 31, 2006 we had received aggregate net cash proceeds from the following: (a) U.S.$29,852,668 from the issuance of equity securities; (b) U.S.$7,652,826 from LifeScan under our Development and Research Agreement; (c) U.S.$904,591 as contributions from government grants; and (d) U.S.$462,952 from interest on investments. As of December 31, 2006, we had U.S.$23,885,198 in cash, cash equivalents and short-term investments. Our cash and investment balances are held in money market accounts and short-term instruments. Cash in excess of immediate requirements is invested in short-term instruments with regard to liquidity and capital preservation.

     For the year ended December 31, 2006, we used net cash of U.S.$1,538,471 for operating activities. This consisted of a net loss for the period of U.S.$2,219,039, which included U.S.$231,613 of non-cash depreciation and amortization, and non-cash stock option expense of U.S.$304,180. Net cash used in investing activities during the year ended December 31, 2006 was U.S.$3,377,721, which included purchase of plant and equipment reflecting the commencement of the expansion of our manufacturing capabilities. Net cash provided by financing activities during the year ended December 31, 2006 was U.S.$25,533,159 resulting from the issue and sale of our preferred stock which raised U.S.$9,990,000 and U.S.$15,543,159 raised by way of a private placement of our shares to United States accredited investors and by way of an initial public offering of our shares in Australia.

     For the year ended December 31, 2005, net cash provided by operating activities was U.S.$207,570. This consisted of a net loss for the period of U.S.$36,966, which included U.S.$228,103 of non-cash depreciation and amortization. Net cash used in investing activities during the year ended December 31, 2005 was U.S.$214,682, which included purchases of plant and equipment. Net cash provided by financing activities during the year ended December 31, 2005 was U.S.$23,429 resulting from the exercise of options issued to employees.

     For the year ended December 31, 2004, net cash provided by operating activities was U.S.$218,926. This consisted of a net loss for the period of U.S.$56,422, which included U.S.$200,944 of non-cash depreciation and amortization. Net cash used in investing activities during the year ended December 31, 2004 was U.S.$190,023, which included purchases of plant and equipment.

     As at December 31, 2006, we had cash and cash equivalents of U.S.$23,885,198 as compared to U.S.$3,253,426 as at December 31, 2005. This increase was due to the receipt of net proceeds of U.S.$25,533,159 from the issue and sale of our equity securities in share placements and the initial public offer of our shares carried out in 2006. We anticipate continuing the preparations for regulatory clearance for a blood glucose test. However, the timing of any regulatory filing will be dependant on the requirements of LifeScan. If successful in our development and regulatory activities, we will seek to negotiate an agreement with LifeScan in relation to the manufacturing and supply of point-of-care tests. LifeScan have all rights with respect to the commercialization of the test. We believe that the proceeds of the recent initial public offering of our shares in Australia and private placement of our shares in the United States, together with our cash, cash equivalents and short-term marketable securities balances, and the interest we earn on these balances, will be sufficient to meet our anticipated cash requirements with a view to being capable of commercially manufacturing a blood glucose test at volumes suited to the market. In the event we are not able to generate revenue for the manufacturing and supply of the blood glucose test in 2008, we believe that our current cash and cash equivalents will be sufficient to fund our ongoing operations until the end of 2008. We note our forecasted ability to maintain our financial resources to support our operations for this period is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue one or more of our planned research, development and commercialization activities.

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Operating Capital and Capital Expenditure Requirements

     We believe that the proceeds of the recent initial public offering of our shares in Australia and private placement of our shares in the United States, together with our cash, cash equivalents and short-term marketable securities balances, and the interest we earn on these balances, will be sufficient to meet our anticipated cash requirements with a view to being capable of commercially manufacturing a blood glucose test at volumes suited to the market. If our available cash, cash equivalents and short-term marketable securities are insufficient to satisfy our liquidity requirements, or if we develop additional products, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity and debt securities may (depending on the terms) result in dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations. Any such required additional capital may not be available on reasonable terms, if at all. If we are unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned research, development and commercialization activities, which could harm our business.

     As a result of the numerous risks and uncertainties associated with establishment of our commercial manufacturing capability and the development of commercialization of our point-of-care tests and our strategy of seeking to manufacture point-of-care devices on behalf of third parties, we are unable to estimate the exact amounts of our capital and working capital requirements. We estimate our capital expenditures in 2007 to be in the range of U.S.$7,000,000 to U.S.$8,000,000 for the purchase of equipment to support the scale-up of our manufacturing capability, developing and progressing the blood glucose test to the point where it is capable of commercial sale, for ongoing development of our existing products and for other ongoing research and development activities. Unless we are successful in negotiating for the potential third party purchaser of the Corporate Avenue premises to fund the fit out cost of our the new facilities in the manner contemplated by the section below entitled “Off-Balance Sheet Arrangement”, our capital expenditure in connection with the fitout is likely to be approximately U.S.$3,700,000. Our future funding requirements will depend on many factors, including, but not limited to:

• continued income from LifeScan under our Development and Research Agreement;

• any expenditures related to commercial production of our point-of-care tests during this period and the rate of progress and cost of our product development activities;

• the success of our research and development efforts;

• the emergence of competing or complementary technological developments;

• costs related to the fitout of our manufacturing facility in Melbourne, Australia;

• whether or not we are successful in negotiating a manufacturing and supply agreement with LifeScan in connection with the blood glucose test and whether we generate any revenue from any such arrangement in 2008;

• our ability to scale our manufacturing operations to meet demand for our point-of-care tests;

• revenue generated by sales of our point-of-care tests;

• expenses we incur in manufacturing, developing, marketing and selling products;

• costs and timing of additional regulatory approvals;

• costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

• the terms and timing of any collaborative, licensing and other arrangements that we may establish; and

• the acquisition of businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.

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Off-Balance Sheet Arrangement

     We are aware of the proposed sale of the Corporate Avenue property (the new facility which we have commenced leasing from September 2006 and expect to relocate to during the second half of 2007), from the existing owner to a third party. Management has entered into discussions with the proposed third party purchaser in order to seek to negotiate for that purchaser to fit out the Corporate Avenue premises at its cost (estimated to be U.S.$3,700,000) with the potential result that we would pay increased rental payments. Management considers that the advantage of the proposal would be to over time free up the cash that would otherwise be used in the upgrade of the new facilities and enable us to use those funds on our core research and development activities. As proposed, the future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2006 would be:

	U.S.$
Less than 1 year	877,174
1 – 3 years	1,788,142
3 – 5 years	1,840,443
More than 5 years	5,670,007
Total minimum lease payments	10,175,766

Contractual Obligations

     Our future contractual obligations primarily for future rental payment obligations on the current office and manufacturing space, including financing costs, at December 31, 2006 were as follows:

	Payments Due By Period
			Less than 1						More than 5
	Total		year		1 – 3 years		3 – 5 years		years
Long-Term Debt Obligations		—		—		—		—		—
Capital Lease Obligations		—		—		—		—		—
Operating Lease Obligations		2,824,014		350,251		734,297		786,598		952,868
Purchase Obligations		—		—		—		—		—
Other Long-Term Liabilities on Balance Sheet under GAAP		55,426		—		—		—		55,426
Total		2,879,440		350,251		734,297		786,598		1,008,294

Segments

We operate in one segment. Our principal activities are the research, development, manufacture and commercialization of in vitro diagnostic test devices for point-of-care use. We operate predominantly in one geographical area, being Australia.

Recent Accounting Pronouncements

     In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 154 – Accounting Changes and Error Corrections (SFAS 154), a replacement of Accounting Principles Board Opinion No. 20 (APB 20) and Statement No. 3 (SFAS 3), which previously addressed accounting changes. SFAS 154 establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS 154 carries forward without change the guidance in APB 20 for reporting the correction of an error in previously issued financial statements. SFAS 154 was effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of this standard has not had a material impact on our consolidated financial statements.

     In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, Accounting for Income Taxes,” which clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation requires that we recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of FIN 48 are effective beginning January 1, 2007 with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. We are currently evaluating the possible impact of FIN 48 on our consolidated financial statements.

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     In September 2006, the Securities and Exchange Commission, or SEC, released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements” (SAB 108). SAB 108 is applicable for the current year and provides guidance on how the effects of the carryover or reversal of prior year financial statement misstatements should be considered in quantifying a current year misstatement. Prior practice allowed the evaluation of materiality on the basis of (1) the error quantified as the amount by which the current year income statement was misstated (rollover method) or (2) the cumulative error quantified as the cumulative amount by which the current year balance sheet was misstated (iron curtain method). Reliance on either method in prior years could have resulted in misstatement of the financial statements. The guidance provided in SAB 108 requires both methods to be used in evaluating materiality. Immaterial prior year errors may be corrected with the first filing of prior year financial statements after adoption. The cumulative effect of the correction would be reflected in the opening balance sheet with appropriate disclosure of the nature and amount of each individual error corrected in the cumulative adjustment, as well as a disclosure of the cause of the error and that the error had been deemed to be immaterial in the past. The adoption of SAB 108 did not have a material impact on our consolidated financial statements.

     In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). This Statement defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosure related to the use of fair value measures in financial statements. SFAS No. 157 does not expand the use of fair value measures in financial statements, but standardizes its definition and guidance in GAAP. The Standard emphasizes that fair value is a market-based measurement and not an entity-specific measurement based on an exchange transaction in which the entity sells an asset or transfers a liability (exit price). SFAS No. 157 establishes a fair value hierarchy from observable market data as the highest level to fair value based on an entity’s own fair value assumptions as the lowest level. The Statement is to be effective for our financial statements issued in 2008; however, earlier application is encouraged. We believe that SFAS No. 157 will not have a material impact on our consolidated financial statements.

     In September 2006 the FASB also issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)”. SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. Because we do not have a defined benefit pension plan or other qualifying post retirement plan our adoption of SFAS No. 158 did not have a material effect on our consolidated financial position or results of operations.

     D. Quantitative and Qualitative Disclosures about Market Risk

     Our exposure to market risk is limited to interest income sensitivity, which is affected by changes in the general level of Australian interest rates, particularly because the majority of our investments are in Australian dollars in cash and cash equivalents. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. Our investment portfolio is subject to interest rate risk and will fall in value in the event market interest rates increase. Due to the short duration of our investment portfolio, we believe an immediate 10% change in interest rates would not be material to our financial condition or results of operations.

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ITEM 3. PROPERTIES.

     We currently occupy premises at 103 Ricketts Road, Mt Waverley Victoria 3149, Australia. The premises at 103 Ricketts Road are approximately 2,400 square meters and have been suitable for our administration, research and development and pilot scale manufacturing to date. Universal Biosensors Pty Ltd’s current lease of the premises at 103 Ricketts Road expires on September 6, 2007. Universal Biosensors Pty Ltd has entered into a lease of a property of approximately 8,000 square meters which comprises approximately 5,000 square meters of office, research and development and manufacturing facilities, at 1 Corporate Avenue, Rowville in Melbourne, Australia and the balance of the space used for car parking and excess land. Once fitted out, these facilities will be suitable for our continued administration and research and development activities as well as initial commercial scale manufacture of point-of-care tests. The new facilities are in the process of being fitted out and are expected to be ready for occupation in the second half of 2007. The lease for the new premises at 1 Corporate Avenue expires on March 31, 2014 with two options to renew the lease for successive five year periods. We will continue to occupy the premises at 103 Ricketts Road, Mt Waverley until the fit out of the new premises is complete. We anticipate that we will expend approximately U.S.$3,700,000 in connection with the fit out and the establishment of the new premises (refer to discussion above in relation to negotiations with the potential new owner).

     We intend to manufacture the disposable test strips for each of our existing and future point-of-care tests using our own custom manufacturing equipment. During 2006, we ordered the construction of large scale custom designed manufacturing equipment some of which has been delivered. Our manufacturing equipment is based on pilot manufacturing equipment developed and tested by our scientists and engineers. The key manufacturing equipment includes the Slit/Vial System and Strip Manufacturing Machines. We expended approximately U.S.$160,000, U.S.$70,000 and U.S.$4,475,000 in the years ended December 31, 2004, 2005 and 2006, respectively in relation to the acquisition of manufacturing equipment. In the period December 31, 2006 to April 1, 2007, we have committed an additional U.S.$500,000 to the acquisition of additional manufacturing equipment.

     Depending on the specific point-of-care test and the number of strips required to be manufactured, it may become necessary in the future for us to acquire additional large scale equipment to satisfy manufacturing demand. We expect that with minor modifications, the manufacturing equipment would be suitable for the commercial manufacture of the strips for the three tests currently being developed by us and, given the nature of the technologies, is likely to be able to be used for any future tests that may be developed.

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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Principal Stockholders

     The following table presents certain information known to us regarding beneficial ownership of our shares of common stock as of April 1, 2007 by the following persons:

• each person known by us to be the beneficial owner of more than 5% of our common stock;

• our executive officers;

• our directors; and

• our executive officers and directors as a group.

     Beneficial ownership is determined according to the rules of the Securities and Exchange Commission and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security, and includes options and warrants that are exercisable within 60 days. Information with respect to beneficial ownership has been furnished to us by each director, executive officer and owner of 5% or more of our shares. Holders of our CDIs have beneficial ownership of an equivalent number of our shares. Unless otherwise indicated, to our knowledge, each holder of our CDIs possesses sole power to direct CDN how to vote and has investment power over the shares listed, except for shares owned jointly with that person’s spouse.

     The below table lists applicable percentage ownership based on 128,086,971 shares of common stock outstanding as of April 1, 2007 and 2,435,832 options to purchase our shares that are exercisable within 60 days of April 1, 2007. Options to purchase our shares that are exercisable within 60 days of April 1, 2007 are deemed to be beneficially owned by the person holding these options for the purpose of computing percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other holder.

     Unless otherwise indicated in the table below, the address for each of the persons listed in the table below is c/o Universal Biosensors, Inc. 103 Ricketts Road, Mt Waverley, Victoria 3149, Australia.

			Percentage of
Name and Address of Beneficial Owner	Number of Shares(1)		Class
Johnson & Johnson Development Corporation 410 George Street, New Brunswick, NJ 08901, US		18,231,729		14.23	%
CM Capital Venture Trust No. 3 (2) Level 4, 167 Eagle Street Brisbane QLD 4000, Australia		15,196,879		11.86	%
George Kepper Superannuation Fund/ George Kepper (3) 266-268 Maroondah Highway Mooroolbark Victoria 3138, Australia		7,840,338		6.12	%
Mark Morrisson (4)		318,978		*
Salesh Balak	Nil			*
Cameron Billingsley (5)		200,000		*
Garry Chambers (6)		2,337,965		1.82	%
Ron Chatelier Ph.D(7)		1,595,330		1.24	%
Alastair Hodges Ph.D (8)		3,827,738		2.97	%
Andrew Denver (9)		7,932,005		6.19	%
Colin Adam Ph.D (10)		6,626,951		5.17	%
Denis Hanley (11)		8,295,105		6.48	%
Andrew Jane (12)		15,196,879		11.86	%
Charles Kiefel (13)		5,844,005		4.56	%
Elizabeth Wilson (14)		1,015,000		*
Total Directors and Executives as a group (11 persons)		53,189,956		40.95	%

*	Represents beneficial ownership of less than one percent of our outstanding ordinary shares.
(1)	Includes shares issuable pursuant to options exercisable within 60 days of April 1, 2007. The figures represent the
	amounts last notified to us unless otherwise stated. The relevant stockholders may have acquired or disposed of share since the last notification that are not reflected.

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(2)	Includes (i) 11,688,767 shares in the form of CDIs held by CM Capital Investments Pty Ltd as trustee of the CM Capital Venture Trust No.3; and (ii) 3,508,112 shares in the form of CDIs held by CIBC Australia VC Fund LLC as general partner of the Australia Venture Capital Fund L.P., of which CM Capital Investments Pty Ltd is a special limited partner.
(3)	George Kepper Superannuation Fund’s shares in the form of CDIs are held on trust by Kaasim Pty Ltd. Mr. George Kepper is the primary beneficiary of the George Kepper Superannuation Fund.
(4)	Mark Morrisson holds 318,978 options exercisable within 60 days of April 1, 2007.
(5)	A trust of which Cameron Billingsley is a potential beneficiary holds 200,000 shares in the form of CDIs.
(6)	Includes: (i) 1,750,755 shares in the form of CDIs Garry Chambers holds directly; and (ii) 587,210 employee options exercisable within 60 days of April 1, 2007.
(7)	Includes: (i) 1,468,464 shares in the form of CDIs Ron Chatelier holds directly; and (ii) 126,866 employee options exercisable within 60 days of April 1, 2007.
(8)	Includes: (i) 3,048,416 shares in the form of CDIs Alastair Hodges holds directly; and (ii) 779,322 employee options exercisable within 60 days of April 1, 2007.
(9)	Includes: (i) 1,087,425 shares in the form of CDIs Andrew Denver holds directly; (ii) 1,181,812 shares in the form of CDIs held by a trust of which Andrew Denver is a potential beneficiary; and (iii) 5,662,768 shares in the form of CDIs held by The Principals Cornerstone Fund Pty Ltd on trust for Andrew Denver.
(10)	Includes: (i) 964,183 shares in the form of CDIs held by two trusts of which Colin Adam is a potential beneficiary; and (ii) 5,662,768 shares in the form of CDIs held by The Principals Cornerstone Fund Pty Ltd on trust for Colin Adam.
(11)	Includes: (i) 2,313,230 shares in the form of CDIs which Denis Hanley holds directly; (ii) 319,105 shares in the form of CDIs held by a trust of which Denis Hanley is a potential beneficiary; and (iii) 5,662,770 shares held by The Principals Cornerstone Fund Pty Ltd on trust for Denis Hanley.
(12)	Includes: (i) 11,688,767 shares in the form of CDIs held by CM Capital Investments Pty Ltd as trustee of the CM Capital Venture Trust No.3; and (ii) 3,508,112 shares in the form of CDIs held by CIBC Australia VC Fund LLC as general partner of the Australia Venture Capital Fund L.P., of which CM Capital Investments Pty Ltd is a special limited partner. Andrew Jane is a partner of CM Capital Investments Pty Ltd. Andrew Jane may be taken to have an indirect pecuniary interest in an indeterminate portion of all shares of common stock held by CM Capital Investments Pty Ltd as trustee for CM Capital Venture Trust No. 3 and CIBC Australia VC Fund LLC as general partner of the Australia Venture Capital Fund L.P. Andrew Jane disclaims beneficial ownership in such shares, except to the extent of his pecuniary interest therein.
(13)	Includes: (i) 181,237 shares in the form of CDIs Charles Kiefel holds directly; and (ii) 5,662,768 shares in the form of CDIs The Principals Cornerstone Fund Pty Ltd holds on trust for Charles Kiefel.
(14)	Includes: (i) 1,000,000 shares in the form of CDIs Elizabeth (Jane) Wilson holds directly; and (ii) 15,000 shares in the form of CDIs held as trustee.

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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.

The following table sets out the name, age and position of each of the members of our board of directors and our executive officers at April 1, 2007:

Name	Age	Position
Mark Morrisson	45	Chief Executive Officer and Executive Director
Salesh Balak	38	Chief Financial Officer
Cameron Billingsley	30	Company Secretary
Garry Chambers	43	Vice President, Operations
Alastair Hodges, Ph.D.	47	Chief Scientist
Ronald Chatelier, Ph.D.	47	Chief Research Scientist
Andrew Denver	58	Chairman and Non-executive Director
Colin Adam, Ph.D.	63	Non-executive Director
Denis Hanley	59	Non-executive Director
Andrew Jane	45	Non-executive Director
Charles Kiefel	51	Non-executive Director
Elizabeth (Jane) Wilson	48	Non-executive Director

Executive Officers and Directors

Mr. Mark Morrisson BSc. (Hons.)

Mr. Morrisson has served as our Chief Executive Officer since July 2005 and has been an executive director of us since August 2006 and a director of Universal Biosensors Pty Ltd since August 9, 2005. Mark Morrisson’s term of appointment as a director of us ends on the date of our 2008 annual general meeting. After training as a biochemist with the University of Queensland in Australia, in 1986 Mark Morrisson then joined AGEN Biomedical Ltd, a company focused on the advanced medical diagnosis of human diseases and a thrombosis and blood clot specialist. Mr. Morrisson became a member of AGEN Biomedical Ltd’s global management executive team as Vice President of Marketing in 1992 and left AGEN Biomedical Ltd in 1995. More recently in 2005, Mr. Morrisson worked as an advisor and consultant for Thallo Biosciences, a San Francisco based corporate and strategic advisor serving the biotechnology and life sciences industries. Between 2001 and 2005, Mr. Morrisson served as an investment manager for CM Capital Investments Pty Ltd, a Brisbane based venture capital investment company where he led that firm’s investment rounds into CathRx Ltd and Pharmaxis Ltd. Mr. Morrisson holds a Bachelor of Science Degree in Biochemistry (Hons.).

Mr. Salesh Balak B.A., C.A.

Mr. Balak has served as our Chief Financial Officer since November 2006. Prior to joining Universal Biosensors, he was chief financial officer and company secretary of Pearl Healthcare Limited, an ASX listed entity engaged in the manufacturing and healthcare sector. Salesh Balak joined Pearl Healthcare Limited in April 2003 initially as its Group Accounting Manager and was promoted to Chief Financial Officer in June 2004. Whilst at Pearl Healthcare Limited, Mr. Balak was instrumental in the successful acquisition of four businesses and integration of its existing businesses. Prior to joining Pearl Healthcare Limited, Salesh Balak spent 13 years in the Business Services, Audit and Financial Advisory Services divisions of KPMG in both the Melbourne and Fiji offices. He holds a Bachelor of Arts in accounting and economics and is a member of the Institute of Chartered Accountants and Certified Practicing Accountants.

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Mr. Cameron Billingsley L.L.B. (Hons.), B.A.

Mr. Billingsley has served as our Company Secretary since February 2006. Mr. Billingsley has been involved with us as a corporate attorney since our incorporation in 2001. Cameron Billingsley is a corporate lawyer and is the principal and founder of PFM Legal Pty Ltd, a company established to provide company secretarial and general counsel services to Australian technology businesses and has been engaged in this business since April 2004. Cameron Billingsley provides his services as Company Secretary and general legal counsel to us through PFM Legal Pty Ltd. Prior to establishing PFM Legal Pty Ltd, Mr. Billingsley was a corporate lawyer at Piper Alderman Solicitors in Sydney, Australia between January 2001 and April 2004. Mr. Billingsley is also a director of The Principals Funds Management Pty Ltd, which help Australian technology businesses commercialize their technologies. Mr. Billingsley holds a Bachelor of Laws (Honors) and Bachelor of Arts from the University of Technology, Sydney in Australia.

Mr. Garry Chambers

Mr. Chambers has served as our Head of Engineering since April 2002 and as Vice President of Operations since September 1, 2006. Prior to joining Universal Biosensors Pty Ltd, Mr. Chambers was a senior engineer with MediSense (UK), one of the first biotechnology companies to produce mass market biosensors. In 1991, Garry Chambers migrated to Australia to join Memtec Limited, a company involved in the operation, design and installation, filtration and separation of products for water supply and waste water recycling plants, to work on sensor technologies. From 1999 to 2001, he was part of a core team based in the United States, developing the glucose sensor technology. Mr. Chambers is an inventor on 13 patents issued and pending.

Dr. Alastair Hodges BSc. (Hons.), Ph.D.

Dr. Hodges has been working in the field of electrochemical sensors for the last 12 years and has served as our Chief Scientist since April 2002. Dr. Hodges has a BSc. (Hons.) in chemistry and gained a Ph.D. in electrochemistry from the University of Melbourne in 1987. Dr. Hodges worked as a research scientist, then senior and principle research scientist in the Defense Science and Technology Organization and the CSIRO in the fields of electrochemistry and transport processes, particularly involving membranes, until 1995, when he joined Memtec Limited to work on sensor technologies. Memtec was involved in the operation, design and installation, of filtration and separation products for water supply and waste water recycling plants. From 1999 to 2001 Dr. Alastair Hodges led a team that worked in the US on the development of glucose sensor technology. Dr. Hodges has published thirteen papers in refereed journals, is the primary inventor of issued patents in 24 families and has pending patent applications in a further 10 families.

Dr. Ron Chatelier BSc. (Hons.) Ph.D.

Dr. Chatelier has been our Chief Research Scientist since April 2002. Dr. Chatelier has a BSc (Hons) and Ph.D. (Physical Biochemistry) from the University of Melbourne in 1985 where he worked on fluorescence spectroscopy in biological membranes. Following this, Dr. Chatelier developed flow cytometric assays of growth factors binding to cells at the Ludwig Institute for Cancer Research in Melbourne and was a Fogarty Fellow at the National Institutes of Health in Bethesda MD, working on the statistical physics of concentrated protein solutions. Dr. Chatelier joined the CSIRO in 1988 and worked on polymeric biomaterials for cardiovascular applications, and then on the surface modification of ophthalmic materials. From 1999 to 2001, he was part of a core team based in the United States, developing the glucose sensor technology. Dr. Chatelier has developed novel chemistries, voltage pulse sequences and analyses for the sensors. Dr. Chatelier is one of our founding employees and stockholders. He has 55 papers in refereed journals and 15 patents in the areas of polymeric biomaterials and electrochemical biosensors.

Mr. Andrew Denver BSc. (Hons.), M.B.A., F.A.I.C.D.

Mr. Denver has served as our non-executive Chairman since September 2005 and is a member of the Audit & Risk Management Committee. Prior to this date, Andrew Denver has served as a non executive director of us since December 2002. Mr. Denver has served as a director of Universal Biosensors Pty Ltd since December 31, 2002. Mr. Denver’s term of appointment as a director of us ends on the date of our 2009 annual general meeting. Between 2002 and 2005, Mr. Denver was President of Pall Asia, a subsidiary of Pall Corporation formed on the acquisition by Pall Corporation of US Filter’s Filtration and Separations business, where he was also President. Pall Corporation is a technology based filtration, separation and purification multinational company. Andrew Denver is a founder and director of The Principals Funds Management Pty Ltd, a company which helps Australian technology businesses commercialize their technologies. Mr. Denver is a non-executive director of CathRx Ltd, Anzon Australia Ltd and Cochlear Ltd. Mr. Denver graduated from the University of Manchester with a Bachelor of Science Degree (Honors) in Chemistry and achieved a distinction in his M.B.A. at the Harvard Business School and is a Fellow of the Australian Institute of Company Directors.

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Dr. Colin Adam B.E. (Met.), Ph.D.

Dr. Adam has been a non-executive director of us since December 2006 and a director of Universal Biosensors Pty Ltd since July 2002. Dr. Adam’s term of appointment as a director of us ends on the date of our 2007 annual general meeting which is expected to be held in May 2007. Dr. Colin Adam will seek reappointment for three years as a Class III director at this time. Dr. Adam is a member of the Remuneration and Nomination Committee. In 2000, Dr. Adam was the Acting Chief Executive of the Commonwealth Scientific and Industrial Research Organization (“CSIRO”), the peak Australian Government body with a mission for technological development and industrial research and development. Prior to that between 1996 to 1999, Dr. Adam was Deputy Chief Executive directly responsible for all the CSIRO’s commercial activity. Prior to working with the CSIRO, Dr. Adam’s career has included executive positions within the US aerospace industry for Pratt & Whitney Aircraft in Florida and Allied Corporation in New Jersey. Dr. Adam has served as a member of the Australian Government’s Industry Research and Development Board, the Australian Prime Minister’s Science Engineering and Innovation Council and the Victorian Premier’s Science, Engineering and Technology Taskforce. Dr. Adam is a founder and director of The Principals Funds Management Pty Ltd, a company which helps Australian technology businesses commercialize their technologies. Dr. Adam serves on the board of Ausmelt Limited and has a Bachelor of Metallurgical Engineering Degree and a Ph.D. in Metallurgy from the University of Queensland.

Mr. Denis Hanley A.M., M.B.A., F.C.P.A., F.A.I.C.D.

Mr. Hanley has served as a non-executive director of the Company since September, 2001 and is a member of the Audit & Risk Management Committee. Denis Hanley’s term of appointment as a director of us ends on the date of our 2008 annual general meeting. Mr. Hanley is a qualified accountant and company director with more than 35 years experience in the management of technology-based growth businesses. Mr. Hanley has significant experience in developing and commercializing new technology based Australian corporations to become successful global entities. His experience includes 14 years as chief executive officer of Memtec Limited, growing the start-up company to become an international force in filtration and separations technology, listed on the New York Stock Exchange. Prior to this, Mr. Hanley spent more than a decade at global medical company Baxter Healthcare, both in the U.S. and also as Australian Managing Director. Mr. Hanley has served on the Australian Industry Research and Development Board and various technology councils and roundtables. Denis Hanley is a founder and director of The Principals Funds Management Pty Ltd, a company which helps Australian technology businesses commercialize their technologies. Mr. Hanley is currently non-executive Chairman of Pharmaxis Ltd, CathRx Ltd and Lochard Ltd. Mr. Hanley holds an M.B.A. with High Distinction from Harvard Graduate School of Business, where he was named a Baker Scholar.

Mr. Andrew Jane BSc. (Hons.), MSc.

Mr. Jane has served as a non-executive director of the Company since August 2006 and is Chairman of the Remuneration and Nomination Committee. Andrew Jane was a director of Universal Biosensors Pty Ltd between August 15, 2006 and December 6, 2006. Mr. Jane’s term of appointment as a director of us ends on the date of our 2009 annual general meeting. In 2003, Mr. Jane joined CM Capital Investments Pty Ltd, a Brisbane based venture capital investment company, as an Investment Manager and was promoted to Partner in 2006. Prior to this, Mr. Jane worked for Lake Technology, an audio technology company as Director of Business Development and Licensing, where he worked closely with Lake Technology’s strategic partner, Dolby Laboratories an audio technology company in San Francisco, and was responsible for a significant number of global licensing deals during his four years there. Prior to Lake Technology, Mr. Jane held R&D management positions of increasing responsibility at AGEN Biomedical and the CSIRO. Mr. Jane is currently a director of Advent Pharmaceuticals Pty Ltd and an observer to the board of Metastatix, Inc. Andrew Jane received his Master of Science in Instrumentation from the University of Manchester Institute of Science and Technology and holds a Bachelor of Science (Honors) in Physics from St Andrews University in Scotland.

Mr. Charles Kiefel B.Com., F.C.A., F.A.I.C.D.

Mr. Kiefel has served as a non-executive director of us since December 2006 and was a director of Universal Biosensors Pty Ltd between September 2002 and December 6, 2006. Charles Kiefel’s term of appointment as a director of us ends on the date of our 2007 annual general meeting which is expected to be held in May 2007. Mr. Kiefel will seek reappointment for three years as a Class III director at this time. Mr. Kiefel is member of the Audit & Risk Management Committee is a Fellow of the Institute of Chartered Accountants in Australia and a Fellow of the Australian Institute of Company Directors. Mr. Kiefel has more than 20 years experience in finance, investment banking and the investment sector in London with Lazard Bros, New York with Lazard Freres, Sydney with Ord Minnett and with ANZ Investment Bank. Mr. Kiefel is a founder and director of The Principals Funds Management Pty Ltd, a company which helps Australian technology businesses commercialize their technologies. Charles Kiefel is Chairman of the Military Superannuation Board and serves on the advisory boards of two of Australia’s largest private equity funds, Pacific Equity Partners Fund and CHAMP II Fund. Mr. Kiefel is a Director of Business Development for two major US money managers, Turner Investment Partners and LSV Asset Management and is also a non-executive director of Pharmaxis Ltd.

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Dr. Elizabeth Wilson M.B.B.S., M.B.A., F.A.I.C.D.

Dr. Wilson has served as a non-executive director and independent member of the board of directors of Company since December 2006. Dr. Wilson is Chairman of the Audit & Risk Management Committee and a member of the Remuneration and Nomination Committee. Dr. Wilson’s term of appointment as a director of us ends on the date of our 2008 annual general meeting. Dr. Wilson is the Finance Director of the Winston Churchill Memorial Trust and was the inaugural Chair of Horticulture Australia Ltd from 2000 to 2004. She is involved in a number of charitable and cultural organizations and has also served on the Queensland Government Biotechnology Taskforce and the boards of Energex Ltd, WorkCover Queensland, AGEN Biomedical Limited and Protagonist Ltd. Dr. Wilson is a member of the Queensland Premier’s Smart State Council and a member of the University of Queensland Senate. She has an M.B.A. from the Harvard Business School where she studied agribusiness and the health sector. Dr. Wilson is the current Chairman of IMBcom Limited, the commercialization company of the Institute for Molecular Bioscience, and is Immediate Past President of the Australian Institute of Company Directors – Queensland Division, as well as a director of CathRx Ltd, UQ Holdings Ltd and the National Archives Advisory Council.

There are no family relationships between any of our executive officers or directors.

Our board of directors

     Our board of directors currently consists of six non-executive directors and one executive director. The board of directors has been structured as a ‘staggered Board’ comprising three classes of directors with members in each class of directors serving for staggered three-year terms or until his or her successor is duly elected or until his or her earlier death, resignation or removal. The board of directors consists of two Class I directors (currently Mr. Andrew Denver and Mr. Andrew Jane), three Class II directors (currently Mr. Denis Hanley, Dr. Elizabeth Wilson and Mr. Mark Morrisson) and two Class III directors (currently Mr. Charles Kiefel and Dr. Colin Adam), whose initial terms will expire at the our annual meetings of stockholders to be held in 2009, 2008 and 2007 respectively. Subject to the Listing Rules, any additional director of any class elected to fill a vacancy will hold office for a term that coincides with the remaining term of that class. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. In general terms, directors may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 70% of the voting power of our then outstanding share capital. Any vacancy on our board of directors that results from an increase in the number of directors may be filled by a majority of our board of directors then in office, provided that a quorum is present, and any other vacancy occurring on the board of directors may be filled by a majority of the board of directors then in office, even if less than a quorum, or by a sole remaining director.

     Nominations of persons for election to our board of directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors in accordance with the requirements of our amended and restated certificate of incorporation (“certificate of incorporation”) and amended and restated by-laws (“by-laws”). Stockholders wishing to appoint a director must give timely notice thereof in proper written form. To be timely, a stockholder’s notice in the form required by our certificate of incorporation and by-laws must be delivered to or mailed and received at our principal executive offices: (a) in the case of an annual meeting, not less than 90 days and not more than 120 days prior to the anniversary date of the immediately preceding annual meeting, provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting.

Committees

     We have established a Remuneration and Nomination Committee consisting of Dr. Colin Adam, Dr. Elizabeth Wilson and Mr. Andrew Jane (chairman). We have also established an Audit and Compliance Committee consisting of Mr. Andrew Denver, Mr. Denis Hanley, Mr. Charles Kiefel and Dr. Elizabeth Wilson (chairman). The Audit and Compliance Committee is governed by a formal charter.

Corporate Governance

     We are not listed on a U.S. securities exchange and, therefore, not subject to the corporate governance requirements of any such exchange, including those relating to the independence of directors. However, we consider all of our directors to be “independent directors” as defined under the Marketplace Rules of the Nasdaq Stock Market, except for Mr. Mark Morrisson who is an executive officer and employee.

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     In reaching this conclusion with respect to Messrs. Hanley, Denver, Kiefel and Dr. Adam we have considered that we paid US$325,000 in consideration for capital raising services in the year ended December 31, 2006, to The Principal Funds Management Pty Ltd., a corporation of which each owns 25% and of which each is a director. See “Item 7 – Certain Relationships and Related Transactions and Director Independence.” These fees represented more than 5% of the revenues of The Principal Funds Management Pty Ltd; however, none of Messrs. Hanley, Denver, Kiefel or Dr. Adam is an employee or executive officer or a controlling shareholder of The Principal Funds Management Pty Ltd.

     As a result, we do not believe these transactions would interfere with the ability of any of these directors to exercise independent judgment in carrying out his responsibilities as a director.

     In reaching the conclusion that Mr. Jane is independent we have considered his relationship as a partner with CM Capital Investments Pty Ltd., which (i) serves as trustee for CM Capital Venture Trust No. 3 which beneficially owns 11,688,767 of our shares and (ii) is a special limited partner of Australia Venture Capital Fund L.P. which holds 3,508,112 of our shares through its general partner, Australia Venture Capital Fund L.P.

     We do not believe Mr. Jane’s indirect interest in these shares would interfere with his ability to exercise independent judgment in carrying out his responsibilities as a director.

     In reaching the conclusion that Dr. Wilson is independent we have considered that she is the spouse of Mr. Steven Wilson who is a substantial stockholder and officer of the parent company of Wilson HTM Corporate Finance Pty Ltd, the underwriter of our initial public offering in Australia in December 2006 which received underwriting fees from us in an amount that was less than 5% of such underwriter’s revenues for its fiscal year.

     We do not believe this transaction would impair Dr. Wilson’s ability to exercise independent judgment in carrying out her responsibilities as director.

     We are also subject to the corporate governance requirements of the ASX Listing Rules which include guidelines for determination of whether a director should be considered independent for purpose of the ASX Listing Rules. Under these guidelines in order for a director to be independent the board must generally conclude that such director, among other things, is not a “substantial shareholder.” Under these guidelines the holdings of a shareholder are typically considered substantial if they exceed 5% of the outstanding shares. As a result under the ASX Listing Rules Messrs. Hanley, Denver, Jane, Kiefel and Dr. Adam may not be considered independent.

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ITEM 6. EXECUTIVE COMPENSATION.

Compensation Discussion and Analysis

Principles used to determine the nature and amount of remuneration

     The objective of our executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for stockholders. Our performance depends upon the quality of our directors and executives. In order to attract, motivate and retain highly skilled directors and executives, we embody the following principles in our remuneration framework:-

• Provide competitive remuneration to attract, motivate and retain high caliber directors and executives with appropriate skills and experience;

• Remunerate with a mix of short and long term components;

• Remunerate executives according to individual performance and pre-determined benchmarks through cash bonuses; and

• Link executive remuneration to stockholder value through options.

     The Remuneration and Nomination Committee has processes in place to review the performance of the Board of Directors and our senior executives. Our Remuneration and Nomination Committee takes into consideration elements such as the following in setting compensation policies:

• peer group comparisons with our financial performance;

• regulatory requirements;

• rate of employee turnover;

• content and effectiveness of our employee training;

• results of any employee surveys; and

• ability to retain and attract new employees.

     Corporate performance is also taken into account in setting compensation policies and making compensation decisions. The following is taken into consideration:

• milestones achieved by us;

• share price;

• free cash flow per share;

• earnings per share; and

• actual compared to budgeted results

     Our executive remuneration comprises of separate and distinct components. The framework provides a mix of fixed pay and a blend of short and long-term incentives. As executives gain seniority with the group, the balance of this mix shifts to a higher proportion of “at risk” rewards such as bonuses and employee options. The executive remuneration framework currently has four components:

• base pay;

• short-term performance incentives in the form of cash bonuses;

• long-term incentives through participation in our employee stock option plan (“Employee Option Plan”); and

• statutory superannuation.

     The combination of these comprises the executive’s total remuneration.

     Base pay and cash bonuses are paid in cash. Options, which constitute the current form of long-term equity incentive take the form of options granted under our Employee Option Plan. Executive remuneration has provided substantial grants of stock options in order to promote share ownership as a direct means of aligning the interests of executive officer’s with the interests of our stockholders.

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Base pay

     Executives are offered a base pay that comprises the fixed component of their remuneration. Base pay is structured as a total employment cost package, which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ discretion. Base pay is provided to meet competitive salary norms and reward good performance on an annual basis. Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion. There are no guaranteed base pay increases included in any senior executives’ contracts. In setting base salaries, consideration is given to salary compensation of executive officers within our industry and the performance of the executive in previous years. The industry comparisons are used for guidance purposes only. It is the intention of the Remuneration and Nomination Committee to pay base salaries to our executive officers that are commensurate with their qualifications and demonstrated performance that bring continuing and increasing value to our stockholders.

Short-term incentives — Cash bonuses

     If the executive achieves pre-determined milestones as set by the Remuneration and Nomination Committee, a cash bonus, up to a maximum amount for each executive set by the Remuneration and Nomination Committee, may be paid to the available executive. The cash bonuses are awarded to reward superior performance against short-term goals. We believe that paying such cash bonuses will:

• promote the growth, profitability and expense control necessary to accomplish corporate strategic long-term plans;

• encourage superior results by providing a meaningful incentive; and

• support teamwork among employees.

     If payable, cash bonuses are payable in the first quarter of each year. Each executive has a maximum potential cash bonus set by the Remuneration and Nomination Committee and determined depending on the accountabilities of the role and impact on the organization or business unit performance.

     Each year, the Remuneration and Nomination Committee considers the appropriate targets and key performance indicators to link short-term incentives and the level of payout if targets are met. This includes setting any maximum cash bonuses that may be paid to an executive, and minimum levels of performance to trigger payment of short-term incentives.

     For the year ended December 31, 2006, the key performance indicators linked to short-term incentives were based on Group, departmental and personal objectives. The key performance indicators required performance in achieving specific targets as well as other key, strategic non-financial measures linked to drivers of performance in future reporting periods. These key performance indicators are set according to the relevant executive. For the year ending December 31, 2007, the key performance indicators are based on the same principles as the preceding year.

     The Remuneration and Nomination Committee is responsible for assessing whether the key performance indicators are met. To help make this assessment, the Remuneration and Nomination Committee receives detailed reports on performance from management.

     The cash bonus payments may be adjusted up or down in line with under or over achievement against the target performance levels. This is at the discretion of the Remuneration and Nomination Committee

Long-term incentives — Options

     Our long term incentives currently consist of stock option grants. Our Employee Option Plan was adopted in 2004 and approved by our stockholders in October 2006. The Employee Option Plan permits our Board to grant employee stock options to our employees, directors and consultants. The total number of shares that may be issued under the Employee Option Plan is such maximum amount permitted by law and the Listing Rules of Australian Securities Exchange and the limits imposed on our authorized capital in our amended and restated certificate of incorporation. The overall objective for our Employee Option Plan is to provide an equitable and competitive means to reward our executive and other officers for their contribution to our long-range success. Our goal is to meet the following objectives:

• link each participant’s remuneration to our long-term success through the appreciation of stock price;

• align the interests of our officers with the interests of our stockholders, by linking the long-term value of the compensation to stockholder returns;

• provide annual grants of options that are market competitive; and

• improve our ability to attract and retain officers.

     The value of options granted is determined at the time of grant and there is a direct relationship between the value of a stock option and the market price of our common stock. We believe that granting stock options is an effective method of motivating our executive and other officers to manage our business in a manner consistent with the interest of our stockholders.

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     The grant of stock options to our officers are based primarily on their performance, title and base pay. Options granted to date have had a ten year term and generally vest in equal tranches over three years. Our policies for allocating compensation between long-term incentives (granting of options) and currently paid out compensation (base pay and short-term incentives) is to achieve the goals set above. The granting of options is currently the only form of non-cash compensation provided by us. Currently, the allocation between long-term and short term incentives is determined by the Remuneration and Nomination Committee having regard to the seniority and experience of the employee.

     Stock-option awards are generally granted annually in conjunction with the review of the performance of our executive and other officers.

Other remuneration – Superannuation

     As required by Australian law, we contribute to standard defined contribution superannuation funds on behalf of all employees at an amount up to nine percent of each such employee’s salary. Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee’s remuneration to an approved superannuation fund that the employee is typically not able to access until they are retired. We permit employees to choose an approved and registered superannuation fund into which the contributions are paid.

Overview of the compensation process

     The composition of compensation for our executive officers includes: base pay, cash bonus, stock-based awards and superannuation. The elements of executive compensation are discussed at the meetings of our Remuneration and Nomination Committee. During the November of each year, the Remuneration and Nomination Committee discusses the base salaries and cash bonus plans for the next year for our executive officers, and makes recommendations to the Board of Directors for its approval. The Board of Directors usually approves the base pays and cash bonus plan recommended by the Remuneration and Nomination Committee; though if it does not, it could ask the Remuneration and Nomination Committee to prepare revised recommendations. At or about the same time the Remuneration and Nomination Committee subject to the approval of the Board of Directors grants stock-based awards to our executive and other officers. Under Australian Law, options granted to directors (who may or not be executives) require stockholder approval.

     As part of the Remuneration and Nomination Committee’s process, the Managing Director/Chief Executive Officer meets with our Human Resources Manager, and reviews the elements of each executive officer’s (excluding the Managing Director/Chief Executive Officer’s) compensation during the preceding years. Typically, the Human Resources Manager makes compensation recommendations to the Managing Director/Chief Executive Officer for each of our executive officers (excluding the Managing Director/Chief Executive Officer’s compensation). The Managing Director/Chief Executive Officer then presents these recommendations to the Remuneration and Nomination Committee. The Chairman of the Remuneration and Nomination Committee may liaise with the Human Resources Manager whilst reviewing the Managing Director/Chief Executive Officer’s compensation. Our executive officers are not present when our Human Resources Manager makes her recommendations or during the Remuneration and Nomination Committee’s deliberations on the compensation of our executive officers.

Summary Compensation Table

     Our named executives are all employed through our wholly owned subsidiary, Universal Biosensors Pty Ltd. As a result their compensation is paid in Australian dollars. All compensation set out below for the year ended December 31, 2006 is presented in U.S. dollars using the average exchange rate for the 2006 financial year which was A$1.00 to U.S.0.7535.

							Option Awards		All Other
Name and Principal			Salary		Bonus		(1)		Compensation (3)		Total
Position	Year		U.S.$		U.S.$ (2)		U.S.$		U.S.$		U.S.$
Mark Morrisson –		2006		197,009		48,978		155,693		17,731		419,411
Managing Director/Chief Executive Officer (4)
Salesh Balak -		2006		8,948		—		—		805		9,753
Chief Financial Officer (5)
Ian Bennett - Chief		2006		88,985		—		—		8,009		96,994
Financial Officer (6)
Alastair Hodges -		2006		165,215		—		11,638		14,869		191,722
Chief Scientist
Garry Chambers -		2006		130,164		—		10,019		11,715		151,898
Vice President, Operations
Ronald Chatelier -		2006		98,189		—		5,923		8,837		112,949
Chief Research Scientist

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(1)	Refer to Note 6, “Stock Option Plan,” in the Notes to Financial Statements for the year ended December 31, 2006 included in Item 15 for the relevant assumptions used to determine the valuation of option awards.
(2)	Amounts reported in this column represent the cash annual incentive award for 2006 performance under our annual incentive plan. Bonus payments were approved by our board of directors after December 31, 2006.
(3)	Represents compulsory superannuation payment of 9% of base pay.
(4)	No directors’ fees are payable to Mr. Morrisson in addition to his executive remuneration set out above.
(5)	Mr. Salesh Balak commenced his employment with the Company in November 2006.
(6)	Mr. Ian Bennett resigned in October 2006.

Grants of Plan-Based Awards During 2006

     The following table provides information regarding the plan-based awards that we made to the named executive officers during the year ended December 31, 2006

															All						Grant
															Other		All Other				Date Fair
															Stock		Option				Value of
															Awards:		Awards:				Stock
			Estimated Future Payouts						Estimated Future						Number		Number		Exercise		and
			Under Non-Equity						Payouts Under Equity						of		of		or Base		Options/
			Incentive Plan Awards						Incentive Plan Awards						Shares		Securities\		Price of		SAR
			Thres				Maxi-		Thres				Maxi-		of Stock		Underlying		Option		Awards
	Grant		hold		Target		mum		hold		Target		mum		or Units		Options		Awards		(U.S.$)
Name	Date		U.S.$		U.S.$		U.S.$		#		#		#		#		# (1)		U.S.$/Sh		(2)
Mark Morrisson (3)		1-1-06		—		—		—		—		—		—		—		960,560		0.33		220,929
Salesh Balak (4)		—		—		—		—		—		—		—		—		—		—		—
Ian Bennett (5)		1-1-06		—		—		—		—		—		—		—		36,248		0.33		8,337
Alastair Hodges (6)		1-1-06		—		—		—		—		—		—		—		36,248		0.33		8,337
Garry Chambers (7)		1-1-06		—		—		—		—		—		—		—		36,248		0.33		8,337
Ronald Chatelier (8)		1-1-06		—		—		—		—		—		—		—		36,248		0.33		8,337

(1)	The stock option awards shown in the table above are stock options that were awarded to the named executive officers on January 1, 2006. With the exception of the stock options granted to Mark Morrisson, all options granted to employees in 2006 vest in three equal tranches over three years with the first tranche vesting on January 1, 2007, the second tranche vesting on January 1, 2008 and the third tranche vesting on January 1, 2009. The stock options granted to Mark Morrisson vest in three equal tranches over three years with the first tranche vesting on July 1, 2006, the second tranche vesting on July 1, 2007 and the third tranche vesting on January 1, 2008.
(2)	The fair value of the option grants were estimated on the date of each grant using the Black-Scholes pricing model.
(3)	45,000 stock options granted on March 22, 2007 subject to stockholder approval.
(4)	Mr. Balak commenced his employment with the Company in November 2006. 208,000 stock options granted on March 22, 2007.
(5)	Mr. Bennett resigned in October 2006. The options granted to him during the financial year were forfeited.
(6)	36,000 stock options granted on March 22, 2007.
(7)	36,000 stock options granted on March 22, 2007.
(8)	28,000 stock options granted on March 22, 2007.

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Narrative disclosure to summary compensation table and grants

Employee Option Plan

     Our Employee Option Plan was adopted by us in 2004 and approved by our stockholders in October 2006. The Employee Option Plan permits our Board to grant stock options to our employees, directors and consultants. The total number of shares that may be issued under the Employee Option Plan is such maximum amount permitted by law and the Listing Rules of ASX. When exercisable, each option is convertible into one share of common stock at an exercise price determined on the date of grant. The contractual life of each option granted is ten years. No option holder has any right under the option to participate in any other issues of shares of our common stock or any other entity without first having exercised the options. The exercise price and any exercise conditions are determined by the board at the time of grant of the options. Any exercise conditions must be satisfied before the options vest and become capable of exercise. The options lapse on such date determined by the board at the time of grant or earlier in accordance with the Employee Option Plan. Options granted to date have had a ten year term and generally vest in equal tranches over three years. Options may be subject to adjustment in the event of a stock split, stock dividend, consolidation or other change in the structure of our capitalization. Options carry no dividend or voting rights.

Executive service agreements

     Remuneration and other terms of employment for the executive officers are formalized in executive service agreements. The terms and conditions of each of the employment agreements with our executive officers who continued to serve at December 31, 2006 are substantially similar, a summary of which is set out below:

• the executive must devote his time and attention exclusively to our business and affairs and the business and affairs of Universal Biosensors Pty Ltd;

• the executive is bound by customary confidentiality, intellectual property assignment and non competition clauses;

• the executive’s salary is to be reviewed on an annual basis;

• whilst there is no provision or contractual right to receive further compensation, the executive may be entitled to a discretionary cash bonus or be granted stock options under the Employee Option Plan as recommended by the Remuneration and Nomination Committee and determined by our board of directors from time to time;

• each party has the right to terminate the agreement by giving three months notice to the other party;

• we may also terminate the agreement, at any time with reasonable notice, if the executive is mentally or physically unfit to perform the executive’s duties for a total of two months in any 12 month period or, with immediate effect for cause, for default by the executive in the performance of the executive’s responsibilities or the discharge of the executive’s duties, for fraudulent or dishonest conduct by the executive or intemperate use of alcohol or drugs by the executive or conviction of the executive for the commission of a felony or willful or intentional injury to our business or affairs; and

• each agreement will terminate automatically on a date specified in the executive employment agreement unless extended by us from time to time. If the parties do not expressly extend the agreement, the executive’s employment will automatically extend for a further 12 months on the same terms.

     Subject to applicable law, other than payments during the notice period and any long service leave entitlements, no additional payments are payable on termination or change of control of us. All contracts with executives may be terminated early by either party with three months notice or immediately for cause.

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Outstanding equity awards at fiscal-year end table

     The following table provides information as of December 31, 2006 regarding equity awards, including unexercised stock options that had not vested, for each of the named executive officers.

	Option Awards
	Number of				Equity Incentive
	Securities		Number of		Plan
	Underlying		Securities		Awards: Number of
	Unexercised		Under-lying		Securities
	Options		Unexercised		Underlying
	(#)		Options (#)		Unexercised		Option Exercise
Name	Exercisable		Unexercisable		Unearned Options (#)		Price (U.S.$)		Option Expiration Date
Mark Morrisson		318,978		641,582		—		U.S.$0.33	December 31, 2015
Salesh Balak		—		—		—		—		—
Ian Bennett (1)		79,745		—		—		U.S.$0.29	December 31, 2013
Alastair Hodges		768,448		—		—		U.S.$0.29	December 31, 2013
		—		36,248		—		U.S.$0.33	December 31, 2015
Garry Chambers		576,336		—		—		U.S.$0.29	December 31, 2013
		—		36,248		—		U.S.$0.33	December 31, 2015
Ronald Chatelier		115,993		—		—		U.S.$0.29	December 31, 2013
		—		36,248		—		U.S.$0.33	December 31, 2015

(1) On January 5, 2007, upon exercise of employee options, Ian Bennett acquired 79,745 of our shares for exercise consideration of U.S.$0.29 per share.

Option exercises and stock vested table

     There were no options exercised by named executives during the year ended December 31, 2006.

Pension benefits

     We do not provided pension benefits to our named executives. Instead, as required by Australian law, we contribute to standard defined contribution superannuation funds on behalf of all employees at an amount up to nine percent of each such employee’s salary. Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee’s remuneration to an approved superannuation fund that the employee is typically not able to access until they are retired. We permit employees to choose an approved and registered superannuation fund into which the contributions are paid.

Potential payments upon termination or change-in-control

     For details of payments owed to executives upon termination or change of control are set out above. See “Item 6 — Executive Compensation – Executive employment agreements”.

Compensation Committee Interlocks and Insider Participation

     As noted above, during the course of the year ending December 31, 2006 we established a Remuneration and Nomination Committee comprising Dr. Colin Adam, Dr. Elizabeth (Jane) Wilson and Mr. Andrew Jane (chairman). None of Dr. Adam, Dr. Wilson or Mr. Jane have acted as executive officers or employees of us or of Universal Biosensors Pty Ltd. Prior to the establishment of our Remuneration and Nomination Committee, our board of directors were responsible for determining executive remuneration. No non-executive directors have acted as executive officers or employees of us or of Universal Biosensors Pty Ltd. None of our executive officers or employees participated in deliberation with respect to executive officer compensation. None of our executive officers or employees other than Mr. Mark Morrisson participated in deliberation with respect to executive officer compensation.

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     In the fiscal year ended December 31, 2006, no executive officers of us or Universal Biosensors Pty Ltd have served on the compensation committee of any another entity, one whose executive officers or directors served on our Remuneration and Nomination Committee or our board of directors.

Compensation of directors

     The following table provides information about the compensation of our directors for the year ended December 31, 2006. All compensation set out below for the year ended December 31, 2006 is presented in U.S. dollars using the average exchange rate for the 2006 financial year which was A$1.00 to U.S.0.7535.

							Non-Equity		Change in Pension
	Fees						Incentive		Value and Non-
	Earned of						Plan		qualified Deferred		All Other
	Paid in		Stock		Option		Compensati		Compensation		Compensation
	Cash		Awards		Awards		on		Earnings		(3)		Total
Name	U.S.$		U.S.$		U.S.$		U.S.$		U.S.$		U.S.$		U.S.$
Andrew Denver		40,480		—		—		—		—		3,643		44,123
Dr Colin Adam		20,367		—		—		—		—		1,833		22,200
Denis Hanley		20,367		—		—		—		—		1,833		22,200
Andrew Jane (1)		3,038		—		—		—		—		—		3,038
Charles Kiefel		20,367		—		—		—		—		1,833		22,200
Dr Elizabeth (Jane) Wilson (2)		3,038		—		—		—		—		274		3.312
Roger Guidi (resigned 3 November 2006)		—		—		—		—		—		—		—

(1)	Andrew Jane was appointed to our board of directors on August 15, 2006.
(2)	Dr. Elizabeth (Jane) Wilson was appointed to our board of directors on December 6, 2006.
(3)	Represents compulsory superannuation payment of 9% of base pay. A Jane is not subject to superannuation as his directors fees is invoiced by his employer
(4)	No shares or options have been granted to non executive directors and no non equity plan compensation paid to non executive directors.

Director Compensation

     Our Remuneration and Nomination Committee makes recommendations to our board of directors with respect to the remuneration and benefits provided to directors and executive officers. Our board of directors then determines what levels of director remuneration and benefits are appropriate. Stockholder approval of an aggregate pool of non-executive director compensation is required by the Listing Rules of the Australian Securities Exchange, to which we are subject by virtue of the quotation of our shares in Australian Securities Exchange. Our stockholders have approved an aggregate remuneration pool available to non-executive directors of approximately U.S.$376,750 (equivalent to A$500,000) per annum. The annual remuneration payable to our non-executive directors currently comprises of:

• a base fee of approximately U.S.$75,350 (equivalent to A$100,000) per annum for the chairman and approximately U.S.$37,675 (equivalent to A$50,000) for other non-executive directors;

• an additional fee for directors serving on sub-committees, currently approximately U.S.$3,768 (equivalent to A$5,000) per annum and an additional approximately U.S.$3,768 (equivalent to A$5,000) for each chairman of such sub-committees; and

• statutory superannuation for the independent non-executive directors, currently 9% of the base fee.

     None of the non-executive directors have been granted options over our common stock under our Employee Option Plan or any other equity based compensation.

     Termination and cash bonus payments do not apply to non-executive directors. A director may be paid all traveling and other expenses properly incurred by them in attending meetings of directors or committees or stockholder meetings or otherwise in connection with the execution of their duties as directors.

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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

     Set out below are summaries or any transactions, or series of transactions since January 1, 2006 to which we were or are proposed to be a party in which the amount involved exceeded or will exceed U.S.$120,000 and in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of their immediate family had or will have a direct or indirect material interest.

Private Placement of Securities in June and August 2006

     In June 2006 and August 2006, we undertook a placement of convertible preferred stock from existing stockholders, venture capital investors and seed investors to raise U.S.$9,990,000. All of our share capital was subdivided by 3,624.75188 on December 5, 2006. Taking into account the effect of the share subdivision, we issued 30,176,059 shares of convertible preferred stock at price of U.S.$0.33 per share. Our convertible preferred stock converted to shares of common stock immediately prior to the issue of shares under our initial public offering in Australia on December 5, 2006 on a one for one basis. At the date of this Registration Statement, there are no shares of convertible preferred stock outstanding. For further details of the private placement, see “Recent Sales of Unregistered Securities.” The following table summarizes, on a common stock equivalent basis, taking into account the participation by our five percent stockholders (each a “Principal Stockholder”), officers and directors and their immediate family in the private placement.

	Relationship to	Total Common		Aggregate		Percentage
	Universal	stock		Consideration		Interest in Total
Purchaser	Biosensors, Inc.	Equivalents		Paid (U.S.$)		Placement
Johnson & Johnson Development	Principal		2,870,803		950,400		9.51	%
Corporation	Stockholder
Kaasim Pty Ltd as trustee for	Principal		7,840,338		2,595,600		25.98	%
the George Kepper Superannuation Fund	Stockholder
CM Capital Investments Pty Ltd	Principal		7,053,767		2,335,200		23.38	%
as trustee of CM Capital Venture	Stockholder
Trust No. 3)(1)
CIBC Australia VC Fund LLC in	Principal		2,008,112		664,800		6.65	%
its capacity as general partner	Stockholder
of the Australian Venture Capital Fund, L.P. (1)
Denis Hanley	Director		300,854		99,600		1.00	%
Denis Hanley as trustee for the	Trust of which		279,105		92,400		0.92	%
Denis Hanley Superannuation Fund	Denis Hanley is a
	potential
	beneficiary
Denver Family Superannuation Fund	Trust of which		300,854		99,600		1.00	%
	Andrew Denver is a
	beneficiary
Andrew Denver	Director		366,100		121,200		1.21	%
Linda Denver	Spouse of Andrew		242,858		80,400		0.80	%
	Denver
Colin Adam and Elizabeth Adam as	Trust of which		235,608		78,000		0.78	%
trustees for the Collin &	Colin Adam is a
Elizabeth Adam Superannuation	beneficiary
Fund A/C
McLean Engineering Pty Ltd as	Trust of which		184,862		61,200		0.61	%
trustee for The Colin &	Colin Adam is a
Elizabeth Family Trust	potential beneficiary
Alastair Hodges	Executive		57,996		19,200		0.19	%
Garry Chambers	Executive		253,732		84,000		0.84	%

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Initial Public Offer and US Private Placement in December 2006

     On December 5, 2006, we successfully closed an initial public offering in Australia of 36 million shares of common stock at an issue price of U.S.$0.40 (equivalent to A$0.50) per share to raise approximately U.S.$14,243,400 (equivalent to A$18,000,000). Concurrently with the initial public offer, we completed a private placement in the United States to certain US accredited investors of 8 million shares at an issue price of U.S.$0.40 (equivalent to A$0.50) per share to raise approximately U.S.$3,165,200 (equivalent to A$4,000,000). The following table summarizes the participation by our Principal Stockholders, officers and directors in the initial public offer and United States private placement. For further details of the initial public offer and United States private placement, see “Recent Sales of Unregistered Securities.”

						Percentage
						Interest in Total
						Initial Public
	Relationship to			Aggregate		Offer and US
	Universal	Total Common		Consideration		Private
Purchaser	Biosensors	Stock		Paid (U.S.$)		Placement
Johnson & Johnson	Principal		5,150,000		2,060,000		11.70	%
Development	Stockholder
Corporation
CM Capital Investments	Principal		4,635,000		1,854,000		10.53	%
Pty Ltd as trustee of	Stockholder in
CM Capital Venture	which Andrew Jane
Trust No. 3	has indirect
(1)	pecuniary interest
CIBC Australia VC Fund	Principal		1,500,000		600,000		3.41	%
LLC in its capacity as	Stockholder in
general partner of the	which Andrew Jane
Australian Venture	has indirect
Capital Fund,	pecuniary interest
L.P.(1)
Denis Hanley	Director		200,000		80,000		0.45	%
Amarden Pty Ltd as	Trust of which a		20,000		8,000		0.05	%
trustee of the George	daughter of Denis
St Trust	Hanley is a
	potential
	beneficiary
	Trust of which
Denis M Hanley Pty Ltd	Denis Hanley is a
as trustee for the	potential
Hanley Family Trust	beneficiary		40,000		16,000		0.09	%
Megreg Holdings Pty	Trust of which		800,000		320,000		1.82	%
Ltd as trustee for the	brother-in-law of
Megreg Holdings	Denis Hanley is a
Superannuation Fund	potential
	beneficiary
Allison Denver	Daughter of Andrew		100,000		40,000		0.23	%
	Denver
Colin Denver	Son of a Andrew		100,000		40,000		0.23	%
	Denver
Andrew and Linda	Trust of which		272,000		108,800		0.62	%
Denver as trustees of	Andrew Denver is a
the Denver Family	beneficiary
Superannuation Account
Elizabeth (Jane) Wilson	Director		1,000,000		400,000		2.27	%
Wolverley Pty Ltd as	Trust of which		200,000		80,000		0.45	%
trustee for the	Cameron Billingsley
Fenelon Falls Trust	is a potential
Fenelon Falls Trust	beneficiary

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(1)

Mr. Andrew Jane is a director of us and a Partner of CM Capital Investments Pty Ltd as trustee for CM Capital Venture Trust No. 3. CM Capital Investments Pty Ltd is a special limited partner of CIBC Australia VC Fund LLC as general partner of the Australia Venture Capital Fund L.P. Mr. Andrew Jane may be taken to have an indirect pecuniary interest in an indeterminate portion of all shares of common stock held by CM Capital Investments Pty Ltd as trustee for CM Capital Venture Trust No. 3 and CIBC Australia VC Fund LLC as general partner of the Australia Venture Capital Fund L.P. Andrew Jane disclaims beneficial ownership in such shares, except to the extent of his pecuniary interest therein.

(2)

Takes into account the subdivision of our share capital by 3,624.75188 on December 5, 2006.

Transactions with our Executive Officers and Directors

     We have employment agreements with Mr. Morrisson, Dr. Hodges, Mr. Chambers, Dr. Chatelier and Mr. Balak, which provide for certain salary entitlements.

     Since 2004, PFM Legal Pty Ltd has been engaged to provide general legal and some book keeping services to Universal Biosensors Pty Ltd pursuant to a standard legal letter of engagement. Between October 2006 and February 25, 2007, PFM Legal provided the services of an employee of PFM Legal Pty Ltd, Ms Katherine Chapman, as company secretary of us. Since February 26, 2007, PFM Legal Pty Ltd has provided the services of the principal of PFM Legal Pty Ltd, Mr. Cameron Billingsley, as company secretary of us. PFM Legal Pty Ltd was paid approximately U.S$304,226, U.S$12,602, U.S.$7,438 for the years ended December 31, 2006, 2005 and 2004, respectively in connection with the provision of general legal and book keeping services to Universal Biosensors Pty Ltd.

     Messrs Hanley, Denver, Kiefel and Dr Adam are directors of us. They are also stockholders and directors of The Principals Funds Management Pty Ltd which was paid a total of U.S.$325,000 in the year ended December 31, 2006 from us in connection with capital raising services. The Principals Funds Management Pty Ltd was paid a fee of approximately U.S.$83,087 (equivalent to A$105,000) by the underwriter, Wilson HTM Corporate Finance Ltd in connection with firm commitments to subscribe for shares in connection with the initial public offer of our shares in Australia which closed in December 2006. Mr. Cameron Billingsley is a director but not a stockholder of The Principals Funds Management Pty Ltd.

     Mr Andrew Jane is a partner of CM Capital Investments Pty Ltd. CM Capital Investments Pty Ltd as trustee of the CM Capital Venture Trust No. 3 was paid a sub-underwriting fee by Wilson HTM Corporate Finance Ltd for subscribing for shares in the initial public offer in Australia which closed in December 2006. The underwriting fee was satisfied by the transfer of 135,000 shares by the underwriter Wilson HTM Corporate Finance Ltd to CM Capital Investments Pty Ltd as trustee for CM Capital Venture Trust No. 3.

     Dr. Elizabeth (Jane) Wilson is the spouse of Mr. Steven Wilson who is a substantial stockholder and officer of the parent company of Wilson HTM Corporate Finance Pty Ltd, the underwriter of the initial public offering of our shares in Australia in December 2006. Refer to our financial statements for more details.

     A majority of disinterested directors will be required to approve any material related party transactions involving our executive officers or directors. Additionally, we will seek approval of stockholders in relation to any material related party transactions as may be required under the Listing Rules of ASX.

Stock Option Awards

     For information regarding stock options and stock awards granted to our named executive officers and directors, see “Item 6 – Executive Compensation.”

63

ITEM 8. LEGAL PROCEEDINGS.

     So far as we are aware, there are no legal or arbitration proceedings, active or threatened against, or being brought by, us or Universal Biosensors Pty Ltd, which may have a material effect on our business.

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ITEM 9. MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market information

     Our shares of common stock are not currently traded on any established United States public trading market. We have not determined whether we will seek the quotation of our shares of common stock on any United States public trading market. We cannot assure you that we will seek to be quoted on any United States public trading market or that we would meet any applicable listing requirements.

     Our shares of common stock are traded on ASX in the form of CHESS Depositary Interests, or CDIs, under the ASX trading code “UBI”. The Clearing House Electronic Subregister System, or “CHESS”, is an electronic system which manages the settlement of transactions executed on ASX and facilitates the paperless transfer of legal title to ASX quoted securities. CHESS cannot be used directly for the transfer of securities of companies, such as us, that are domiciled in countries whose laws do not recognize uncertificated holdings or electronic transfer of legal title. CDIs are used as a method of holding and transferring the beneficial ownership of these securities on ASX which are not able to be electronically traded in CHESS. The main difference between holding CDIs and holding the underlying securities (in this case our shares) is that a holder of CDIs has beneficial ownership of the equivalent number of our shares instead of legal title. Legal title is held by CHESS Depositary Nominees Pty Ltd, or CDN, and the shares are registered in the name of CDN and held by CDN on behalf of and for the benefit of the holders of CDIs. CDN is a wholly owned subsidiary of ASX.

     Holders of CDIs who do not wish to have their trades settled in CDIs on ASX may request that their CDIs be converted into shares, in which case legal title to the shares of common stock are transferred to the holder of the CDIs (now a stockholder). Likewise, stockholders who wish to be able to trade on ASX can do so by requesting that their shares be converted into CDIs and by lodging their applicable share certificate with our share registrar and signing a share transfer form with respect to the relevant shares. Our share registrar will then transfer the shares from the stockholder to CDN and establish a CDI holding in the name of the stockholder (now a CDI holder).

High and low sale prices of our CDIs on ASX

     The sale prices of our shares traded in the form of CDIs are quoted on ASX in Australian dollars. Our CDIs were first quoted on ASX on December 13, 2006. Twenty minute delayed trading prices of our CDIs are available through the ASX at www.asx.com.au.

     The following tables sets forth, for the periods indicated, the highest and lowest market prices in Australian dollars for our CDIs reported on ASX since December 13, 2006, the date on which the our CDIs were quoted thereon.

		High A$		Low A$
Fiscal Year 2006
	Fourth Quarter (December 13,		A$1.50		A$0.805
	2006 to December 31, 2006)
Fiscal Year 2007
	First Quarter (January 1, 2007		A$1.74		A$1.00
	to March 31, 2007)
	Second Quarter (April 1, 2007		A$1.20		A$1.10
	to April 23, 2007)

The closing price of our CDIs trading on ASX was A$1.11 as at April 23, 2007.

Security details

     As of April 1, 2007, there were 128,086,971 shares of our common stock issued and outstanding and 4,533,492 employee options over an equivalent number of shares of common stock (2,435,832 of which are currently exercisable or exercisable within the next 60 days). All of our issued and outstanding shares of common stock are fully paid. On March 22, 2007, the board of directors approved the grant of a further 45,000 options over shares to the Managing Director subject to receipt of necessary stockholder approval for the grant of the options under the ASX Listing Rules which will be sought at our annual general meeting proposed to be May 15, 2007.

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     In connection with the initial public offering of our shares in Australia and quotation of our shares in the form of CDIs on ASX, certain of our stockholders have entered into lock up agreements with ASX restricting their ability to dispose of their common stock. 418,804 of our shares are subject to such escrow until June 14, 2007 and 2,893,408 of our shares are subject to escrow until August 29, 2007 and 27,189,052 of our shares are subject to escrow until December 12, 2008. Likewise, our Managing Director has entered into a lock up agreement with ASX restricting his ability to dispose of 960,560 of his shares that may be granted on exercise of his employee options until December 12, 2008. Certain of our stockholders also entered into lock up agreements with the underwriter of our Australian initial public offering agreeing not to dispose of 37,252,581 shares of common stock until December 6, 2007.

     Under applicable U.S. securities laws all of the shares of our common stock are “restricted securities” as that term is defined in Rule 144 under the Securities Act. Restricted securities may be resold in the public market to U.S. persons as defined in Regulation S only if registered or if they qualify for an exemption from registration under the Securities Act, each as described in more detail below. We have not agreed to register any of our common stock for resale by security holders.

Rule 144(k)

     Because there is no public trading market for the shares in the United States, no sales in the United States under Rule 144 other than Rule 144(k) is likely to occur. Under Rule 144(k), a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell the shares without having to comply with the manner of sale, public information, volume limitation or notice filing provisions of Rule 144.

Holders

     Currently, CDN holds all of our shares on behalf of and for the benefit of the holders of CDIs. Set out below is the number of our registered holders of CDIs at specific dates:

			Number of Holders that
	Total Number of		are United States
Date	Registered Holders		Residents
At December 31, 2004		30		5
At December 31, 2005		32		5
At December 31, 2006		588		13
At April 1, 2007		828		13

     We do not consider that this Registration Statement will have an effect on the amount and percentage of the present holdings of our securities by beneficial owners of 5% of more of our shares or directors and their nominees. The principal reasons for the beneficial holdings to vary will be through trading of our CDIs on ASX.

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Dividends

     To date, we have not declared or paid any cash dividends on our shares or CDIs and currently intend to retain any future earnings, if any, for funding growth. We do not anticipate paying any dividends in the foreseeable future.

Securities authorized for issuance under equity compensation plans

     Set out below are details of our Employee Option Plan as at December 31, 2006.

Equity Compensation Plan Information
	Number of securities to be		Weighted average exercise
	issued upon exercise of		price of outstanding		Number of securities
	outstanding options,		options, warrants and		remaining for future
Plan Category	warrants and rights		rights		issuance
Equity compensation plans approved by security holders		3,820,487		U.S.$0.31		(1)
Equity compensation plans not approved by security holders		—		—		(1)
Total		3,820,487		U.S.$0.31		(1)

(1) The number of employee options able to be granted is limited to the amount permitted to be granted at law, the ASX Listing Rules and by the limits on our authorized share capital in our certificate of incorporation. The Listing Rules of ASX generally prohibits companies whose securities are quoted on ASX from issuing securities exceeding 15% of issued share capital in any 12 month period, without stockholder approval.

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ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.

Initial Public Offer in Australia

     On December 5, 2006, we closed our initial public offer in Australia and issued 36 million shares of common stock at an issue price of approximately U.S.$0.40 (equivalent to A$0.50) per share to raise an aggregate total of approximately U.S.$14,243,400 (equivalent to A$18,000,000) in cash. The initial public offer was underwritten by Wilson HTM Corporate Finance Ltd, an underwriter based in Brisbane, Australia (“Underwriter”). We paid the Underwriter a retainer of approximately U.S.$17,409 (equivalent to A$22,000) together with a management fee of approximately U.S.$156,677 (equivalent to A$198,000) and an underwriting commission of approximately U.S.$783,387 (equivalent to A$990,000) in connection with the initial public offering. In addition, we reimbursed the Underwriter for certain of their outgoings, costs and expenses incurred in connection with the initial public offering. We raised approximately U.S.$12,713,530 net of fees and commissions paid to the Underwriter in our initial public offer in Australia.

     We issued these shares in reliance upon exemptions from registration under Regulation S under the Securities Act, as modified by the January 7, 2000 No Action Letter issued by the Securities Exchange Commission to ASX. The initial public offer constituted an “offshore transaction” for the purposes of the Securities Act as shares offered in the initial public offer were only available to Australian residents. Restrictions have been applied to our securities to prevent the resale of the securities into the United States. All shares issued in the initial public offer in Australia rank equally in all respects with all other shares on issue.

December 2006 Private Placement in the United States

     Concurrently with our initial public offer in Australia, on December 5, 2006 we completed a private placement in the United States to certain United States accredited investors (as that term is defined by the Securities Act) and issued 8 million shares of common stock to raise approximately U.S.$3,165,200 (equivalent to A$4,000,000). The private placement in the United States was not underwritten.

     We issued these shares in reliance upon exemptions from registration under Regulation D under the Securities Act. The shares purchased pursuant to Regulation D are “restricted securities” that are only able to be re-sold in the United States if such shares are sold pursuant to an exemption from registration or are registered under the Securities Act. All shares issued in the private placement in the United States rank equally in all respects with all other shares on issue.

June and August 2006 Private Placements

     On August 30, 2006 and June 15, 2006 we closed two private capital raisings in which we issued an aggregate total of 30,176,059 shares of series A convertible preferred stock at U.S.$0.33 per share (taking into account the effect of the subdivision of our share capital on December 5, 2006) to raise a total of U.S.$9,990,000. These shares of convertible preferred stock were converted into shares of common stock on a one for one basis on December 5, 2006. Shares were offered under the private placement to all existing stockholders of us at that time and to certain venture capital investors and other accredited investors.

     With respect to shares issued to United States investors, we issued shares in reliance upon exemptions from registration under Regulation D under the Securities Act. In relation to shares issued to Australian investors, we issued shares to in reliance upon exemptions from registration under Regulation S under the Securities Act.

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Issuance of Employee Stock Options

     The table below sets forth our issuances of employee stock options for each of the fiscal years ended December 31, 2006, 2005 and 2004, respectively. These options were issued solely to non US Person (as defined under Regulation S) pursuant to our Employee Option Plan described under “Item 6 -Executive Compensation – Employee Option Plan”. These employee stock options were issued in reliance upon exemptions from registration under Regulation S under the Securities Act.

			Average Exercise
Options Issued During the Year	Number of Options		Price
Ended	Issued		(U.S.$)
December 31, 2004		2,076,982		0.29
December 31, 2005		—	Not Applicable
December 31, 2006		2,066,108		0.33

Exercise of Employee Stock Options

The table below sets forth the number of employee stock options exercised and the number of shares issued in the period from January 1, 2007 to April 1, 2007 and the fiscal years ended December 31, 2006, 2005 and 2004, respectively. We issued these shares in reliance upon exemptions from registration under Regulation S under the Securities Act.

	Number of Options
	Exercised and
	Corresponding Number
Period Ending	of Shares Issued	Option Exercise Price
December 31, 2004	Nil	—
December 31, 2005	79,745	U.S.$0.29
December 31, 2006	Nil	—
April 1, 2007	79,745	U.S.$0.29
	7,250	U.S.$0.33

* Option numbers and option exercise prices adjusted to reflect the subdivision of our share capital by 3,624.75188 which occurred on December 5, 2006.

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ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.

     Our shares of common stock are not currently traded on any established United States public trading market. We have not determined whether we will seek the quotation of our shares of common stock on any United States public trading market. We cannot assure you that we will seek to be quoted on any United States public trading market or that we would meet any applicable listing requirements. Since December 13, 2006 our shares of common stock are traded on ASX in the form of in the form of CHESS Depositary Interests, or CDIs, under the ASX trading code “UBI”.

     Our authorized capital stock consists of 300,000,000 shares of common stock, par value of U.S.$0.0001 per share, and 1,000,000 shares of undesignated preferred stock, par value of U.S.$0.01 per share.

     The following description of our capital stock is a summary of the material provisions of our shares of common stock. We refer in this section to our amended and restated certificate of incorporation as our certificate of incorporation, and we refer to our amended and restated by-laws as our by-laws. For a complete description of our capital stock, you should read our amended and restated certificate of incorporation and amended and restated by-laws included as Exhibits to this Registration Statement and available from our website www.universalbiosensors.com.

Common Stock

     As of April 1, 2007, there were there were 128,086,971 shares of our common stock outstanding and held of record by approximately 828 stockholders.

     The rights attaching to our shares of common stock are derived through a combination of our certificate of incorporation, by-laws and the Delaware General Corporation Law and other applicable laws. Holders of our shares of common stock are entitled to notice of and to be present at and to vote at stockholder meetings. One third of the issued shares of common stock outstanding and entitled to vote at a meeting, present in person or represented by proxy, constitute a quorum at all meetings of stockholders. Special meetings of stockholders may be called only by our board of directors, our chairman or certain executive officers. There is no ability for stockholders to call a special meeting. Holders of our shares of common stock are entitled to one vote for each share held of record for the election of directors and on all matters submitted to a vote of stockholders. Holders of our shares of common stock are entitled to receive dividends ratably, if any, as may be declared by our board of directors out of legally available funds, subject to any preferential dividend rights of any preferred stock then outstanding and Delaware General Corporation Law. Upon our dissolution, liquidation or winding up, holders of our common stock are entitled to share ratably in our net assets legally available after the payment of all our debts and other liabilities, subject to the preferential rights of any preferred stock then outstanding. Holders of our common stock are not entitled to cumulative voting rights with respect to the election of directors, and our shares of common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

     Refer below to the section entitled “Provisions of our Certificate of Incorporation and By-Laws and Delaware Anti-Takeover Law” with respect to provisions of our certificate of incorporation and by-laws that may have the effect of delaying, deferring or preventing a change of control.

     In order to allow trading of our common stock on the Australian Securities Exchange, or ASX, CHESS Depositary Interests, or CDIs, are issued to stockholders in uncertificated form. CDIs represent beneficial ownership of the underlying share of our common stock, the legal ownership of which is held by CHESS Depository Nominees Pty Ltd, or CDN, which is controlled by ASX. CDN’s principal executive offices are Exchange Centre, 20 Bridge Street, Sydney, New South Wales 2000, Australia. CDIs are structured so that each of the CDIs represents one of our shares of common stock. A CDI holder may choose to either leave their holdings in the form of CDIs (so that legal title remains in the name of CDN) or convert the CDIs into shares of common stock and hold legal title in their own right. Our shares are quoted on the ASX, but trades are settled by the delivery of CDIs. Legal title to all shares remains with CDN, unless and until a CDI holder requests in writing a transfer of beneficially owned shares from CDN to the holder, in which case a paper transfer will be effected in accordance with our certificate of incorporation and by-laws. We maintain a register of individual CDI holders through Registries Limited in Sydney, Australia. Registries Limited principal executive offices are Level 2, 28 Margaret Street, Sydney, NEW SOUTH WALES 2000, Australia.

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     CDI holders have the right to direct CDN on how CDN should vote. ASX rules require us to send a notice of stockholder meetings to each CDI holder at the address recorded in the register of CDI holders. The notice must: (a) inform the holder of the holder’s rights to direct CDN on how it should vote with respect to the resolutions in the notice; (b) provide a mechanism for the holder to direct CDN on how to vote; and (c) provide the date and time by which the holder must provide such direction to CDN. CDI holders are to receive all direct economic benefits of the shares of common stock underlying their CDIs. Any dividend declared in respect of our shares underlying CDIs will be distributed to the CDI holders. In the event of our liquidation, dissolution or winding up, CDI holders will be entitled to the same economic benefits on their CDIs as stockholders.

Preferred Stock

     Pursuant to our certificate of incorporation, without further action by the stockholders, the board of directors has the authority to issue up to 1,000,000 shares of preferred stock in one or more series (although Australian Securities Exchange Rules generally requires stockholder approval for certain issuances that exceeds 15% of our then outstanding capital stock in any 12 month period without the approval of shareholders). The board of directors also has the right to fix the designations, voting powers, preferences, and relative participating, optional or other rights, any or all of which may be greater than the rights of our shares of common stock, and any qualifications, limitations or restrictions thereof. Shares of preferred stock could thus be issued quickly with terms that could have the effect of delaying, deferring or preventing a change of control. We do not currently have any preferred stock outstanding and have no current plans to issue any preferred stock.

Provisions of our Certificate of Incorporation and By-Laws and Delaware Anti-Takeover Law

     Our certificate of incorporation and by-laws include a number of provisions that may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.

Board Composition and Filling Vacancies. In accordance with our certificate of incorporation, our board of directors is divided into three classes serving staggered three-year terms, with one class being elected each year. Our certificate of incorporation also provides that directors may be removed only for cause and then only by the affirmative vote of the holders of 70% or more of the shares then entitled to vote at an election of directors.

No Written Consent of Stockholders. Our certificate of incorporation provides that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting.

Meetings of Stockholders. Our by-laws provide that only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our by-laws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.

Advance Notice Requirements. Our by-laws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or business to be brought before annual meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our company secretary prior to the meeting at which the action is to be taken. To be timely, a stockholder’s notice must be delivered to or mailed and received at our principal executive offices: (a) in the case of an annual meeting, not less than 90 days and not more than 120 days prior to the anniversary date of the immediately preceding annual meeting, provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting.

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Amendment to Certificate of Incorporation or By-Laws. As required by the Delaware General Corporation Law, any amendment of our certificate of incorporation must first be approved by a majority of our board of directors and, if required by law or our certificate of incorporation, thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment, and a majority of the outstanding shares of each class entitled to vote thereon as a class, except that the amendment of the provisions relating to prohibiting stockholder action by written consent, calling special stockholder meetings, our staggered board, removal of directors and ASX matters must be approved by not less than 70% of the outstanding shares entitled to vote on the amendment. Our by-laws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in the by-laws; and may also be amended by the affirmative vote of at least 70% of the outstanding shares entitled to vote on the amendment.

Section 203 of the Delaware General Corporation Law

     Upon this Registration Statement becoming effective, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of our voting stock. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

• before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

• upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or

• at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Delaware General Corporation Law

     The Delaware General Corporation Law provides us with the statutory authority to indemnify our officers and directors. The applicable provisions of Delaware Law state that, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In any threatened, pending or completed action by or in the right of the corporation, a corporation also may indemnify any person in connection with that action’s defense or settlement, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation; however, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that a court shall determine that such indemnity is proper. To the extent the present or former officer or director has been successful on the merits or otherwise in defense of any such action, such indemnity is mandatory.

     Under the applicable provisions of Delaware Law, any indemnification shall be made by the corporation only as authorized in the specific case upon a determination that the indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct.

Certificate of Incorporation

     Our amended and restated certificate of incorporation provides for indemnification of our directors and officers and former directors and officers to the fullest extent permitted by the law, however, except for proceedings to enforce rights to indemnification, we are not obligated to indemnify any such director or officer or former director or officer or any of their heirs, executors and personal and legal representatives) in respect of proceedings initiated by them unless consented to by our board of directors. The board of directors may provide indemnities to our employees and agents. The rights of indemnification in the certificate of incorporation are not exclusive of any other right which the person may have. Any repeal or modification to the indemnification provisions in our certificate of incorporation shall not adversely affect any rights of indemnification the director or officer or former director or officer had at the time of the repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification. The certificate of incorporation provides that no director or former director shall be personally liable to us or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation is not permitted under the Delaware General Corporation Law and in such case, we shall indemnify the directors and officers to the fullest extent authorized or permitted by law.

By-laws

     In addition, our by-laws provide that we shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that such person is or was our director or officer or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to our best interests, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

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     The by-laws provide we shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was our director or officer or is or was at our request serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

     Any indemnification under our by-laws (unless ordered by a court) shall be made by us only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct. Such determination shall be made, with respect to a person who is a director or officer of us at the time of such determination: (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum; or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum; or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel to the Company. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Company. To the extent, however, that a present or former director or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.

     The by-laws provide that the Company may apply to the Court of Chancery in the State of Delaware for indemnification to the extent otherwise permissible under by-laws. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer of the Company is proper in the circumstances because such person has met the applicable standards of conduct. If successful, in whole or in part, the director or officer of the Company seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

     Expenses incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified.

     The indemnification and advancement of expenses provisions of the by-laws are not exclusive of any other rights to which those seeking indemnification may be entitled.

     The bylaws provide that the Company may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Company would have the power or the obligation to indemnify such person against such liability.

Individual Indemnity Agreements

     Each of our directors and our chief financial officer and company secretary has entered into an indemnity agreement with us that provides certain rights to indemnification of such persons which are not exclusive of any other rights provided by law or our amended and restated certificate of incorporation or by-laws.

     Each indemnity agreement provides that we will indemnify the relevant director or executive officer if he or she is a party to or threatened to be a party to any proceedings (other than proceedings by or in the right of the Company) by reason of the fact that he or she was a director or executive officer (as applicable) of the Company or as an officer, employee or agent of another entity, against all expenses, judgments, fines and penalties actually and reasonably incurred by the director or executive (as applicable) in connection with the defense or settlement of such proceedings, but only if he or she acted in good faith and in a manner he or she reasonably believed to be in the best interests of the Company or, in the case of criminal proceedings, in addition he or she had no reasonable cause to believe that his or her conduct was unlawful.

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     Each indemnity agreement also provides that we will indemnify the relevant director or executive officer if he or she is a party or threatened to be a party to any proceedings by or in the right of the Company by reason of the fact that he or she was a director, officer, employee or agent or another entity against all expenses actually and reasonably incurred by the relevant director or executive officer in connection with the defense or settlement of such proceedings, but only if he or she acted in good faith and in a manner which he or she reasonably believed to be in the best interests of the Company, except that no indemnification will be made in respect of any proceedings where the relevant director or executive officer is adjudged to be liable to the Company, unless the court determines that he or she is reasonably entitled to be indemnified for such expenses that the court shall deem proper. The relevant director or executive officers has no right to be indemnified in connection with the purchase and sale by the director or executive (as applicable) of securities in violation of section 16(b) of the Exchange Act or in connection with any proceeding charging improper personal benefit to the the relevant director or executive officer (as applicable)in which he or she is adjudged liable on the basis that personal benefit was improperly received by the applicable director or executive officer.

     The indemnity agreements also provide that we must from time to time make good faith determinations whether or not it is practicable for us to obtain and maintain a policy of directors’ and officers’ indemnity insurance.

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ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Our financial statements appear at end of this registration statement. Please see table of contents to the financial statements on page F-1.

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ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     In July 2006, prior to being admitted to ASX and our CDIs being quoted on ASX, we requested that our then current auditors KPMG resign. Subsequently, KPMG submitted its resignation in August 2006. The decision to request that KPMG resign was made by our board of directors. At this time, we appointed PricewaterhouseCoopers as our auditors.

     KPMG’s reports on our consolidated financial statements for the years ended December 31, 2004 and 2005 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During these years and the interim period through to KPMG’s replacement, we had no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which disagreements, if not resolved to the satisfaction of KPMG, would have caused it to make reference to the subject matter of the disagreements in connection with its report. A letter from KPMG is attached as an Exhibit to this Registration Statement.

     None of the reportable events described by Item 304(a)(1)(v) of Regulation S-K has occurred.

     During the two years ended December 31, 2005 and December 31, 2006 and the interim period we did not consult with PricewaterhouseCoopers regarding any of the matters set forth in Item 304(a)(2) of Regulation S-K in relation to work in connection with our initial public offer in Australia. PricewaterhouseCoopers have subsequently audited our consolidated financial statements for the fiscal years ended December 31, 2004, 2005 and 2006 and the cumulative amounts from inception to December 31, 2006.

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ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.

(a) List separately all financial statements filed as part of the registration statement.

See page F-1 for a listing of the financial statements filed as part of this Registration Statement.

(b) Furnish the exhibits required by Item 601 of Regulation S-K.

The following exhibits are filed as part of this Registration Statement.

Exhibit Number	Description
3.1	Amended and restated articles of incorporation
3.2	Amended and restated by-laws
10.1	License Agreement between LifeScan and Universal Biosensors, Inc effective April 1, 2002, as amended
10.2	Development and Research Agreement between LifeScan and Universal Biosensors, Inc. effective April 1, 2002, as amended
10.3	Form of indemnity agreement entered into with directors of us, our chief financial officer and company secretary
10.4	Lease for the premises at 103 Ricketts Rd, Mt Waverley from Jane Sergi to Universal Biosensors Pty Ltd effective May 23, 2005
10.5	Lease of premises 1 Corporate Avenue, Rowville Victoria Australia
10.6	AusIndustry, R&D Start Program Agreement, effective February 25, 2005 (particular and general conditions).
10.7	Employee Option Plan
10.8	Employment agreement between Universal Biosensors Pty Ltd and Mr Salesh Balak effective November 27, 2006
10.9	Employment agreement between Universal Biosensors Pty Ltd and Mr Garry Chambers effective April 1, 2006
10.10	Employment agreement between Universal Biosensors Pty Ltd and Dr Ronald Chatelier dated April 1, 2006
10.11	Employment agreement between Universal Biosensors Pty Ltd and Dr Alastair Hodges effective April 1, 2006
10.12	Employment agreement between Universal Biosensors Pty Ltd and Mr Mark Morrisson dated July 1, 2006
16.0	Letter from KPMG
21.0	List of Subsidiaries

78

SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized.

		Universal Biosensors, Inc.
				(Registrant)
Date: April 30, 2007	By:		/s/	Mark Morrisson
				(Signature)
				Mr Mark Morrisson
				Chief Executive Officer and Managing Director

79

UNIVERSAL BIOSENSORS, INC.
(A Development Stage Enterprise)

Consolidated Financial Statements
and Schedule

(With Independent Auditors’ Report Thereon)

UNIVERSAL BIOSENSORS, INC.
(A Development Stage Enterprise)

Consolidated Financial Statements

And Schedules

Table of Contents

	Page
Independent Auditors’ Report December 31, 2006, 2005 and 2004		F-1
Balance Sheets		F-2
Statements of Operations		F-3
Statements of Stockholders’ Equity and Comprehensive Income		F-4
Statements of Cash Flows		F-5
Notes to Financial Statements		F-6
Schedule ii — Valuation and Qualifying Accounts		F-28
Additional Financial Information		F-29

F-1

PricewaterhouseCoopers

ABN 52 780 433 757

Freshwater Place

2 Southbank Boulevard

SOUTHBANK VIC 3006

GPO Box 1331L

MELBOURNE VIC 3001

DX 77

Website:www.pwc.com/au

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Universal Biosensors Inc:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in stockholder’s equity and comprehensive income and cash flows present fairly, in all material respects, the financial position of Universal Biosensors Inc. and its subsidiaries (a development stage enterprise) at December 31, 2006 and 2005, and the results of their operations and their cash flows for the years ended December 31, 2004, December 31, 2005 and December 31, 2006 and, cumulatively, for the period from September 14, 2001 (date of inception) to December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers
March 30, 2007

F-2

UNIVERSAL BIOSENSORS, INC. (A Development Stage Enterprise)

Balance Sheets
(U.S. dollars)

	As of December 31,
	2006			2005
	$			$
ASSETS
Current assets:
Cash		23,885,198			3,253,426
Accrued income		76,968			—
Other current assets		421,394			49,158
Total current assets		24,383,560			3,302,584
Property, plant, and equipment — net (note 9)		5,667,535			1,248,761
Total assets		30,051,095			4,551,345
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		1,226,779			85,971
Income taxes payable		128,982			—
Accrued expenses (note 10)		613,492			114,734
Deferred income		—			76,510
Employee entitlements provision		111,691			80,628
Total current liabilities		2,080,944			357,843
Non-current liabilities:
Employee entitlements provision		55,426			26,423
Total non-current liabilities		55,426			26,423
Total liabilities		2,136,370			384,266
Commitments and contingencies (note 4)
Stockholders’ equity:
Convertible preferred stock, $0.01 par value. Authorized 1,000,000 shares; issued and outstanding nil in 2006 (2005: 2,817 — pre-stock split)		—			3,000,000
Common stock, $0.0001 par value. Authorized 300,000,000 shares; issued and outstanding 127,999,976 shares in 2006 (2005: 43,613,014)		12,800			4,361
Additional paid-in capital		30,144,048			1,315,148
Deficit accumulated during the development stage		(2,387,877	)		(168,838	)
Accumulated other comprehensive income		145,754			16,408
Total stockholders’ equity		27,914,725			4,167,079
Total liabilities and stockholders’ equity		30,051,095			4,551,345

See accompanying notes to the financial statements.

F-3

UNIVERSAL BIOSENSORS, INC. (A Development Stage Enterprise)

Statement of Operations
(U.S. dollars)

				Years ended December 31,
	Period from			2006			2005			2004
	inception
	(September 14, 2001 to
	December 31, 2006
	$			$			$			$
Revenue		—			—			—			—
Cost of goods sold		—			—			—			—
Gross profit		—			—			—			—
Operating expenses:
Research and development		7,152,420			2,469,971			1,591,829			1,567,933
General and administrative		3,194,643			1,689,925			703,036			395,246
Fair value of stock options issued to employees related to:
Research and development		106,463			106,463			—			—
General and administrative		197,717			197,717			—			—
Total operating expenses		10,651,243			4,464,076			2,294,865			1,963,179
Research and development income		7,652,826			2,000,000			2,086,013			1,816,813
Loss from operations		(2,998,417	)		(2,464,076	)		(208,852	)		(146,366	)
Interest and other income		726,384			367,858			171,886			89,944
Net loss before tax		(2,272,033	)		(2,096,218	)		(36,966	)		(56,422	)
Income tax expense		(115,844	)		(122,821	)		—			—
Net loss		(2,387,877	)		(2,219,039	)		(36,966	)		(56,422	)
Basic and diluted net loss per share		(0.06	)		(0.04	)		0.00			0.00

see accompanying notes to the financial statements.

F-4

UNIVERSAL BIOSENSORS, INC. (A Development Stage Enterprise)

Statement of Changes in Stockholders’ Equity and Comprehensive Income

(U.S dollars)

	Preference Shares						Ordinary shares										Foreign currency			Total
											Additional			Accumulated			translation			stockholders’
	Shares			Amount			Shares		Amount		paid-in capital			deficit			reserve			equity
				$					$		$			$			$			$
Balance at inception (September 14, 2001)		—			—			—		—		—			—			—			—
Issuance of ordinary shares at $0.0001 per share for cash on incorporation of the Company in September 2001 #		—			—			29,179,253		2,918		(2,798	)		—			—			120
Issuance of ordinary shares at $0.03 per share for cash #		—			—			10,729,264		1,073		294,897			—			—			295,970
Issuance of ordinary shares at $0.28 per share for cash #		—			—			3,624,752		362		999,628			—			—			999,990
Issuance of preference shares at $0.29 per share for cash #		10,210,926			3,000,000			—		—		—			—			—			3,000,000
Comprehensive Income
Net loss for period from inception to December 31, 2003		—			—			—		—		—			(75,450	)		—			(75,450	)
Foreign currency translation reserve		—			—			—		—		—			—			185,891			185,891
Total Comprehensive Income		—			—			—		—		—			—			—			110,441
Balances at December 31, 2003		10,210,926			3,000,000			43,533,269		4,353		1,291,727			(75,450	)		185,891			4,406,521
Comprehensive Income
Net loss		—			—			—		—		—			(56,422	)		—			(56,422	)
Foreign currency translation reserve		—			—			—		—		—			—			(22,491	)		(22,491	)
Total Comprehensive Income		—			—			—		—		—			—			—			(78,913	)
Balances at December 31, 2004		10,210,926			3,000,000			43,533,269		4,353		1,291,727			(131,872	)		163,400			4,327,608
Comprehensive Income
Net loss		—			—			—		—		—			(36,966	)		—			(36,966	)
Foreign currency translation reserve		—			—			—		—		—			—			(146,992	)		(146,992	)
Total Comprehensive Income																					(183,958	)
Exercise of stock options issued to employees		—			—			79,745		8		23,421			—			—			23,429
Balances at December 31, 2005		10,210,926			3,000,000			43,613,014		4,361		1,315,148			(168,838	)		16,408			4,167,079
Issuance of preference shares at $0.33 per share for cash #		30,176,036			9,990,000			—		—		—			—			—			9,990,000
Conversion of preference shares to ordinary shares		(40,386,962	)		(12,990,000	)		40,386,962		4,039		12,985,961			—			—			—
Issuance of ordinary shares at $0.40 per share in private placement to American institutional and sophisticated investors in December 2006, net of issuance costs #		—			—			8,000,000		800		2,825,229			—			—			2,826,029
Issuance of ordinary shares at $0.40 per share in a public offering to Australian institutional and sophisticated investors in December 2006, net of issuance costs #		—			—			36,000,000		3,600		12,713,530			—			—			12,717,130
Comprehensive Income
Net loss		—			—			—		—		—			(2,219,039	)		—			(2,219,039	)
Foreign currency translation reserve		—			—			—		—		—			—			129,346			129,346
Total Comprehensive Income																					(2,089,693	)
Stock option expense		—			—			—		—		304,180			—			—			304,180
Balances at December 31, 2006		—			—			127,999,976		12,800		30,144,048			(2,387,877	)		145,754			27,914,725

Note
# Common stock has a par value of $0.0001.

All share and per share amounts from inception to December 31, 2006 presented have been retroactively adjusted to give effect to the stock split detailed in Note 11 of the financial statements. The par value of common stock was altered after the share split.

F-5

UNIVERSAL BIOSENSORS, INC. (A Development Stage Enterprise)

Statement of Cash Flows
(U.S. dollars)

				Years ended December 31,
	Period from			2006			2005			2004
	inception to
	December 31, 2006
	$			$			$			$
Cash flows from operating activities provided by/(used in):
Net loss		(2,387,877	)		(2,219,039	)		(36,966	)		(56,422	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of plant & equipment		890,451			231,613			228,103			200,944
Share based payments expense		304,180			304,180			—			—
Translation (gain)/loss		(341,552	)		(148,268	)		(81,270	)		(72,860	)
Change in assets and liabilities:
Prepaid expenses and other current assets		(353,563	)		(305,106	)		(29,627	)		(12,500	)
Grants receivable		(76,968	)		(153,477	)		76,510			—
Income tax payable		128,982			128,982			—			—
Payroll liabilities		287,371			180,320			59,202			18,574
Accounts payable and accrued expenses		642,330			442,324			(8,382	)		141,190
Net cash provided by/(used in) operating activities		(906,646	)		(1,538,471	)		207,570			218,926
Cash flows from investing activities:
Purchases of property, plant and equipment		(3,986,323	)		(3,377,721	)		(214,682	)		(190,023	)
Net cash used in investing activities		(3,986,323	)		(3,377,721	)		(214,682	)		(190,023	)
Cash flows from financing activities:
Net proceeds from preferred and common share issuance		28,829,239			25,533,159			—			—
Proceeds from stock options exercised		23,429			—			23,429			—
Net cash provided by financing activities		28,852,668			25,533,159			23,429			—
Net increase in cash and cash equivalents		23,959,699			20,616,967			16,317			28,903
Cash and cash equivalent at beginning of period		—			3,253,426			3,225,446			3,197,621
Effect of exchange rate fluctuations on the balances of cash held in foreign currencies		(74,501	)		14,805			11,663			(1,078	)
Cash and cash equivalents at end of period		23,885,198			23,885,198			3,253,426			3,225,446

See accompanying notes to the financial statements.

F-6

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(1)	Organization of the Company
	Universal Biosensors, Inc. (the “Company”) was incorporated on September 14, 2001 in the United States, and it’s wholly owned subsidiary and operating vehicle, Universal Biosensors Pty Ltd, was incorporated in Australia on September 21, 2001. Collectively, the Company and its wholly owned subsidiary Universal Biosensors Pty Ltd are referred to as “Universal Biosensors” or the “Group”. The Company was listed on the Australian Securities Exchange (“ASX”) on December 13, 2006 following the initial public offering in Australia of the Company’s shares.
	The Company is a specialist medical diagnostics company focused on the development, manufacture and commercialization of a range of in vitro diagnostic tests for point-of-care use. In vitro diagnostic testing involves the testing of a body fluid or tissue sample outside the body
	The diagnostic tests comprise a novel disposable test strip and a reusable meter. The diagnostic tests are small, portable and easy-to-use.
	Universal Biosensors has rights to an extensive patent suites comprising 18 patent applications owned by Universal Biosensors Pty Limited and 183 patents and 227 patent applications licensed to the Company by LifeScan, Inc. (“LifeScan”), an affiliate of Johnson & Johnson Development Corporation.
	The Group has a range of point-of-care blood tests in development including a C-reactive protein test which may be used to assist in the diagnosis and management of inflammatory conditions and a prothrombin time test which may be used for monitoring the therapeutic range of the anticoagulant, warfarin. The Group has already developed a working prototype of a C-reactive protein test and a prothrombin time test.
	Universal Biosensors intends to develop additional immunoassay tests by taking proven disease biomarkers currently used in the central laboratory environment and adapting those diagnostic tests to the point-of-care setting, using the Group’s platform of electrochemical cell technologies.
	The Group also provides research and development services to LifeScan in the development of a blood glucose test. The rights to commercialization of the blood glucose test have been retained by LifeScan.
	All the business operations and research and development activities are undertaken in Melbourne, Australia by the Company’s wholly owned subsidiary, Universal Biosensors Pty Ltd, under a research and development sub-contract and sub-license agreement with the Company.
	The Group is considered a development stage enterprise as its planned commercial manufacturing operations have not yet commenced.

F-7

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(2)	Basis of Presentation
	These financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All amounts are expressed in United States dollars unless otherwise stated.
	The Company’s financial statements have been prepared assuming the Company will continue as a going concern. The Company has sustained operating losses since inception and expects such losses to continue as it furthers its research and development programs.
(3)	Summary of Significant Accounting Policies
	Principles of Consolidation
	The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary Universal Biosensors Pty Ltd. All significant intercompany balances and transactions have been eliminated in consolidation.
	Use of Estimates
	The preparation of the consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment, deferred income taxes and obligations related to employee benefits. Actual results could differ from those estimates.
	Cash & Cash Equivalents
	The Company considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents. For cash and cash equivalents, the carrying amount approximates fair value due to the short maturity of those instruments.
	Concentration of Credit Risk and Other Risks and Uncertainties
	Cash and cash equivalents consists of financial instruments that potentially subject the Company to concentration of credit risk to the extent of the amount recorded on the balance sheet. The Company’s cash and cash equivalents are invested with one of Australia’s four largest banks. The Company is exposed to credit risk in the event of default by the banks holding the cash or cash equivalents to the extent of the amount recorded on the balance sheets. The Company has not experienced any losses on its deposits of cash and cash equivalents.

F-8

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Concentration of Credit Risk and Other Risks and Uncertainties (continued)

Product candidates developed by the Company may require approvals or clearances from the U.S. Food and Drug Administration or other international regulatory agencies prior to commercialized sales. There can be no assurance that the Company’s product candidates will receive any of the required approvals or clearances. If the Company was denied approval or clearance of such approval was delayed, it may have a material adverse impact on the Company.

Property, Plant, and Equipment

Property, plant, and equipment are recorded at acquisition cost, less accumulated depreciation.

Depreciation on plant and equipment is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful life of machinery and equipment is 4 to 10 years. Leasehold improvements are amortized on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset. Maintenance and repairs are charged to operations as incurred and include minor corrections and normal services and does not include items of capital nature.

Research and Development

Research and development expenses consists of costs incurred to further the Group’s research and development activities and include salaries and related employee benefits, costs associated with clinical trial and preclinical development, regulatory activities, research-related overhead expenses, costs associated with the manufacture of clinical trial material, costs associated with developing a commercial manufacturing process, costs for consultants and related contract research, facility costs and depreciation. Research and development costs are expensed as incurred.

The Group receives Australian government grants as compensation for expenses incurred in respect of certain research activities into dry chemistry immunosensors. Such grants reduce the related research and development expenses as and when the relevant research expenses are incurred. Grants received in advance of incurring the relevant expenditure are treated as deferred research grants and included in current liabilities on the balance sheet as the Group has not earned these amounts until the relevant expenditure has been incurred. Grants due to the Group under research agreements are included in current assets on the balance sheet

F-9

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Income Taxes

The Company applies Statement of Financial Accounting Standards No. 109 – Accounting for Income Taxes (SFAS 109) which establishes financial accounting and reporting standards for the effects of income taxes that result from a company’s activities during the current and preceding years. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Where it is more likely than not that some portion or all of the deferred tax assets will not be realized the deferred tax assets are reduced by a valuation allowance. The valuation allowance is sufficient to reduce the deferred tax assets to the amount that is more likely than not to be realized. A reconciliation of the valuation and qualifying accounts is attached as Schedule ii.

Fair Value of Financial Instruments

The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature. The estimated fair value of all other amounts has been determined by using available market information and appropriate valuation methodologies.

Impairment of Long-Lived Assets

The Company reviews its capital assets, including patents and licenses, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. In performing the review, the Company estimates undiscounted cash flows from products under development that are covered by these patents and licenses. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying amount of the asset. Impairment, if any, is measured as the amount by which the carrying amount of the assets exceeds its fair value. Impairment, if any, is assessed using discounted cash flows.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognized net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognized as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis.

F-10

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Revenue Recognition

Research and development revenue

The Company receives research and development revenue under an agreement with LifeScan (see note 7). This agreement provides details of the amount to be charged to LifeScan each year for the provision of research and development services. Revenue is recognized when services have been performed, the amount of the payment can be reliably measured and collectibility is reasonably assured.

Interest revenue

Interest revenue is recognized as it accrues, taking into account the effective yield on the financial asset

Foreign Currency

Functional and reporting currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).

The consolidated financial statements are presented using a reporting currency of U.S. dollars.

The functional currency of the Company for financial years up to December 31, 2005 was determined by management to be U.S. dollars. This was based on the facts that the denomination of a significant proportion of transactions and the major source of finance were in U.S. dollars.

In 2006, the Company expanded significantly its Australian based research activities. All of the Company’s directors became resident in Australia. All of the Company’s expenditure on research and development is Australian dollar denominated. It also began planning for and successfully accomplished a capital raising in Australian dollars and listed on the Australian Stock Exchange. The majority of cash and other monetary assets now held by the Company are denominated in Australian dollars.

Due to these changes in circumstance, management are of the view that the functional currency of the Company has changed in 2006 to Australian dollars. This change has been effected from December 1, 2006. The functional currency of Universal Biosensors Pty Ltd (the Company’s subsidiary) is Australian dollars for all years presented.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the Statement of Operations.

F-11

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Foreign Currency (continued)

The Company has recorded foreign currency transaction gains of $67,171, $74,672, $33,478, and $262,431 for each of the years ended December 31, 2004, 2005 and 2006 and the period from inception to December 31, 2006, respectively. These are included with “Interest and Other Income.”

Group companies

The results and financial position of all the Group entities that have a functional currency different from the reporting currency are translated into the reporting currency as follows:

• assets and liabilities for each balance sheet item reported are translated at the closing rate at the date of that balance sheet;

• income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable approximation of the effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognized as a separate component of equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities are taken to the Foreign Currency Translation Reserve (“FCTR”).

Commitments and Contingencies

Liabilities for loss contingencies, arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Patent and License Costs

Legal fees incurred for patent application costs have been charged to expense and reported in research and development expense.

Clinical Trial Expenses

Clinical trial costs are a component of research and development expenses. These expenses include fees paid to participating hospitals and other service providers, which conduct certain product development activities on behalf of the Company. Depending on the timing of payments to the service providers and the level of service provided, the Company records prepaid or accrued expenses relating to these costs.

These prepaid or accrued expenses are based on estimates of the work performed under service agreements.

F-12

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Leased Assets

All of the Group’s leases for the years ended December 31, 2004, 2005 and 2006 are considered operating leases. The costs of operating leases are charged to the statement of operations on a straight-line basis over the lease term.

Stock-based Compensation

Prior to January 1, 2006, the Company applied Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations, in accounting for its fixed-plan stock options. For periods prior to January 1, 2006, the Company complied with the disclosure only provisions of FASB Statement No.123, “Accounting for Stock-Based Compensation”, or SFAS 123. No stock-based employee compensation cost was reflected in net income, as all options granted under those plans had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant (or within permitted discounted prices as it pertains to the ESPP). Results for periods before January 1, 2006 have not been restated to reflect, and do not include the impact of, FASB Statement No. 123(R), “Share Based Payment”, or SFAS 123(R). The following table illustrates the effect on net income if the fair-value-based method had been applied to all outstanding and unvested awards in each period.

	2005			2004
Net loss, as reported		(36,966	)		(56,422	)
Add stock-based employee compensation expense included in reported net income, net of tax		—			—
Deduct total stock-based employee compensation expense determined under fair-value-based method for all awards		(36,792	)		(100,740	)
Pro forma net loss		(73,758	)		(157,162	)

As of January 1, 2006, the Company adopted SFAS No. 123(R), using the modified prospective method, which requires measurement of compensation expense of all stock-based awards at fair value on the date of grant and amortization of the fair value over the vesting period of the award. The Company has elected to use the straight-line method of amortization. Under the modified prospective method, the provisions of SFAS 123(R) apply to all awards granted or modified after the date of adoption. In addition, the unrecognized expense of awards not yet vested at the date of adoption, determined under the original provisions of SFAS No. 123 shall be recognized in net income in the periods after adoption. The fair value of stock options is determined using the Black-Scholes valuation model, which is consistent with valuation techniques previously utilized for options in footnote disclosures required under SFAS No. 123, as amended by SFAS No. 148 “Accounting for Stock-Based Compensation Transition and Disclosure”.

F-13

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Stock-based Compensation (continued)

Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method under SFAS 123(R). There were no transitional adjustments on adoption of SFAS 123 (R).

The application of SFAS 123(R) had the following effect on reported amounts for the year ended December 31, 2006 relative to amounts that would have been reported under previous accounting:

	Under			2006 SFAS
	Previous			123(R)
	Accounting			Adjustments			As reported
Net loss	$	(1,914,859	)	$	(304,180	)	$	(2,219,039	)

Pension Costs

As required by Australian law, Universal Biosensors Pty Ltd contributes to standard defined contribution superannuation funds on behalf of all employees at an amount up to nine percent of each such employee’s salary. Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee’s remuneration to an approved superannuation fund that the employee is typically not able to access until they are retired. The Company permits employees to choose an approved and registered superannuation fund into which the contributions are paid. Contributions are charged to the statement of operations as they become payable.

Net Loss per Share and Anti-dilutive Securities

Basic and diluted net loss per share is presented in conformity with Statement of Financial Accounting Standards No. 128 – Earnings Per Share (SFAS 128). Basic and diluted net loss per share has been computed using the weighted-average number of common shares outstanding during the period. All periods present in these financial statements have been retroactively adjusted to give effect to the stock split in December 2006 (note 11). The potentially dilutive options issued under the Universal Biosensors Employee Option Plan and the convertible preference shares (see note 12) were not considered in the computation of diluted net loss per share because they would be anti-dilutive given the Group’s loss making position in this and previous years.

Total Comprehensive Income

The Company follows Statement of Financial Accounting Standard (“SFAS”) No. 130, Reporting Comprehensive Income (Loss). Comprehensive income is defined as the total change in shareholders’ equity during the period other than from transactions with shareholders, and for the Company, includes net income and cumulative translation adjustments.

F-14

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Recent Accounting Pronouncements

In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 154 – Accounting Changes and Error Corrections (SFAS 154), a replacement of Accounting Principles Board Opinion No. 20 (APB 20) and Statement No. 3 (SFAS 3), which previously addressed accounting changes. SFAS 154 establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS 154 carries forward without change the guidance in APB 20 for reporting the correction of an error in previously issued financial statements. SFAS 154 will be effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of this standard has not had a material impact on the Company’s consolidated financial statements.

In June 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, Accounting for Income Taxes,” which clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation requires that the Company recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of FIN 48 are effective beginning January 1, 2007 with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the possible impact of FIN 48 on the Company’s consolidated financial statements.

In September 2006, the Securities and Exchange Commission (SEC) released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements” (SAB 108). SAB 108 is applicable for the current year and provides guidance on how the effects of the carryover or reversal of prior year financial statement misstatements should be considered in quantifying a current year misstatement. Prior practice allowed the evaluation of materiality on the basis of (1) the error quantified as the amount by which the current year income statement was misstated (rollover method) or (2) the cumulative error quantified as the cumulative amount by which the current year balance sheet was misstated (iron curtain method). Reliance on either method in prior years could have resulted in misstatement of the financial statements. The guidance provided in SAB 108 requires both methods to be used in evaluating materiality. Immaterial prior year errors may be corrected with the first filing of prior year financial statements after adoption.

F-15

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

Recent Accounting Pronouncements (continued)

The cumulative effect of the correction would be reflected in the opening balance sheet with appropriate disclosure of the nature and amount of each individual error corrected in the cumulative adjustment, as well as a disclosure of the cause of the error and that the error had been deemed to be immaterial in the past. The adoption of SAB 108 did not have a material impact on the Company’s consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). This Statement defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosure related to the use of fair value measures in financial statements. SFAS No. 157 does not expand the use of fair value measures in financial statements, but standardizes its definition and guidance in GAAP. The Standard emphasizes that fair value is a market-based measurement and not an entity-specific measurement based on an exchange transaction in which the entity sells an asset or transfers a liability (exit price). SFAS No. 157 establishes a fair value hierarchy from observable market data as the highest level to fair value based on an entity’s own fair value assumptions as the lowest level. The Statement is to be effective for our financial statements issued in 2008; however, earlier application is encouraged. We believe that SFAS No. 157 will not have a material impact on the Company’s consolidated financial statements

In September 2006 the FASB also issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)”. SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. Because the Group does not have a defined benefit pension plan or other qualifying post retirement plan our adoption of SFAS No. 158 did not have a material effect on the Company’s consolidated financial position or results of operations.

F-16

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(4)	Commitments and Contingent Liabilities
	Operating Leases
	In 2005, Universal Biosensors Pty Ltd entered a non-cancelable operating lease with respect to premises at Mount Waverly Victoria for warehouse and office premises for a term of two years and nine months with no renewal option. This lease expires in September 2007. Universal Biosensors Pty Ltd has recently entered into a lease with respect to premises at 1 Corporate Avenue, Rowville Victoria which commences on 1 April 2007 for an initial period of seven years and five months, with two options to renew the lease for successive five-year periods. The period during which there will be two leases held concurrently by Universal Biosensors Pty Ltd is viewed by management as necessary to ensure a smooth, undisrupted transition. Management therefore has not made provision for surplus lease space. The Group’s bankers have issued a bank guarantee of $197,825 in relation to a rental bond to secure the payments under the lease. This bank guarantee is secured by a security deposit held at the bank.
	Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2006 are:

	$
2007		350,251
2008		360,834
2009		373,463
2010		386,534
2011 and thereafter		1,352,932
Total minimum lease payments		2,824,014

Rent expense was $126,506, $140,348, $159,756 and $592,518 for the fiscal years ended December 31, 2004, 2005 and 2006 and for the period from inception to December 31, 2006, respectively

Government research grants

Universal Biosensors Pty Ltd has received an Australian Government research grant under the R&D START Program up to a maximum grant amount of $1,782,829 payable over the period from 1 January 2005 to 30 September 2007. The grant formally terminates on 30 September 2007, however Universal Biosensors Pty Ltd has submitted an application for the extension of the grant. The Government may or may not grant an extension. The Commonwealth of Australia may terminate the grant agreement for breach of the agreement by Universal Biosensors Pty Ltd, for failure to undertake the required research, if there is a change in control of Universal Biosensors Pty Ltd, or on the grounds of insolvency. In certain limited circumstances where Universal Biosensors Pty Ltd fails to use its best endeavors to commercialize the project within a reasonable time of completion or upon termination of the grant due to breach or insolvency, the Commonwealth of Australia may require Universal Biosensors Pty Ltd to repay some or all of the grant. The Company continues the development of the project funded by the START Program.

F-17

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(4)	Commitments and Contingent Liabilities (continued)
	The Company believes that the likelihood of being required to repay grant funding is remote because the Company continues to act in good faith with respect to the grant. Research and development start grant advances of $283,470 (2005: $540,477) were received during 2006 and income of $436,015 (2005: $468,576, 2004: $0, and period from inception to December 31, 2006: $904,591) was recognized with $76,968 recorded as accrued income at December 31, 2006 ($76,510 recorded as deferred income at December 31, 2005).
	On October 28, 2006, Universal Biosensors Pty Ltd was awarded a grant by the State of Victoria to support the establishment of a medical diagnostic manufacturing facility in Victoria, Australia for the manufacture of new technologies for disease monitoring and to increase support of local and export markets. These payments are subject to the achievement of milestones which include capital expenditure by Universal Biosensors Pty Ltd of predetermined minimum amounts. The State of Victoria may require Universal Biosensors Pty Ltd to refund any amounts paid under the grant together with interest should Universal Biosensors Pty Ltd commit a breach of its obligations under the grant agreement. The State of Victoria may also withhold, suspend, cancel or terminate any payment or payments upon a failure to comply with obligations or if Universal Biosensors Pty Ltd chooses not to proceed with these initiatives or it becomes insolvent. The total amount received under the Victorian State Government Grant at December 31, 2006 was $0 and no income has been recognized in relation to this agreement.
	Government compliance costs
	The Company has raised provisions totaling $330,787 in regards to certain government compliance costs. The Company is currently liaising with the relevant government authorities to finalize this matter.
	This is management’s best estimate of the likely outcome of these negotiations, however the final outcome may materially differ from the provision raised.
(5)	Income Taxes
	The Company is subject to income tax in Australia and is required to pay taxes on its Australian profits. As provided under the Australian income tax laws, the Company and its wholly owned resident subsidiary have formed a tax-consolidated group.
	A reconciliation of the (benefit) provision for income taxes with the amount computed by applying the Australian statutory company tax rate of 30% to the loss before income taxes is as follows:

F-18

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(5) Income Taxes (continued)

	Period from inception to												Years ended December 31,
	December 31, 2006						2006						2005						2004
	$			%			$			%			$			%			$			%
Loss before income taxes		(2,272,033	)					(2,096,218	)					(36,966	)					(56,422	)
Computed by applying income tax rate of home jurisdiction		(681,610	)		30			(628,865	)		30			(11,090	)		30			(16,927	)		30
Research & development incentive		(206,019	)		9			(206,019	)		10			—			—			—			—
Disallowed expenses/(income)
Share based payment		91,254			(4	)		91,254			(4	)		—			—			—			—
Other		(67,228	)		3			13,393			(1	)		3,631			(10	)		(36,587	)		65
Impact of translation from functional to reporting currencies		(28,249	)		1			(36,633	)		2			(5,354	)		14			5,590			(10	)
Change in valuation allowance		1,073,905			(47	)		766,870			(37	)		58,554			(158	)		160,733			(285	)
Adjustment in respect of current income tax of prior years		(66,209	)		3			122,821			(6	)		(45,741	)		124			(112,809	)		200
Income tax expense		115,844			(5	)		122,821			(6	)		—			—			—			—

Significant components of the Company’s deferred tax assets are shown below:

	As of December 31,
	2006			2005
Deferred tax assets:
Operating loss carry forwards	$	1,001,394		$	252,485
Unamortized IPO cost		447,425			—
Depreciation and amortization		11,352			26,416
Employee entitlements		66,307			29,917
Other accruals		130,403			21,911
Total deferred tax assets		1,656,881			330,729
Valuation allowance for deferred tax assets		(1,656,881	)		(330,729	)
Net deferred tax asset	$	—		$	—

F-19

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(5)	Income Taxes (continued)
	Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes. A valuation allowance has been established, as realization of such assets is not more likely than not.
	At December 31, 2006 the Company has $3,337,980 ($841,617 at December 31, 2005) of accumulated tax losses available for carry forward against future earnings, which under Australian tax laws do not expire but may not be available under certain circumstances.
(6)	Stock Option Plan
	All share and option amounts from inception to December 31, 2006 have been retroactively adjusted to give effect to the share split described in note 11. In 2004, the Company adopted an employee option plan (“Plan”). Options may be granted pursuant to the Plan to any person considered by the board to be employed by the Group on a permanent basis (whether full time, part time or on a long term casual basis) and includes all directors. Each option gives the holder the right to subscribe for one share of common stock. The total number of options that may be issued under the Plan is such maximum amount permitted by law and the Listing Rules of ASX. The exercise price and any exercise conditions are determined by the board at the time of grant of the options. Any exercise conditions must be satisfied before the options vest and become capable of exercise. The options lapse on such date determined by the board at the time of grant or earlier in accordance with the Plan. Options granted to date have had a ten year term and generally vest in equal tranches over three years.
	An optionholder is not permitted to participate in a bonus issue or new issue of securities in respect of an option held prior to the issue of shares to the optionholder pursuant to the exercise of an option. If Universal Biosensors changes the number of issued shares through or as a result of any consolidation, subdivision, or similar reconstruction of the issued capital of the Company, the total number of options and the exercise price of the options (as applicable) will likewise be adjusted. There were no stock options granted in 2005. There were 2,066,108 options granted in 2006.
	In accordance with SFAS 123(R), the fair value of the option grants were estimated on the date of each grant using the Black-Scholes option pricing model. The assumptions for these grants were:

	Grant Date
	2006			2004
Exercise Price	$	0.33		$	0.29
Share Price at Grant Date	$	0.33		$	0.29
Volatility		55	%		40% - 45	%
Expected Life		10 years			10 years
Risk Free Interest Rate		4.4	%		4.65	%
Fair value of Option	$	0.23		$	0.08

F-20

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(6)	Stock Option Plan (continued)
	Stock option activity during the period indicated is as follows:

				Weighted average
	Number of shares			exercise price
Balance at January 1, 2004		—				—
Granted		2,076,982			$	0.29
Balance at December 31, 2004		2,076,982				0.29
Granted		—				—
Exercised		(79,745	)			0.29
Forfeited		(152,240	)			0.29
Expired		—				—
Balance at December 31, 2005		1,844,997			$	0.29
Granted		2,066,108				0.33
Exercised		—
Forfeited		(90,618	)			0.31
Expired		—
Balance at December 31, 2006		3,820,487				0.31

At December 31, 2006, the number of options exercisable was 2,305,341 (2005: 1,207,042 and 2004: 663,329).

The following table represents information relating to stock options outstanding under the plans as of December 31, 2006 and 2005:

	Options Outstanding				Options exercisable
			Weighted
			Average
			Remaining Life
Exercise price	Shares		in Years		Shares
2006
$0.33		2,011,736		9.1		532,838
$0.29		1,808,751		7.0		1,772,503
2005
$0.29		1,844,997		8.0		1,207,042

F-21

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(7)	Economic Dependency
	The Company has entered the following agreements with LifeScan.
	LifeScan License and Research and Development Agreement
	Since April 2002 the Company has undertaken contracted research and development activities for LifeScan pursuant to a Development and Research Agreement. The Development and Research Agreement has historically been an important source of revenue for the Company. If the Development and Research Agreement was terminated there would be a loss of revenue but at the same time costs expended under the contract would also reduce. Management believe that loss of the agreement per se would no longer have a material adverse effect on the Company. The Company also currently holds a license from LifeScan to a range of patents, patent applications and know-how, pursuant to a License Agreement. If the Company were to breach the License Agreement, which the Group does not intend to do, LifeScan might validly terminate the License Agreement. This would seriously restrict or eliminate the Company’s development and commercialization activities.
	In consideration for the rights, licenses and options granted under the Development and Research agreement, LifeScan made payments totaling $2,000,000 in 2006, $2,086,013 in 2005, $1,816,813 in 2004 and $7,652,826 for the period from inception to December 31, 2006.
(8)	Related Party Transactions
	Details of related party transactions material to the operations of the Group other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, are set out below:
	Johnson & Johnson Development Corporation, a wholly owned subsidiary of Johnson and Johnson, owns approximately 14% of the Company’s shares.
	LifeScan, a wholly owned subsidiary of Johnson & Johnson, makes payments to the Company through a research and development agreement. The terms of the agreement are mentioned in note 7.
	Denis Hanley, Andrew Denver, Colin Adam and Charles Kiefel are shareholders and directors of the Company and of The Principals Funds Management Pty Ltd, which was paid a total of $325,000 in 2006 from the Company in connection with capital raising services. The Principals Funds Management Pty Ltd was paid a firm commitment fee of $79,118 by the underwriter of the Company’s initial public offering in connection with firm commitments to subscribe for shares.
	Andrew Jane is a director of the Company and is a Partner of CM Capital Investments Pty Ltd and is taken to be associated with CM Capital Investments Pty Ltd, CM Capital Venture Trust No. 3, CIBC Australia VC Fund LLC and Australia Venture Capital Fund LP who are shareholders of the Company. 135,000 shares were transferred to CM Capital Investments Pty Ltd by the underwriter of the Company’s initial public offering as a commitment fees as a result of CM Capital Investments Pty Ltd subscribing for shares in connection with the initial public offering in Australia.

F-22

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(8)	Related Party Transactions (continued)
	Dr Elizabeth Wilson is a shareholder and director of Universal Biosensors, Inc. The spouse of Dr Wilson is a substantial shareholder and officer of the parent company of Wilson HTM Corporate Finance Limited, the underwriters and lead managers of the Company’s Australian initial public offering. The transaction with Wilson HTM Corporate Finance Limited is not considered a related party as Dr Wilson accepted the appointment as a director of the Company subsequent to Wilson HTM Corporate Finance Limited accepting their engagement.
(9)	Property, Plant and Equipment

	As of December, 31
	2006			2005
Plant and equipment		2,170,549			1,783,901
Leasehold improvements		192,724			158,226
Capital work in process		4,339,007			—
		6,702,280			1,942,127
Accumulated depreciation		(1,034,745	)		(693,366	)
Property, plant & equipment, net		5,667,535			1,248,761

	Depreciation expense was $200,944, $228,103, $231,613 and $890,451 for the fiscal years ended December 31, 2004, 2005 and 2006 and for the period from inception to December 31, 2006, respectively.
(10)	Accrued Expenses
	Accrued expenses consist of the following:

	As of December, 31
	2006		2005
	$		$
Legal, tax and accounting fees		265,086		26,692
Goods & services tax		218,399		—
Salary related on-costs		120,252		88,042
Other		9,755		—
		613,492		114,734

F-23

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(11)	Stockholders’ Equity — Common Stock
	In fiscal year 2006, in connection with an initial public offering in Australia in the form of an offer of new shares of common stock in the capital of the Company (“Public Offer”) and a concurrent separate offer of shares of common stock in the US to certain US Persons (as that term is defined in Regulation S promulgated under the US Securities Act of 1933) (“US Private Placement”), shareholders approved a) the conversion of all Series A preferred stock into common stock; b) the adoption of a new certificate of incorporation which was filed with the State of Delaware on December 5, 2006; c) a subdivision of existing common stock by 3,624.7518771; and d) an issue and allotment of common stock to subscribers under the Public Offer and US Private Placement.
	As noted in note 12, during fiscal year 2006 the Company also issued 30,176,036 Series A convertible preferred stock in 2 separate private placements to institutional and sophisticated investors in both the US and Australia. This preference stock was subsequently converted into common stock on December 6, 2006. Before the stock split by 3,624.7518771, the Company had on issue 12,032 shares of common stock and 11,142 Series A convertible preferred stock. After the conversion of all Series A preferred stock into shares of common stock, there were 23,174 shares of common stock on issue. Immediately following the subdivision on December 6, 2006, there were 83,999,976 shares on issue. All share and per share amounts from the period from inception to December 31, 2006 presented in the accompanying financial statements have been retroactively adjusted to give effect to the stock split.
	The Company completed its Public Offer of 36,000,000 shares of common stock and concurrent US Private Placement of 8,000,000 shares in the US to institutional and accredited investors, raising A$22 million in aggregate before costs. The Company listed on ASX on December 13, 2006.
	Holders of common stock are generally entitled to one vote per share held on all matters submitted to a vote of the holders of common stock. At any meeting of the shareholders, the presence, in person or by proxy, of the majority of the outstanding stock entitled to vote shall constitute a quorum. Except where a greater percentage is required by the Company’s Amended and Restated Certificate of Incorporation or By-laws, the affirmative vote of the holders of a majority of the shares of common stock then represented at the meeting and entitled to vote at the meeting shall be sufficient to pass a resolution. Holders of common stock are not entitled to cumulative voting rights with respect to the election of directors, and the common stock does not have pre-emptive rights.
	Trading in our shares of common stock on ASX is undertaken using CHESS Depositary Interests (“CDIs”). Each CDI represents beneficial ownership in one underlying share. Legal title to the shares underlying CDIs is held by CHESS Depositary Nominees Pty Ltd (“CDN”), a wholly owned subsidiary of ASX.
	Holders of CDIs have the same economic benefits of holding the shares, such as dividends (if any), bonus issues or rights issues as though they were holders of the legal title. Holders of CDIs are not permitted to vote but are entitled to direct CDN how to vote. Subject to Delaware General Corporation Law, dividends may be declared by the Board and holders of common stock may be entitled to participate in such dividends from time to time.

F-24

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(12)	Convertible preference shares
	Up until the time of the Company’s Australian initial public offering, the Company had on issue 40,386,962 Series A convertible preference shares. The Company issued 30,176,036 Series A convertible preferred stock between June 15, 2006 and August 30, 2006, raising a total of US$ 9,990,000 before costs associated with the issues. Immediately prior to the issue of shares in connection with the Public Offer and the U.S. Private Placement, all the Company’s convertible preference shares were converted into common stock (refer note 11).
	The rights and obligations attaching to the Series A preferred stock were derived by a combination of an Investor Rights Agreement (which was terminated in connection with the close of the Public Offer), the By-laws and Amended and Restated Certificate of Incorporation of the Company. Without limitation, the terms of issue of the Series A Preferred Stock were as follows:

• the right to receive notices of general meetings and to attend and vote at general meetings of the Company;

• each preferred share entitled the stockholder to such number of votes at a general meeting equal to the number of shares of common stock that the preferred stock would have converted into (whether or not it had been converted);

• rights of conversion into common stock;

• may participate in dividends declared in respect of that class of share at the discretion of the Board, the rights to which may not be similar to the rights of the holders of common stock;

• anti-dilution protection in certain circumstances; and

• a liquidation preference over common stockholders in the event of liquidation or a capital reduction of the Company.

The Series A convertible preference shares were convertible by the holders into shares of common stock at any time or could be compulsorily converted at the time of an initial public offering, subject to certain conditions. The conversion ratio was one share of common stock per convertible preference share, subject to variation for capital reconstructions and share dilutions.

In the event of a return of assets on liquidation or capital reduction or otherwise, the assets of the Company remaining after payment of its liabilities were applied first in paying the preferred stockholders an amount equal to the issue price of such preferred stock adjusted as necessary for capital reconstructions and secondly, to the common stockholders an amount equal to the relevant issue price. Thirdly an amount per preferred share equal to the amount of interest that would have accrued on the amount subscribed for by the preference stockholder if interest had accrued daily at a rate of 10% per annum from the date of issue. Finally, the balance of assets remaining (if any) was to have been distributed among the holders of preferred and common stock pari passu as if they constituted one class of shares.

F-25

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(13)	Retirement Benefits
	As required by Australian law, Universal Biosensors Pty Ltd contributes to standard defined contributions superannuation funds on behalf of all employees at an amount up to nine percent of employee salary. The Company permits employees to choose the superannuation fund into which the contributions are paid, provided the fund is appropriately registered.
	Universal Biosensors Pty Ltd contributed $83,485, $127,487 and $222,500, and $498,476 for the fiscal years ended December 31, 2004, 2005 and 2006, and the period from inception to December 31, 2006, respectively.
(14)	Net Loss per Share
	Basic net loss per ordinary share was computed by dividing the net loss applicable to common stock by the weighted-average number of common stock outstanding during the period. All periods presented in the financial statements have been retroactively adjusted to give effect to the share split described in note 11. Options granted to employees under the Universal Biosensors Employee Option Plan and the convertible preference shares on issue during the current and prior periods are considered to be potential ordinary shares for the purpose of calculating diluted net loss per share. However, all these were not included in the calculation of diluted net loss per share as the effect of including them is anti-dilutive.

	Period from		Year ended December 31,
	inception to
	December 31,
	2006		2006		2005		2004
Weighted average number of ordinary shares used as denominator in calculating basic and diluted net loss per share
		43,050,568		49,408,822		45,573,580		43,533,269

F-26

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(15)	Guarantees and Indemnifications
	The certificate of incorporation and amended and restated by-laws of the Company provide that the Company will indemnify officers and directors and former officers and directors in certain circumstances, including for expenses, judgments, fines and settlement amounts incurred by them in connection with their services as an officer or director of the Company or its subsidiaries, provided that such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the Company.
	In addition to the indemnities provided in the certificate of incorporation and amended and restated by-laws, the Company has entered into indemnification agreements with certain of its officers and each of its directors. Subject to the relevant limitations imposed by applicable law, the indemnification agreements, among other things:

• indemnify the relevant officers and directors for certain expenses, judgments, fines and settlement amounts incurred by them in connection with their services as an officer or director of the Company or its subsidiaries; and

• require the Company to make a good faith determination whether or not it is practicable to maintain liability insurance for officers and directors or to ensure the Company’s performance of its indemnification obligations under the agreements.

	No liability has arisen under these indemnities as at December 31, 2006.
(16)	Segments
	The Company operates in one segment. The principal activities of the Company are the research, development, manufacture and commercialization of a range of in vitro diagnostic tests for point-of-care use.
	The Company operates predominantly in one geographical area, being Australia.

F-27

UNIVERSAL BIOSENSORS, INC.

(A Development Stage Enterprise)

Notes to Financial Statements
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 2006)

(17)	Subsequent Events
	On March 28, 2007 the Company announced that, subsequent to a review of employee and director performance for the year ended December 31, 2006, the directors granted 845,000 employee options under the Universal Biosensors Employee Option Plan. Included within this grant are 45,000 employee options granted to the Managing Director of the Company which require shareholder approval prior to formal grant of those options.
	The Company has recently entered into a lease with respect to premises at 1 Corporate Avenue, Rowville Victoria which commences on 1 April 2007 for an initial period of seven years and five months, with two options to renew the lease for successive five-year periods. The Company is aware of the proposed sale of 1 Corporate Avenue property to an interested third party. Management has entered into discussions with the third party to undertake the fit out of 1 Corporate Avenue premises at the third party’s own cost which would have otherwise been borne by Universal Biosensors and estimated to be $3.7 million. It is likely the term of the lease will be extended to 10 years. Management has entered into these discussions aware that whilst it will result in increased rental payment, it will free up the cash flow which will then be utilized to fund the Company’s core activities which management believes will provide greater returns. Upon the successful negotiation of these discussions and the subsequent signing of a lease agreement, the future minimum lease payments under non-cancellable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2006 will be:

2007	$	877,174
2008		887,757
2009		900,386
2010		913,457
2011 and thereafter		6,596,992
Total minimum lease payments	$	10,175,766

Other than as disclosed above, there has not arisen in the interval between the end of the financial year and March 30, 2007 any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

F-28

UNIVERSAL BIOSENSORS, INC.
(A Development Stage Enterprise)

Schedule ii — Valuation and Qualifying Accounts
(for the years ended December 31, 2004, 2005 and 2006 and for the period from inception
(September 14, 2001) to December 31, 200

			Additions
			Charged
	Balance at		to Costs		Charged				Balance at
	Beginning of		and		to Other				end of
	Period		Expenses		Accounts		Deductions		Period
	$		$		$		$		$
Description at Period from inception to December 31, 2003 Deferred income tax valuation allowance		—		111,442		—		—		111,442
Year ended December 31, 2004 Deferred income tax valuation allowance		111,442		160,733		—		—		272,175
Year ended December 31, 2005 Deferred income tax valuation allowance		272,175		58,554		—		—		330,729
Year ended December 31, 2006 Deferred income tax valuation allowance		330,729		766,871		559,281		—		1,656,881
Period from inception to December 31, 2006 Deferred income tax valuation allowance		—		1,097,600		559,281		—		1,656,881

F-29

Universal Biosensors, Inc and Subsidiary

Additional Financial Information

A breakdown of total expenses is attached as Schedule 1

F-30

UNIVERSAL BIOSENSORS, INC.
(A Development Stage Enterprise)

Schedule I

Consolidated Research and Development and Administrative Expenses
(U.S. dollars)

	Period from
	Inception
	(September 14,
	2001 to
	December 31,			Year ended December 31,
	2006			2006			2005			2004
	$			$			$			$
Research and development and administrative expenses:
Employee expenses		6,053,338			2,458,015			1,548,740			1,165,668
Government grants		(904,591	)		(436,015	)		(468,576	)		—
Material and design costs		1,160,042			510,003			251,777			131,491
Depreciation and amortization		890,451			231,613			228,103			200,944
Rent		592,518			159,756			140,348			126,506
Legal Fees		366,789			152,981			106,745			49,050
Travel and related expenses		398,596			192,861			102,925			42,401
Consulting and professional fees		753,839			467,297			120,552			107,625
Other		634,215			408,563			91,102			57,027
Auditors’ remuneration		204,707			121,493			32,171			12,531
Freight		125,574			46,675			47,751			20,178
Gas and electricity		82,190			26,070			21,150			13,664
Telephone and facsimile		73,446			29,240			20,278			11,534
Stationary and supplies		78,849			38,500			19,775			8,400
Insurance		80,142			23,290			15,669			14,484
Repair and maintenance		52,071			28,179			14,721			910
Bank charges		9,067			5,555			1,634			766
		10,651,243			4,464,076			2,294,865			1,963,179

F-31

Exhibits

Exhibit Number	Description
3.1	Amended and restated articles of incorporation
3.2	Amended and restated by-laws
10.1	License Agreement between LifeScan and Universal Biosensors, Inc effective April 1, 2002, as amended
10.2	Development and Research Agreement between LifeScan and Universal Biosensors, Inc. effective April 1, 2002, as amended
10.3	Form of indemnity agreement entered into with directors of us, our chief financial officer and company secretary
10.4	Lease for the premises at 103 Ricketts Rd, Mt Waverley from Jane Sergi to Universal Biosensors Pty Ltd effective May 23, 2005
10.5	Lease of premises 1 Corporate Avenue, Rowville Victoria Australia
10.6	AusIndustry, R&D Start Program Agreement, effective February 25, 2005 (particular and general conditions).
10.7	Employee Option Plan
10.8	Employment agreement between Universal Biosensors Pty Ltd and Mr Salesh Balak effective November 27, 2006
10.9	Employment agreement between Universal Biosensors Pty Ltd and Mr Garry Chambers effective April 1, 2006
10.10	Employment agreement between Universal Biosensors Pty Ltd and Dr Ronald Chatelier dated April 1, 2006
10.11	Employment agreement between Universal Biosensors Pty Ltd and Dr Alastair Hodges effective April 1, 2006
10.12	Employment agreement between Universal Biosensors Pty Ltd and Mr Mark Morrisson dated July 1, 2006
16	Letter from KPMG
21	List of Subsidiaries

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
UNIVERSAL BIOSENSORS, INC.

     Universal Biosensors, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the “GCL”), does hereby certify as follows:

     (1) The name of the Corporation is Universal Biosensors, Inc. The original certificate of incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware on September 14, 2001.

     (2) This Amended and Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”) and by the stockholders of the Corporation in accordance with Sections 228, 242 and 245 of the GCL.

     (3) This Amended and Restated Certificate of Incorporation restates and integrates and further amends the certificate of incorporation of the Corporation, as heretofore amended or supplemented.

     (4) The text of the Certificate of Incorporation hereby is amended and restated in its entirety as follows:

     FIRST: The name of the Corporation is Universal Biosensors, Inc. (the “Corporation”).

     SECOND: The address of the registered office of the Corporation in the State of Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is Corporation Service Company.

     THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the “GCL”).

     FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is three hundred one million (301,000,000) shares of which the Corporation shall have authority to issue three hundred million (300,000,000) shares of Common Stock, each having a par value of one hundredth of one cent ($0.0001), and one million (1,000,000) shares of Preferred Stock, each having a par value of one cent ($0.01).

At the time that this Amended and Restated Certificate of Incorporation becomes effective pursuant to the General Corporation Law of the State of Delaware (the “Effective Date”), each share of the Corporation’s Common Stock then issued and outstanding (the “Old Stock”) shall, automatically and without any action on the part of the respective holders thereof, be changed into 3,624.7518771 shares of Common Stock of the Corporation, respectively, and each such

share shall have a new par value of $0.0001; provided, however, that the Corporation shall issue no fractional shares as a result of the actions set forth herein but shall instead pay cash consideration to the holder of any such fractional share in accordance with the next succeeding sentence and, provided further, that the number of shares of Common Stock authorized pursuant to the first sentence of this Article FOUR shall not be altered. As contemplated by the preceding sentence, a holder who otherwise would be entitled to receive a fraction of a share of Common Stock shall, in lieu thereof, receive the fair market value thereof, determined by multiplying the fraction of the share of Common Stock by Australian fifty cents (A$0.50) per share.

Each stock certificate that, immediately prior to the Effective Date, represented shares of Old Stock then outstanding shall, from and after the Effective Date, automatically and without the necessity of presenting the same for exchange, represent that number of whole shares of Common Stock outstanding after the Effective Date into which the shares of Old Stock represented by such certificate shall have been reclassified (as well as the right to receive cash in lieu of any fractional shares of Common Stock as set forth above); provided, however, that each holder of record of a certificate that represented shares of Old Stock shall receive, upon surrender of such certificate, a new certificate representing the number of whole shares of Common Stock into which the shares of Old Stock represented by such certificate shall have been changed, as well as any cash in lieu of fractional shares of Common Stock to which such holder may be entitled to pursuant to this Article FOUR.

     (1) The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the GCL, including, without limitation, the authority to provide that any such class or series may be: (A) subject to redemption at such time or times and at such price or prices; (B) entitled to receive dividends (which maybe cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (C) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (D) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.

     (2) The holders of shares of Common Stock shall not have cumulative voting rights.

     (3) Subject to the requirements of applicable law, the Corporation shall have the power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not greater consideration could be

- 2 -

received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law. Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law.

     FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

     (1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

     (2) The Board of Directors shall consist of not less than three or more than nine members, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors.

     (3) The directors shall be divided into three classes, designated Class 1, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The initial division of the Board of Directors into classes shall be made by the decision of the affirmative vote of a majority of the entire Board of Directors. The term of the initial Class I directors shall terminate on the date of the 2009 annual meeting; the term of the initial Class II directors shall terminate on the date of the 2008 annual meeting; and the term of the initial Class III directors shall terminate on the date of the 2007 annual meeting. At each succeeding annual meeting of stockholders beginning in 2007, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director.

     (4) A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office.

     (5) Subject to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director of any class elected to fill a vacancy resulting from an

- 3 -

increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. While the Corporation is listed on Australian Stock Exchange (“ASX”): (i) if any director appointed by the Board of Directors as a result of an increase in the number of directors is required to retire and seek re-election at the first Annual Meeting of Stockholders by virtue of the Listing Rules of ASX (“Listing Rules”), if re-elected by stockholders at that Annual Meeting, that Director will then have the same remaining term that shall coincide with the remaining term of that Director’s class; and (ii) if any director appointed by the Board of Directors as a result of a vacancy is required to retire and seek re-election at the first Annual Meeting of Stockholders by virtue of the Listing Rules, if re-elected by stockholders at that Annual Meeting, that Director will then have the same remaining term that shall coincide with the remaining term as that of his predecessor. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least seventy percent (70%) of the voting power of the Corporation’s then outstanding capital stock entitled to vote generally in the election of directors. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Amended and Restated Certificate of Incorporation applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article FIVE unless expressly provided by such terms.

     6) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.

     SIXTH: No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the GCL as the same exists or may hereafter be amended. If the GCL is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the GCL, as so amended. Any repeal or modification of this Article SIX shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

     SEVENTH: The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to

- 4 -

indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The right to indemnification conferred by this Article SEVEN shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article SEVEN to directors and officers of the Corporation. The rights to indemnification and to the advance of expenses conferred in this Article SEVEN shall not be exclusive of any other right which any person may have or hereafter acquire under this Amended and Restated Certificate of Incorporation, the By-Laws of the Corporation, any statute, agreement, vote of stockholders or disinterested directors or otherwise. Any repeal or modification of this Article SEVEN shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.

     EIGHTH: Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically denied.

     NINTH: Unless otherwise required by law, special meetings of Stockholders, for any purpose or purposes, may be called by either (i) the Chairman, if there be one, or (ii) the President, (iii) any Vice President, if there be one, (iv) the Secretary or (v) any Assistant Secretary, if there be one, and shall be called by any such officer at the request in writing of (i) the Board of Directors or (ii) a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power to call such meetings. The ability of the stockholders to call a special meeting of Stockholders is hereby specifically denied.

     TENTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide using any form of technology permitted by law and approved by the Board of Directors. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.

     ELEVENTH: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation’s By-Laws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adapt, amend, alter or repeal the Corporation’s By-Laws. The Corporation’s By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least seventy percent (70%) of the voting power of the shares entitled to vote at an election of directors.

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     TWELFTH: To the maximum extent permitted from time to time under the GCL, the Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities that are from time to time being presented to its officers, directors or stockholders, other than (i) those officers, directors or stockholders who are employees of the Corporation and (ii) those opportunities demonstrated by the Corporation to have been presented to such officers, directors or stockholders expressly as a result of their activities as a director, officer or stockholder of the Corporation. No amendment or repeal of this Article shall apply to or have any effect on the liability or alleged liability of any officer, director or stockholder of the Corporation for or with respect to any opportunities which such officer, director or stockholder becomes aware prior to such amendment or repeal.

     THIRTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation; provided, however, that, notwithstanding any other provision of this Amended and Restated Certificate of Incorporation (and in addition to any other vote that may be required by law), the affirmative vote of the holders of at least seventy percent (70%) of the voting power of the shares entitled to vote at an election of directors shall be required to amend, alter, change or repeal, or to adopt any provision as part of this Amended and Restated Certificate of Incorporation inconsistent with the purpose and intent of Articles FIVE, EIGHT, NINE, ELEVEN and FOURTEEN of this Amended and Restated Certificate of Incorporation or this Article THIRTEEN.

     FOURTEENTH: If the Corporation is admitted to the official list of Australian Stock Exchange, and at the relevant time is still so admitted, this Article FOURTEEN shall apply:

     (1) Notwithstanding anything contained in this Amended and Restated Certificate of Incorporation, if the Listing Rules of Australian Stock Exchange (and any other rules of Australian Stock Exchange which are applicable while the Corporation is listed each as amended or replaced from time to time) prohibit an act being done, except to the extent of any express written waiver by Australian Stock Exchange, the act shall not be done.

     (2) Nothing contained in this Amended and Restated Certificate of Incorporation prevents an act being done that the Listing Rules require to be done.

     (3) If the Listing Rules of Australian Stock Exchange require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be).

     (4) If the Listing Rules of Australian Stock Exchange require this Amended and Restated Certificate of Incorporation to contain a provision and it does not contain such a provision, this Amended and Restated Certificate of Incorporation is deemed to contain that provision.

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     (5) If the Listing Rules of Australian Stock Exchange require this Amended and Restated Certificate of Incorporation not to contain a provision and it contains such a provision, this Amended and Restated Certificate of Incorporation is deemed not to contain that provision.

     (6) If any provision of this Amended and Restated Certificate of Incorporation is or becomes inconsistent with the Listing Rules of Australian Stock Exchange, this Amended and Restated Certificate of Incorporation is deemed not to contain that provision to the extent of the inconsistency.

     IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf this 5th day of December, 2006.

UNIVERSAL BIOSENSORS, INC.

By:	/s/ Mark Morrisson
Name:	Mark Morrisson
Title:	Chief Executive Officer

- 7 -

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BY-LAWS
OF
UNIVERSAL BIOSENSORS, INC.
(hereinafter called the “Corporation”)

ARTICLE I

OFFICES

     Section 1.1 Registered Office. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.

     Section 1.2 Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine.

ARTICLE II

MEETINGS OF STOCKHOLDERS

     Section 2.1 Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors.

     Section 2.2 Annual Meetings. The Annual Meetings of Stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting of Stockholders.

     Section 2.3 Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (the “Certificate of Incorporation”), Special Meetings of Stockholders, for any purpose or purposes, may be called by (i) the Chairman, if there be one, (ii) the Chief Executive Officer, (iii) the President, or (iv) the Secretary, and shall be called by any such officer at the request in writing of (i) the Board of Directors or (ii) a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power to call such meetings, Such request shall state the purpose or purposes of the proposed meeting. At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto).

     Section 2.4 Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, and the means of remote communications, if any, by which stockholders or any proxy holders may be deemed present in person and vote at such meeting.

Unless otherwise required by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting.

     Section 2.5 Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

     Section 2.6 Quorum. Unless otherwise required bylaw or the Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote at a meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote at such meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 2.5, until a quorum shall be present or represented.

     Section 2.7 Voting. Unless otherwise required by law, the Certificate of Incorporation or these By-laws, any question brought before any meeting of stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of the capital stock represented and entitled to vote at such meeting, voting as a single class. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 5.5 hereof, each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote at such meeting held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 2.8, The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in such officer’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

     Section 2.8 Proxies. Each stockholder entitled to vote at a meeting of the stockholders may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after three years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:

          (a) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such

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writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, without limitation, by facsimile signature.

          (b) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a facsimile or other electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such facsimile or other electronic transmission, provided that any such facsimile or other electronic transmission must either set forth or be submitted with information from which it can be determined that the facsimile or other electronic transmission was authorized by the stockholder. If it is determined that such facsimiles or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied.

     Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

     Section 2.9 Nature of Business at Meetings of Stockholders.

          (a) No business may be transacted at an Annual Meeting of Stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.9 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 2.9.

          (b) In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

          (c) To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such

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notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs.

          (d) To be in proper written form, a stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the Annual Meeting (i) a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting.

          (e) No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 2.9; provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 2.9 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

     Section 2.10 Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances.

          (a) Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.10 and on the record date for the determination of stockholders entitled to notice of and to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 2.10.

          (b) In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

          (c) To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of

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an Annual Meeting, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; and (b) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs.

          (d) To be in proper written form, a stockholder’s notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange-Act”), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

          (e) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.10. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

     Section 2.11 List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of

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any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.

     Section 2.12 Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.11 or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

     Section 2.13 Conduct of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of the meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants.

     Section 2.14 Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman, the Chief Executive Officer or the President shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law.

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ARTICLE III

DIRECTORS

     Section 3.1 Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders.

     Section 3.2 Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by any director, the Chief Executive Officer, the President or Secretary. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, telefax or electronic means on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

     Section 3.3 Quorum. Except as otherwise required by law or the Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.

     Section 3.4 Actions by Written Consent. Unless otherwise provided in the Certificate of Incorporation, or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

     Section 3.5 Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation, members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.5 shall constitute presence in person at such meeting.

     Section 3.6 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any

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committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors when required.

     Section 3.7 Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director, payable in cash and/or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation for that capacity. Members of special or standing committees may be allowed like compensation for attending committee meetings.

     Section 3.8 Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because the director or officer’s vote is counted for such purpose if (i) the material facts as to the director or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to the director or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

     Section 3.9 Organization. At each meeting of the Board of Directors, the Chairman of the Board of Directors, or, in his or her absence, a director chosen by a majority of the directors present, shall act as chairman. The Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors. In case the Secretary shall be absent from any meeting of the Board of Directors, an Assistant Secretary shall perform the duties of secretary at such

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meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

ARTICLE IV

OFFICER

     Section 4.1 General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer, a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose a Chairman of the Board of Directors (who must be a director) and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law or the Certificate of Incorporation. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation.

     Section 4.2 Election. The Board of Directors, at its first meeting held after each Annual Meeting of Stockholders, shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier death, resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be approved by the Board of Directors.

     Section 4.3 Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chief Executive Officer, President or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

     Section 4.4 Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board of Directors shall be selected by the Board of Directors. Except where by law the signature of the Chief Executive Officer or President is required, the Chairman of the Board of Directors shall possess the same power as the Chief Executive Officer or President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the

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Chief Executive Officer and President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the Chief Executive Officer and President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as may from time to time be assigned by these By-Laws or by the Board of Directors.

     Section 4.5 Chief Executive Officer. The Chief Executive Officer shall, subject to the control of the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the Chief Executive Officer shall preside at all meetings of the stockholders and the Board of Directors. The Chief Executive Officer shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these By-Laws or by the Board of Directors.

     Section 4.6 President. At the request of the Chief Executive Officer or Chairman or in either’s absence or in the event of either’s inability or refusal to act, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. The President shall have the right to execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-laws, the Board of Directors, the Chief Executive Officer or the President. The President shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these By-Laws, the Board of Directors or the Chief Executive Officer.

     Section 4.7 Vice Presidents. At the request of the Chief Executive Officer or President or in either’s absence or in the event of either’s inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President, or the Vice Presidents if there is more than one (in the order designated by the Board of Directors), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers as the Board of Directors, the Chief Executive Officer or the President from time to time may prescribe. If there be no Chairman of the Board of Directors or Chief Executive Officer and no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President.

     Section 4.8 Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings of such meetings in a book or books to be kept for that purpose; the Secretary shall also perform like duties for committees of the Board of Directors when requested. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of

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Directors, the Chairman of the Board of Directors, the Chief Executive Officer or the President, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then any of the Board of Directors, the Chief Executive Officer or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officer’s signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

     Section 4.9 Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer, the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of the Treasurer and for the restoration to the Corporation, in case of the Treasurer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Treasurer’s possession or under the Treasurer’s control belonging to the Corporation.

     Section 4.10 Assistant Secretaries. Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of the Secretary’s disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.

     Section 4.11 Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer, President, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of the Treasurer’s disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of

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the duties of the office of Assistant Treasurer and for the restoration to the Corporation, in case of the Assistant Treasurer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Assistant Treasurer’s possession or under the Assistant Treasurer’s control belonging to the Corporation.

     Section 4.12 Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

ARTICLE V

STOCK

     Section 5.1 Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chairman of the Board of Directors, the Chief Executive Officer, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation.

     Section 5.2 Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

     Section 5.3 Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or the owner’s legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate.

     Section 5.4 Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these By-laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

     Section 5.5 Record Date.

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          (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; providing, however, that the Board of Directors may fix a new record date for the adjourned meeting.

          (b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

     Section 5.6 Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

     Section 5.7 Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.

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ARTICLE VI

NOTICES

     Section 6.1 Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person’s address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these By-Laws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. Notice to directors or committee members may be given personally or by telefax or by means of electronic transmission.

     Section 6.2 Waivers of Notice. Whenever any notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE VII

GENERAL PROVISIONS

     Section 7.1 Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the General Corporation Law of the State of Delaware (the “DGCL”) and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of

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Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 3.4), and may be paid in cash, in property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.

     Section 7.2 Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

     Section 7.3 Fiscal Year. The fiscal year of the Corporation shall be the calendar year or as otherwise fixed by resolution of the Board of Directors.

     Section 7.4 Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII

INDEMNIFICATION

     Section 8.1 Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 8.3, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or Officer of the Corporation, or is or was a director or Officer of the Corporation serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. For the purposes of this Article VIII, the Officers of the Corporation shall mean the Chief Executive Officer, President, Vice Presidents, Treasurer, Secretary, Assistant Secretary, the Chief Financial Officer and such other officers that may be determined to be Officers of the Corporation by the Board of Directors. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not

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opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

     Section 8.2 Power to Indemnify in Actions. Suits or Proceedings by or in the Right of the Corporation. Subject to Section 8.3, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or Officer of the Corporation, or is or was a director or Officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

     Section 8.3 Authorization of Indemnification. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or Officer of the Corporation is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 8.1 or Section 8.2, as the case may be. Such determination shall be made, with respect to a person who is a director or Officer of the Corporation at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel to the Corporation in a written opinion. Such determination shall be made, with respect to former directors and Officers of the Corporation, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or Officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.

     Section 8.4 Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 8.3, and notwithstanding the absence of any determination thereunder, any director or Officer of the Corporation may apply to the Court of Chancery in the State of Delaware for indemnification to the extent otherwise permissible under Sections 8.1 and 8.2. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or Officer of the Corporation

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is proper in the circumstances because such person has met the applicable standards of conduct set forth in Section 8.1 or 8.2, as the case may be. Neither a contrary determination in the specific case under Section 8.3 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or Officer of the Corporation seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 8.4 shall be given to the Corporation promptly upon the filing of such application, If successful, in whole or in part, the director or Officer of the Corporation seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

     Section 8.5 Expenses Payable in Advance — Directors. Expenses incurred by a director in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII.

     Section 8.6 Expenses Payable in Advance — Officers of the Corporation. Expenses incurred by an Officer of the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Officer of the Corporation to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII.

     Section 8.7 Nonexclusivity of Indemnification and Advancement, of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 8.1 and 8.2 be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 8.1 or 8.2 but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise.

     Section 8.8 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or Officer of the Corporation, or is or was a director or Officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII. The Corporation shall have no obligation to procure such insurance.

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     Section 8.9 Certain Definitions. For purposes of this Article VIII, references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, Officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or Officer of the Corporation with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article VIII.

     Section 8.10 Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or Officer of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such a person.

     Section 8.11 Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 8.4 hereof), the Corporation shall not be obligated to indemnify any director or Officer of the Corporation in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation.

     Section 8.12 Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and Officers of the Corporation.

ARTICLE IX

AMENDMENTS

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     Section 9.1 Amendments. In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal these By-Laws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the Corporation’s By-Laws. These By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the shares entitled to vote at an election of directors.

     Section 9.2 Entire Board of Directors. As used in this Article IX and in these By-Laws generally, the term “entire Board of Directors” means the total number of directors which the Corporation would have if there were no vacancies.

Adopted as of December 6th, 2006

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EX-10.1

LifeScan, Inc. 1000 Gibraltar Drive, Milpitas, CA 95035-6312
Tel: 408-263-9789 Fax: 408.946.6070 www.LifeScan.com

December 7, 2005

Andrew Denver
Chairman
Universal Biosensors Inc
27, Woodviile Ave
Wahroonga NSW 2076
Australia

Dear Andrew,

I am writing to you today to propose amending our current License Agreement.

This amendment will be effective as of the date of this letter and amends the License Agreement (“Agreement”) entered into the 1^st day of April, 2002 by and between Universal Biosensors, Inc., a Delaware corporation having a principal place of business at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (“Universal Biosensors”) and LifeScan Inc., a California corporation having its principal place of business at 1000 Gibraltar Drive, Milpitas, California 95035 (“LifeScan”). LifeScan and Universal Biosensors are sometimes collectively referred to herein individually as a “Party” or collectively as the “Parties.”

In consideration for the covenants and undertakings set forth herein and in the Agreement, the Parties hereby agree;

Section 1.6 is hereby deleted in its entirety and replaced by the following Section:

     1.6 “LIFESCAN’s Field” means diabetes, including, without limitation:

(a)	measurement of analytes for purposes of diagnosing, managing, monitoring, prognosticating, treating, or curing diabetes; and
(b)	the measurement of glucose in humans for any other purpose, including, without limitation, tight glycemic control

Page 1 of 2

The Parties agree that all other provisions in the Agreement remain.

In witness whereof, LifeScan and Universal Biosensors have caused these present to be signed.

AGREED AND ACCEPTED TO:

UNIVERSAL BIOSENSORS INC		LIFESCAN, INC.
By:	/s/ Andrew Denver	By:	/s/ Eric P. Milledge
Name: Andrew Denver		Name: Eric P. Milledge
Title: Chairman		Title: Company Group Chairman
Date: Jan 9 2006		Date: 01/04/06

Page 2 of 2

Exhibit 10.1

LICENSE AGREEMENT

     THIS AGREEMENT, is by and between LifeScan, Inc., a California corporation having its principal place of business at 1000 Gibraltar Drive, Milpitas, California 95035 (“LIFESCAN”), and Universal Biosensors Inc., a Delaware corporation having its principal place of business at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (“UNIVERSAL BIOSENSORS”).

     WHEREAS, LIFESCAN has acquired from USF Filtration and Separations Group Inc. (“FSG”) all right, title, and interest in and to certain know-how, patents and patent applications relating to electrochemical sensors;

     WHEREAS, UNIVERSAL BIOSENSORS desires to obtain a license in and to this know-how and these patents and patent applications and LIFESCAN desires to grant the license to UNIVERSAL BIOSENSORS.

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties agree to the following:

1. DEFINITIONS.

1.1	“Affiliate” means any entity that directly or indirectly controls, is controlled by, or is under common control with a party to the Agreement. “Control” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the entity, whether through the ownership of voting securities, by contract or otherwise.
1.2	“Effective Date” means April 1, 2002.
1.3	“Field” means a field-of-use.
1.4	“Licensed Fields” means all Fields outside of LIFESCAN’s Field.
1.5	“LIFESCAN Acquired Know-How” means all know-how, data, and information acquired from FSG by LIFESCAN and related to the LIFESCAN Patents.
1.6	“LIFESCAN’s Field” means:

     a.) measurement of analytes for purposes of diagnosing, managing, monitoring, prognosticating, treating, or curing diabetes:

     b.) measurement of blood coagulation; and

     c.) measurement for purposes of diagnosing, managing, monitoring, prognosticating, treating, or curing blood coagulopathies excluding the measurement of total hemoglobin.

1.7	“LIFESCAN Acquired Patents” means those applications and patents acquired by LIFESCAN from FSG and identified on Exhibit A attached hereto and made a part hereof, as well as any patents issuing therefrom, foreign counterparts, divisions, continuations, renewals, reissues, re-examinations, patent extensions, and substitutions thereof.
1.8	“Product” means an article within the Licensed Fields that either falls within the scope of a Valid Claim of one of the LIFESCAN Acquired Patents or embodies LIFESCAN Acquired Know-How.
1.9	“Term” means the period beginning on the Effective Date and ending at the end of the term of the last to expire of the LIFESCAN Acquired Patents unless terminated earlier pursuant to Section 5.
1.10	“Valid Claim“ means a claim of an issued, unexpired patent that has not been held invalid by a court of competent jurisdiction or held unpatentable in a re-examination procedure in the United States Patent and Trademark Office.

2. LICENSE.

2.1	a.) Subject to the provisions of paragraph 2.2 and Section 3, as of the Effective Date and for the Term, LIFESCAN hereby grants to UNIVERSAL BIOSENSORS a worldwide, royalty-free, exclusive license, with the right to sublicense, to make, have made, use, sell under and exploit in any way the LIFESCAN Acquired Patents and the LIFESCAN Acquired Know-How in the Licensed Fields.
	b.) In order to exercise UNIVERSAL BIOSENSORS’ rights to sublicense any or all of the rights licensed under paragraph 2.1a.), UNIVERSAL BIOSENSORS shall provide that each sublicense contains the terms and conditions set forth in Section 3 and paragraph 4.6 of this Agreement
2.2	The license granted in paragraph 2.1a.) is subject to a reserved non-exclusive license in LIFESCAN and its Affiliates to make, have made, use, sell under and exploit in any way the LIFESCAN Acquired Patents and LIFESCAN Acquired Know-How in the Licensed Fields .

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2.3	In consideration of the license granted under paragraph 2.1a.), UNIVERSAL BIOSENSORS hereby grants to LIFESCAN a worldwide, royalty-free, irrevocable, non-exclusive license to make, have made, use, and sell under and exploit in any way in LIFESCAN’s Field any and all intellectual property resulting from UNIVERSAL BIOSENSORS’ improvements, modifications, or adaptations whether or not patentable (collectively, “Improvements”) in respect of the LIFESCAN Acquired Patents, LIFESCAN Acquired Know-How, or both.
	a.) All right, title and interest in and to the Improvements shall be in UNIVERSAL BIOSENSORS and UNIVERSAL BIOSENSORS at its sole discretion may, if registerable, register any of the Improvements in such territories (if any) that UNIVERSAL chooses.
	b.) UNIVERSAL BIOSENSORS shall, at LIFESCAN’s expense, grant registerable user or license agreements in respect of any registered intellectual property in any Improvements that LIFESCAN determines is required in any particular territory to make the license in this paragraph 2.1 effective.
	c.) Registered user or license agreements under paragraph 2.2 b.) shall be consistent with this paragraph 2.2, but otherwise shall be in usual or common form.

3. RECAPTURE RIGHTS.

3.1 In order for UNIVERSAL BIOSENSORS to maintain the exclusive license granted in paragraph 2.1a.), UNIVERSAL BIOSENSORS shall use its best efforts to use and exploit the LIFESCAN Acquired Patents and LIFESCAN Acquired Know-How in the Licensed Fields; provided, however that UNIVERSAL BIOSENSORS retains the discretion to determine the means and manner of its exploitation of LIFESCAN Acquired Patents and LIFESCAN Acquired Know-How. For purposes of this Section 3, “exploit” or “exploitation” means:

a.)	using in research and development activities:
b.)	using in developing, making, selling, and distributing Products;
c.)	granting sublicenses in any Field within the Licensed Fields; and.
d.)	developing, in conjunction with a.), b.) or c.), new patent applications or other intellectual property that derives from or, is a development of, any of the LIFESCAN Acquired Patents and LIFESCAN Acquired Know-How in the Licensed Fields.

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3.2	During the Term, UNIVERSAL BIOSENSORS shall provide to LIFESCAN periodic, written, summary reports on UNIVERSAL BIOSENSORS’ exploitation plans and any Improvements to which paragraph 2.3 applies, which reports shall be provided at least one (1) time per calendar year. LIFESCAN shall keep confidential any exploitation plans disclosed to it in under this paragraph 3.2.
3.3	In the event that LIFESCAN is approached by a third party that desires a license in a Field within the Licensed Fields in any or all of the LIFESCAN Acquired Patents or LIFESCAN Acquired Know-How, LIFESCAN shall refer the third party to UNIVERSAL BIOSENSORS by identifying the third party, identifying a contact for the third party, and providing UNIVERSAL BIOSENSORS copies of any correspondence received by LIFESCAN from the third party (collectively, a “Referral”). UNIVERSAL BIOSENSORS shall acknowledge in writing to LIFESCAN receipt of the Referral within thirty (30) days of such receipt.
3.4	If UNIVERSAL BIOSENSORS receives a Referral pursuant to paragraph 3.3, UNIVERSAL BIOSENSORS shall enter into good faith negotiations for grant of a license to the third party unless UNIVERSAL BIOSENSORS:

a.)	is engaged in exploitation of the LIFESCAN Acquired Patents or LIFESCAN Acquired Know-How, as applicable, in the Field that is the subject of the Referral; or
b.)	provides to LIFESCAN evidence that reasonably demonstrates to LIFESCAN that UNIVERSAL BIOSENSORS has bona fide plans to commence exploitation of the LIFESCAN Acquired Patent or LIFESCAN Acquired Know-How, as applicable, in the Field within twelve (12) months of the date of UNIVERSAL BIOSENSORS’ acknowledgment of the Referral.

3.5 If UNIVERSALBIOSENSORS fails to enter into negotiations under paragraph 3.4 within three (3) months of the date of UNIVERSAL BIOSENSORS’ acknowledgment of the Referral, LIFESCAN shall have the right to convert the license granted under paragraph 2.1a.) to a non-exclusive license with respect to the Field and LIFESCAN Acquired Patent or LIFESCAN Acquired Know-How that is the subject of the Referral;

4. Patent Prosecution and Maintenance; Patent Marking.

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4.1 a.) LIFESCAN shall accept liaison and financial responsibility for prosecution by a patent attorney, in independent practice nominated by LIFESCAN and approved by UNIVERSAL BIOSENSORS, of the application or applications within the LIFESCAN Acquired Patents directed to inventions within the Licensed Fields to allowance or to the point of necessary appeal from a final rejection by an Examiner of the USPTO, and those jurisdictions listed on Exhibit B attached hereto and made apart hereof and any other jurisdiction mutually agreed upon by the parties.

b.)	Except as may be later separately agreed upon by the parties in writing, LIFESCAN does not accept responsibility for:
	i.) filing or prosecution of any appeal from a final rejection by an Examiner of the USPTO, or any other jurisdiction, of any of the patent applications; or
	ii.) the conduct of any interference in which an application or patent arising from an application may become involved.

4.2	LIFESCAN will furnish UNIVERSAL BIOSENSORS copies of all office actions and LIFESCAN’s proposed responses thereto at least thirty (30) days prior to the earliest date set by the USPTO or corresponding foreign office for submission of the response and UNIVERSAL BIOSENSORS shall have the right to review and comment on LIFESCAN’s proposed response to such action.
4.3	In the event that LIFESCAN elects not to proceed with the prosecution of an application under subparagraph 4.1 a.), LIFESCAN shall notify UNIVERSAL BIOSENSORS of such decision and UNIVERSAL BIOSENSORS shall have the right at any time thereafter to assume and continue at its own expense the prosecution of the application. Upon receipt by UNIVERSAL BIOSENSORS of such notice from LIFESCAN, LIFESCAN:

a.)	shall be relieved of all further financial and other responsibility in respect to the application;
b.)	shall have no further rights thereto in all jurisdictions for which UNIVERSAL BIOSENSORS assumes financial responsibility for the prosecution;
c.)	shall enter into such assignments or other reasonably necessary documents in respect thereto in all jurisdictions for which UNIVERSAL BIOSENSORS assumes financial responsibility so as to properly vest

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	ownership and the right to prosecute the application in UNIVERSAL BIOSENSORS or its nominee; and
d.)	shall provide to UNIVERSAL BIOSENSORS the file histories of the application in LIFESCAN’s possession.

4.4 Upon issuance of any patents resulting from the applications prosecuted pursuant to paragraph 4.1, LIFESCAN will accept responsibility for payment of maintenance fees for all jurisdictions mutually agreed upon by the parties. However, LIFESCAN shall have the right to discontinue the payment of any or all maintenance fees in any or all countries. In the event LIFESCAN discontinues such maintenance payments, LIFESCAN shall notify UNIVERSAL BIOSENSORS of such decision and UNIVERSAL BIOSENSORS may, at its option, maintain the patent solely at its own expense. Upon receipt by UNIVERSAL BIOSENSORS of such notice from LIFESCAN, LIFESCAN:

a.)	shall be relieved of all further financial and other responsibility in respect to the patent at issue;
b.)	shall have no further rights thereto in all jurisdictions for which UNIVERSAL BIOSENSORS has assumed the maintenance payments.
c.)	shall enter into such assignments or other reasonably necessary documents in respect thereto in all jurisdictions for which UNIVERSAL BIOSENSORS assumes financial responsibility so as to properly vest ownership and the right to maintain the patent in UNIVERSAL BIOSENSORS or its nominee; and
d.)	shall provide to UNIVERSAL BIOSENSORS the file histories of the patent in LIFESCAN’s possession.

4.5 a.) In the event that UNIVERSAL BIOSENSORS grants a sublicense in the LIFESCAN Acquired Patents and receives a lump sum payment, actual or minimum royalties payment, or both ( a “Payment”) from the sublicensee, UNIVERSAL BIOSENSORS agrees to pay fifty percent (50 %) of such Payment (when received from time to time) to LIFESCAN in reimbursement of LIFESCAN’s payment of the prosecution and maintenance fees under this Section 4, such payment to LIFESCAN

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to cease at the end of the term of the LIFESCAN Acquired Patents that are the subject of the Payment from the sublicensee.

B.) LIFESCAN acknowledges to UNIVERSAL BIOSENSORS that, apart from the rights to Payments under this paragraph 4.5, LIFESCAN is not entitled to receive any other amount by way of royalty or similar payment in respect of the license granted herein.

4.6 UNIVERSAL BIOSENSORS agrees to place in a conspicuous location on Products sold to third parties a patent notice, in accordance with 35 U.S.C. §287, and any corresponding provision of the laws of a jurisdiction other than the United States in which a Product is being sold, identifying the relevant LIFESCAN Patents, if any.

5. TERMINATION.

5.1	This Agreement shall extend until the end of the Term unless terminated earlier in accordance with this Section 5.
5.2	This Agreement may be terminated by LIFESCAN in the event that UNIVERSAL BIOSENSORS fails to exploit the LIFESCAN Acquired Patents and LIFESCAN Acquired Know-How. For purposes of this paragraph 5.2:

a.)

exploit has the same meaning as in paragraph 3.1; and

b.)

if LIFESCAN wishes to terminate the Agreement pursuant to this paragraph 5.2, LIFESCAN shall first provide UNIVERSAL BIOSENSORS with ninety (90) days written notice of its intent to so terminate and, if at the expiration of the ninety (90) days, UNIVERSAL BIOSENSORS has not provided evidence to LIFESCAN that UNIVERSAL BIOSENSORS is exploiting the LIFESCAN Acquired Patents and the LIFESCAN Acquired Know-How, this Agreement shall terminate on the 91st day.

5.3 This Agreement may be terminated by LIFESCAN in the event that UNIVERSAL BIOSENSORS is liquidated or is wound up or is in persistent and material breach of its obligations under this Agreement. LIFESCAN shall first provide UNIVERSAL BIOSENSORS with ninety (90) days written notice of its intent to so terminate and, if at the expiration of the ninety (90) days, UNIVERSAL BIOSENSORS has not rectified the breach, this Agreement shall terminate on the 91^st day.

6. ENFORCEMENT OF PATENTS.

7

6.2 In the event that UNIVERSAL BIOSENSORS shall bring to LIFESCAN’s attention in writing any unlicensed infringement, within one of the Licensed Fields, of a LIFESCAN Acquired Patent and LIFESCAN does not, within six (6) months of receipt of such writing:

a.)	secure cessation of the infringement;
b.)	enter suit against the infringer; or
c.)	engage, along with UNIVERSAL BIOSENSORS, in bona fide negotiations for the acceptance by the infringer of a sublicense under the patents,

UNIVERSAL BIOSENSORS shall thereafter have the right to sue for the infringement at its own expense and to collect for its own use all damages, profits, and awards, of whatever nature.

6.2 Nothing in this Agreement shall be construed as an obligation on LIFESCAN’s part to enforce or defend the LIFESCAN Acquired Patents.

7. WARRANTIES

7.1

Nothing in this Agreement shall be construed as a warranty or representation of the validity, enforceability, or scope of the LIFESCAN Acquired Patents.

7.2

Nothing in this Agreement shall be construed as a warranty or representation that a Product made, used, or sold under the license granted herein is or will be free from infringement of the intellectual property of third parties. LIFESCAN shall not be responsible for any award of damages arising out of charges that UNIVERSAL BIOSENSORS, alone or in combination with other entities or persons, infringed or infringes any claim of any third party patent by making, having made, using, selling or otherwise distributing Products.

LIFESCAN MAKES NO WARRANTIES OF ANY NATURE WITH RESPECT TO THE LIFESCAN PATENTS AND LIFESCAN KNOW-HOW INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR PARTCIULAR PURPOSE, OR OTHERWISE.

8. NOTICES

     All notices, reports, requests, or statements provided for in this Agreement shall be given in writing and may be served either by personal delivery or by depositing the same, postage prepaid, in the United States first class, certified, or registered mails (date of deposit will be considered date of delivery) addressed to the parties respectively at the following addresses:

8

a. In the case of UNIVERSAL BIOSENSORS:

Beth Hughes
Venable Attorneys at Law
8010 Towers Crescent Drive
Suite 300
Vienna, Virginia 22182
USA

With a copy to:

Mr. Denis Hanley
Fax: 61 2 4365 5872

b. In the case of LIFESCAN:

LifeScan, Inc.
1000 Gibraltar Drive
Milpitas, California 95035
Attn: President
Fax: (408) 956-4701

With a copy to:

Chief Patent Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933 U.S.A.
Fax: 732-524-5008

9. ARBITRATION

     Any controversy or claim arising out of or relating to this Agreement or the validity, inducement, or breach thereof, shall be settled by arbitration before a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then pertaining (available at www.adr.org), except where those rules conflict with this provision, in which case this provision controls. Any court with jurisdiction shall enforce this clause and enter judgment on any award. The arbitrator shall be an attorney who has at least fifteen (15) years of experience with a law firm or corporate law department of over twenty-five (25) lawyers or who was a judge of a court of general jurisdiction. He shall be selected within ten days of commencement of the arbitration from the AAA’s National Roster of Arbitrators pursuant to agreement or through selection procedures administered by the AAA. The arbitration shall be held in San Francisco, California and in rendering the award the arbitrator must apply

9

the substantive law of New York (except where that law conflicts with this clause), except that the interpretation and enforcement of this arbitration provision shall be governed by the Federal Arbitration Act. Within forty-five (45) days of initiation of arbitration, the parties shall reach agreement upon and thereafter follow procedures assuring that the arbitration will be concluded and the award rendered within no more than eight months from selection of the arbitrator. Failing such agreement, the AAA will design and the parties will follow procedures that meet such a time schedule. Each party has the right before or, if the arbitrator cannot hear the matter within an acceptable period, during the arbitration to seek and obtain from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the status quo or preserve the subject matter of the arbitration. THE ARBITRATOR SHALL NOT AWARD ANY PARTY PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES. NO PARTY MAY SEEK OR OBTAIN PREJUDGMENT INTEREST OR ATTORNEYS’ FEES OR COSTS.

10. GENERAL PROVISIONS.

10.1 This Agreement, or any of its rights and obligations, shall not be assigned or transferred in whole or in part by either party without the prior written consent of the other party.

a.)	Any attempted assignment or transfer of such rights or obligations without consent shall be void.
b.)	A party shall not unreasonably withhold its consent to an assignment or transfer as part of the sale of the whole or part of the business of the assignor or transferor and the assignee or transferee is of reasonable financial standing.

10.2	This Agreement shall be binding and inure to the benefit of the respective parties and their successors and assigns.
10.3	The waiver of either party, whether express or implied, of any provision of this Agreement, or of any breach or default of either party, shall not be construed to be a continuing waiver of such provision, or any succeeding breach or default or of a waiver of any other provision of this Agreement.
10.4	The interpretation, validity, and performance of this Agreement shall be governed by the laws of the State of New York, except for such laws directing application of the laws of another jurisdiction.
10.5	Each party shall comply with all applicable United States and foreign governmental laws and regulations including, without limitation, any such laws directed to importation and exportation.

10

AGREED AND ACCEPTED TO:

UNIVERSAL BIOSENSORS INC.		LIFESCAN, INC.
By:	/s/ Denis Hanley	By:	/s/ Eric P. Milledge
Name:	Denis Hanley	Name:	Eric P. Milledge
Title:	Director	Title:	Company Group Chairman
Date:	April 9, 2002	Date:	April 4, 2002

11

EXHIBIT A

LIFESCAN Patents

12

EXHIBIT A

Sensor Patents Granted

USF Reference	Title	Owner	Country	Patent Number	Issue Date	Issue Date
AU-C089	Analytic Cell	FSG	AU	719581	11-Sep-1997	11-Sep-1997
AU-C089	Analytic Cell	FSG	US	6193865	27-Feb-2001	15-Mar-1999
AU-C056	Electrochemical Cell	FSG	AU	712939	19-Jun-1996	19-Jun-1996
AU-C056	Electrochemical Cell	FSG	SG	53339	17-Aug-1999	19-Jun-1996
AU-C056	Electrochemical Cell	FSG	US	6284125	04-Sep-2001	17-Apr-1998
AU-C064	Electrochemical Cell	FSG	AU	705313	15-Nov-1996	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	US	6179979	30-Jan-2001	15-Mar-1999
AU-C141	Electrochemical Cell	FSG	AU	741403	02-Aug-1999	02-Aug-1999
AU-C142	Electrochemical Cell	FSG	AU	735132	02-Aug-1999	02-Aug-1999
AU-C137	Electrochemical Cell (Notch)	FSG	AU	738128	15-Nov-1996	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	US	6174420	16-Jan-2001	18-May-1999
AU-C065	Electrochemical Method	FSG	AU	705165	15-Nov-1996	15-Nov-1996
AU-C065	Electrochemical Method	FSG	IL	124494	03-Dec-2000	15-Nov-1996
AU-C065	Electrochemical Method	FSG	RU	2174679	10-Oct-2001	15-Nov-1996
AU-C065	Electrochemical Method	FSG	SG	53703	19-Sep-2000	15-Nov-1996
AU-C080	Electrochemical Method	FSG	US	5942102	24-Aug-1999	05-Jul-1997
AU-C094	Improved Electrochemical Cell	FSG	AU	723768	25-Mar-1998	25-Mar-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	US	6325917	04-Dec-2001	11-Feb-2000
AU-C167	Method and device for sampling and analyzing interstitial fluid and whole blood samples	FSG	WO	WO 01/72220	04-Oct-2001	26-Mar-2001
AU-C054	Method of Defining an Electrode Area	FSG	AU	693678	11-Apr-1996	11-Apr-1996
AU-C054	Method of Defining an Electrode Area	FSG	SG	45676	27-Apr-1999	11-Apr-1996
AU-C054	Method of Defining an Electrode Area	FSG	US	5980709	09-Sep-1999	10-Oct-1997
AU-C161	Method of Preventing short sampling of a capillary or wicking fill device	FSG	WO	WO 01/723395	04-Oct-2001	26-Mar-2001
AU-C041	Novel Electrochemical Cells	FSG	AU	697214	12-Apr-1995	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	US	5863400	26-Jan-1999	24-Feb-1997
	OWNER
	USF Filtration & Separations Group Inc	FSG

13

EXHIBIT A

Sensor Patents Pending

USF Reference	Title	Owner	Country	Application Number	Filing Date
AU-C245	Ambidextrous Strip	FSG	US
AU-C089	Analytic Cell	FSG	CA	2264288	11-Sep-1997
AU-C089	Analytic Cell	FSG	EP	97938686.9	11-Sep-1997
AU-C089	Analytic Cell	FSG	JP	513059/1998	11-Sep-1997
AU-C089	Analytic Cell	FSG	WO	PCT/AU97/00599	11-Sep-1997
AU-C244	Electrochemical Cell	FSG	US	09/709968	10-Nov-2000
AU-C056	Electrochemical Cell	FSG	CA	2222525	19-Jun-1996
AU-C056	Electrochemical Cell	FSG	CN	96194874.4	19-Jun-1996
AU-C056	Electrochemical Cell	FSG	EP	96917287.3	19-Jun-1996
AU-C056	Electrochemical Cell	FSG	JP	502421/1997	19-Jun-1996
AU-C056	Electrochemical Cell	FSG	KR	10-1997709488	19-Jun-1996
AU-C056	Electrochemical Cell	FSG	WO	AU96/00365	19-Jun-1996
AU-C064	Electrochemical Cell	FSG	BR	PI9611514-9	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	CA	2236850	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	CN	96199077.5	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	EP	96937919.7	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	HK	99103129.0	20-Jul-1999
AU-C064	Electrochemical Cell	FSG	IL	124495	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	JP	518444/1997	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	KR	703701/1998	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	MX	983881	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	RU	98111492	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	SG	9802884.8	15-Nov-1996
AU-C064	Electrochemical Cell	FSG	WO	PCT/AU96/00724	15-Nov-1996
AU-C215	Electrochemical Cell	FSG	US	09/618515	18-Jul-2000
AU-C260	Electrochemical Cell	FSG	IL	133994
AU-C279	Electrochemical Cell	FSG	US	09/840624	23-Apr-2001
AU-C317	Electrochemical Cell	FSG	US
AU-C137	Electrochemical Cell (Notch)	FSG	AT	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	BE	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	BR		16-Dec-1999
AU-C137	Electrochemical Cell (Notch)	FSG	CA
AU-C137	Electrochemical Cell (Notch)	FSG	CH	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	CN	99123109.0

14

EXHIBIT A

USF Reference	Title	Owner	Country	Application Number	Filling Date
AU-C137	Electrochemical Cell (Notch)	FSG	DE	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	DK	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	EP	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	ES	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	FR	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	GB	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	GR	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	HK	00107699.9	30-Nov-2000
AU-C137	Electrochemical Cell (Notch)	FSG	IL	132089	27-Sep-1999
AU-C137	Electrochemical Cell (Notch)	FSG	IT	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	JP
AU-C137	Electrochemical Cell (Notch)	FSG	KR	10-2001-7014495	14-Nov-2001
AU-C137	Electrochemical Cell (Notch)	FSG	LI	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	MX	999175	07-Oct-1999
AU-C137	Electrochemical Cell (Notch)	FSG	NL	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	RU	2000104734	24-Feb-2000
AU-C137	Electrochemical Cell (Notch)	FSG	SE	99202305.1	15-Nov-1996
AU-C137	Electrochemical Cell (Notch)	FSG	SG
AU-C316	Electrochemical cell connector	FSG	US
AU-C065	Electrochemical Method	FSG	BR	PI9611513-0	15-Nov-1996
AU-C065	Electrochemical Method	FSG	CA	2236848	15-Nov-1996
AU-C065	Electrochemical Method	FSG	CN	96199076.7	15-Nov-1996
AU-C065	Electrochemical Method	FSG	EP	96937918.9	15-Nov-1996
AU-C065	Electrochemical Method	FSG	HK	99101616.4	14-Apr-1999
AU-C065	Electrochemical Method	FSG	JP	518443/1997	15-Nov-1996
AU-C065	Electrochemical Method	FSG	KR	703700/1998	15-Nov-1996
AU-C065	Electrochemical Method	FSG	MX	983882	15-Nov-1996
AU-C065	Electrochemical Method	FSG	WO	PCT/AU96/00723	15-Nov-1996
AU-C213	Electrochemical method for measuring chemical reaction rates	FSG	AR	P010103342	13-Jul-2001
AU-C213	Electrochemical method for measuring chemical reaction rates	FSG	MY	PI20013295	11-Jul-2001
AU-C213	Electrochemical method for measuring chemical reaction rates	FSG	TH	066874	12-Jul-2001
AU-C213	Electrochemical method for measuring chemical reaction rates	FSG	TW	90117040	12-Jul-2001
AU-C213	Electrochemical method for measuring chemical reaction rates	FSG	US	09/616556	14-Jul-2000
AU-C213	Electrochemical method for measuring chemical reaction rates	FSG	WO	PCT/US01/21314	06-Jul-2001
AU-C131	Heated Electrochemical Cell	FSG	AU	29124/99	11-Mar-1999

15

EXHIBIT A

USF Reference	Title	Owner	Country	Application Number	Filling Date
AU-C131	Heated Electrochemical Cell	FSG	CA	2322757	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	DE	99910001.9	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	EP	99910001.9	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	ES	99910001.9	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	FR	99910001.9	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	GB	99910001.9	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	HK	01103634.5	25-May-2001
AU-C131	Heated Electrochemical Cell	FSG	IT	99910001.9	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	JP	2000-535917	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	NL	99910001.9	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	TW	88103765	11-Mar-1999
AU-C131	Heated Electrochemical Cell	FSG	US	09/659470	11-Sep-2000
AU-C131	Heated Electrochemical Cell	FSG	WO	PCT/AU99/00152	11-Mar-1999
AU-C094	Improved Electrochemical Cell	FSG	CA	2284532	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	DE
AU-C094	Improved Electrochemical Cell	FSG	EP	98910522.6	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	ES	98910522.6	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	FR	98910522.6	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	GB	98910522.6	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	IT	98910522.6	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	JP	543209/1998	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	NL	98910522.6	25-Mar-1998
AU-C094	Improved Electrochemical Cell	FSG	US	09/404119	23-Sep-1999
AU-C094	Improved Electrochemical Cell	FSG	WO	PCT/AU98/00200	25-Mar-1998
AU-C166	Improved Electrochemical Cell	FSG	US	09/568076	10-May-2000
AU-C107	Method and Apparatus for Automatic Analysis	FSG	AU	87263/98	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	CA	2300406	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	DE	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	EP	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	ES	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	FR	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	GB	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	GR	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	IE	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	IT	98938521.6	13-Aug-1998

16

EXHIBIT A

USF Reference	Title	Owner	Country	Application Number	Filing Date
AU-C107	Method and Apparatus for Automatic Analysis	FSG	JP	2000-510018	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	NL	98938521.6	13-Aug-1998
AU-C107	Method and Apparatus for Automatic Analysis	FSG	WO	PCT/AU98/00642	13-Aug-1998
AU-C307	Method and Apparatus for Automatic Analysis	FSG	US	09/970461	02-Oct-2001
AU-C167	Method and device for sampling and analyzing interstitial fluid and whole blood samples	FSG	TW	90108732	12-Apr-2001
AU-C167	Method and device for sampling and analyzing interstitial fluid and whole blood samples	FSG	US	09/536235	27-Mar-2000
AU-C167	Method and device for sampling and analyzing interstitial fluid and whole blood samples	FSG	WO	US01/09673	26-Mar-2001
AU-C054	Method of Defining an Electrode Area	FSG	CA	2216911	11-Apr-1996
AU-C054	Method of Defining an Electrode Area	FSG	EP	96908916.8	11-Apr-1996
AU-C054	Method of Defining an Electrode Area	FSG	JP	530573/1996	11-Apr-1996
AU-C054	Method of Defining an Electrode Area	FSG	WO	PCT/AU96/00210	11-Apr-1996
AU-C161	Method of preventing short sampling of a capillary or wicking fill device	FSG	TW	90108733	12-Apr-2001
AU-C161	Method of preventing short sampling of a capillary or wicking fill device	FSG	US	09/536234	27-Mar-2000
AU-C161	Method of preventing short sampling of a capillary or wicking fill device	FSG	WO	US01/09675	26-Mar-2001
AU-C287	Novel Electrochemical Cells	FSG	US	60/328846	10-Oct-2001
AU-C041	Novel Electrochemical Cells	FSG	AT	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	BE	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	CH	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	DE	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	DK	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	EP	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	ES	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	FR	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	GB	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	GR	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	IE	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	IT	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	JP	526564/1995	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	LU	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	MC	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	NL	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	PT	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	SE	95915068.1	12-Apr-1995
AU-C041	Novel Electrochemical Cells	FSG	WO	PCT/AU95/00207	12-Apr-1995
AU-C248	Novel mediation strategy for enzyme linked electrochemical assays	FSG	US

17

EXHIBIT A

USF Reference	Title	Owner	Country	Application Number	Filing Date
AU-C095	Sensor Connection Means	FSG	AT	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	AU	66044/98	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	BE	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	BR	PI9807987-5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	CA	2284634	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	CH	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	CN	98804325.4	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	DE	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	DK	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	EP	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	ES	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	FR	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	GB	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	GR	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	HK	00103935.2	29-Jun-2000
AU-C095	Sensor Connection Means	FSG	IL	131980	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	IT	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	JP	544532/1998	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	KR	7008615/1999	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	MX	998659	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	NL	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	RU	99122339	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	SE	98907775.5	20-Mar-1998
AU-C095	Sensor Connection Means	FSG	SG	9904624-5	20-Mar-1998
AU-C318	Sensor Connection Means	FSG	US	09/399512	20-Sep-1999
AU-C132	Sensor Connection Means Life	FSG	WO	PCT/AU98/00184	20-Mar-1998
AU-C132	Sensor Connection Means Life	FSG	US	to be advised	04-Jan-2002
AU-C132	Sensor with Improved Shelf Life	FSG	AU	29136/99	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	CA	2322454	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	DE	99910013.4	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	EP	99910013.4	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	ES	99910013.4	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	FR	99910013.4	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	GB	99910013.4	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	HK	01104929.7	31-Jul-2001
AU-C132	Sensor with Improved Shelf Life	FSG	IT	99910013.4	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	JP	2000-538226	16-Mar-1999

18

EXHIBIT A

USF Refrence	Tittle	Owner	Country	Application Number	Filing Date
AU-C132	Sensor with Improved Shelf Life	FSG	NL	99910013.4	16-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	TW	88104370	19-Mar-1999
AU-C132	Sensor with Improved Shelf Life	FSG	US	09/664688	19-Sep-2000
AU-C132	Sensor with Improved Shelf Life	FSG	WO	PCT/AU99/00166	16-Mar-1999
AU-C322	Direct Immunoassay Sensor	FSG	AU	Invention Disclosure	14-Jan-02
	OWNER
	USF Filtration & Separations Group Inc	FSG

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EXHIBIT A

Non Sensor Patents Pending

Case Number	Tittle	Owner	Country	Application Number	Filing Date
AU-C199	Anti-oxidant sensor disclosure	FSG	US	09/615691	14-JUl-2000
AU-C199	Anti-oxidant sensor disclosure	FSG	WO	US01/21961	12-Jul-2001
AU-C214	Hemoglobin Sensor	FSG	US	09/616512	14-Jul-2000
AU-C214	Hemoglobin Sensor	FSG	WO	US01/21964	12-Jul-2001
AU-C198	Immunosensor	FSG	US	09/616433	14-Jul-2000
AU-C198	Immunosensor	FSG	WO	US01/22202	13-Jul-2000

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EXHIBIT B

Australia
Canada
EPO:

France
Germany
Italy
Netherlands
Spain
United Kingdom

Japan
United States

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EX-10.2

Exhibit 10.2

LifeScan, Inc. 1000 Gibraltar Drive, Milpitas, CA 95035-6312
Tel: 408-956-4900 Fax: 408-956-4966 www.LifeScan.com

Eric P. Milledge
Company Group Chairman

March 31, 2004

Denis Hanley
Director, Universal Biosensors
RMB 5512 Coachwood Road
Matcham NSW 2250
Australia

Dear Denis,

I am writing to you today to propose amending our current Development and Research Agreement. This amendment will be effective as of First day of April, 2004 and amends the Development and Research Agreement (“Agreement”) entered into the 1^st day of April, 2002 by and between Universal Biosensors, Inc., a Delaware corporation having a principal place of business at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (“Universal Biosensors”) and LifeScan Inc., a California corporation having its principal place of business at 1000 Gibraltar Drive, Milpitas, California 95035 (“LifeScan”). LifeScan and Universal Biosensors are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

In consideration for the covenants and undertakings set forth herein and in the Agreement, the Parties hereby agree:

LifeScan has fully satisfied all of its obligations under the Agreement, including, without limitation, its payment obligations under Article 4 of the Agreement.

Article 1.11 is hereby deleted in its entirety and replaced by the following Article:

1.11 “Term” means a period beginning on April 1^st 2002 and extending to through December 31, 2004 unless extended or sooner terminated by the Parties in accordance with the provisions of this Agreement.

In the first sentence of Article 2.5, thirty (30) days is hereby replaced with ninety (90) days.

Articles 4.1 and 4.2 are hereby deleted in their entirety and replaced by the following Articles:

4.1 In consideration for the rights, licenses and options granted herein to LifeScan and for extending the term for the period set forth in Article 1.11, LifeScan shall, during the remaining term of this Agreement, pay Universal Biosensors

a.	Six hundred and twenty-five thousand dollars Australian ($625,000) payable on or before April 15, 2004.
b.	Six hundred and twenty-five thousand dollars Australian ($625,000) payable on or before July 1, 2004.
c.	Six hundred and twenty-five thousand dollars Australian ($625,000) payable on or before October 1, 2004.

4.2 Any payments due during the remaining term of this Agreement shall be payable to Universal Biosensors in Australian dollars by wire transfer.

The Parties agree that all other provisions in the Agreement remain effective for the duration of the new Term of the Agreement.

In witness whereof, LifeScan and Universal Biosensors have caused these present to be signed.

LifeScan, Inc.		Universal Biosensors
By:	/s/ Eric P. Milledge	By:	/s/ Denis Hanley
Name:	Eric P. Milledge	Name:	Denis Hanley
Title:	Company Group Chairman	Title:	Director

LifeScan, Inc. 1000 Gibraltar Drive, Milpicas, CA 95035-6312
Tel: 408-263-9789 Fax: 408-946-6070 www.LifeScan.com

December 8, 2004

Denis Hanley
Director, Universal Biosensors
RMB 5512 Coachwood Road
Matcham NSW 2250
Australia

Re: Development and Research Agreement, Dated April 1, 2002 and Amended March 31, 2004

Dear Denis,

In consideration for product and process testing activities associated with the Gemini Project in the months of November and December, 2004 which have exceeded the scope of our Development and Research Agreement, LifeScan hereby agrees to pay Universal Biosensors two hundred thousand dollars U.S. ($200,000) on or before December 31, 2004.

In witness whereof, LifeScan and Universal Biosensors have caused these present to be signed.

LifeScan, Inc.		Universal Biosensors
By:	/s/ John E. Klopp	By:	/s/ Denis Hanley
Name:	John E. Klopp	Name:	Denis Hanley
Title:	Vice President Worldwide Business Development	Title:	Director

LifeScan, Inc. 1000 Gibraltar Drive, Milpitas, CA 95035-6312
Tel: 408-263-9789 Fax: 408-946-6070 www.LifeScan.com

December 21, 2004

Denis Hanley
Director, Universal Biosensors
RMB 5512 Coachwood Road
Matcham NSW 2250
Australia

Dear Denis,

I am writing to you today to propose extending our current Development and Research Agreement. This extension will be effective as of First day of January, 2005 and amends the Development and Research Agreement (“Agreement”) entered into on the 1^st day of April, 2002 and amended on the 31st day of March, 2004 by and between Universal Biosensors, Inc., a Delaware corporation having a principal place of business at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (“Universal Biosensors”) and LifeScan Inc., a California corporation having its principal place of business at 1000 Gibraltar Drive, Milpitas, California 95035 (“LifeScan”). LifeScan and Universal Biosensors are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

In consideration for the covenants and undertakings set forth herein and in the Agreement, the Parties hereby agree:

LifeScan has fully satisfied all of its obligations under the Agreement, including, without limitation, its payment obligations under Article 4 of the Agreement.

Article 1.11 is hereby deleted in its entirety and replaced by the following Article:

1.11 “Term” means a period beginning on April 1^st 2002 and extending through December 31, 2005 unless extended or sooner terminated by the Parties in accordance with the provisions of this Agreement.

Articles 4.1 and 4.2 are hereby deleted in their entirety and replaced by the following Articles:

4.1 In consideration for the rights, licenses and options granted herein to LifeScan and for extending the term for the period set forth in Article 1.11, LifeScan shall, during the remaining term of this Agreement, pay Universal Biosensors

a.	Seven hundred and thirty thousand dollars Australian ($730,000) payable on or before January 15, 2005.
b.	Seven hundred and fifty-five thousand dollars Australian ($755,000) payable on or before April 1, 2005.
c.	Six hundred and twenty-five thousand dollars Australian ($625,000) payable on or before July 1, 2005.
d.	Six hundred and twenty-five thousand dollars Australian ($625,000) payable on or before October 1, 2005.

4.2 Any payments due during the remaining term of this Agreement shall be payable to Universal Biosensors in Australian dollars by wire transfer.

The Parties agree that all other provisions in the Agreement remain effective for the duration of the new Term of the Agreement.

In witness whereof, LifeScan and Universal Biosensors have caused these present to be signed.

LifeScan, Inc.		Universal Biosensors
By:	/s/ Eric P. Milledge	By:	/s/ Denis Hanley
Name:	Eric P. Milledge	Name:	Denis Hanley
Title:	Company Group Chairman	Title:	Director

LifeScan, Inc. 1000 Gibraltar Drive, Milpitas, CA 95035-6312
Tel: 408-263-9789 Fax: 408-946-6070 www.LifeScan.com

December 7, 2005

Andrew Denver
Chairman
Universal Biosensors Inc
27, Woodville Ave
Wahroonga NSW 2076
Australia

Dear Andrew,

I am writing to you to propose amending our current Development and Research Agreement.

This amendment will be effective as of the date of signing and amends the Development & Research Agreement (“Agreement”) entered on or about 1 April, 2002 and amended on March 31, 2004 and December 21, 2004 by and between Universal Biosensors, Inc. a Delaware corporation having a principal place of business at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (“Universal Biosensors”) and LifeScan Inc., a California corporation having its principal place of business at 1000 Gibraltar Drive, Milpitas, California 95035 (“LifeScan”). LifeScan and Universal Biosensors are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

In consideration for the covenants and undertakings set forth herein and in the Agreement, the Parties hereby agree:-

Article 1.5 is hereby deleted in its entirety and replaced by the following Section:

     1.5 “LIFESCAN’s Fields means:

a)	the measurement of analytes for purposes of diagnosing, managing, monitoring, prognosticating, treating or curing diabetes; and
b)	the measurement of glucose in humans for any other purpose, including, without limitation, tight glycemic control.

Article 1.11 is hereby deleted in its entirety and replaced by the following Section:

     1.11 “Term” means a period or periods set forth in Article 8.1

Article 2.5 is deleted in its entirety and replaced by the following Section:

Page 1 of 3

2.5 Promptly at the end of the Term, UNIVERSAL BIOSENSORS shall transfer to LIFESCAN all Joint Know-How existing as at the end of the Term. Such information shall include, without limitation, copies of all relevant data, drawings, notebooks and samples. In addition, UNIVERSAL BIOSENSORS shall offer to LIFESCAN such consultation with UNIVERSAL BIOSENSORS employees as may be reasonably necessary to permit LIFESCAN and its agents to continue work on the Program. After termination of the Agreement, such consultation shall be at LIFESCAN’s cost.

Article 4.1 is deleted in its entirety and replaced by the following Section:

4.1 In consideration for the rights, licenses, and options granted herein to LIFESCAN, LIFESCAN shall make payments to UNIVERSAL BIONSENSORS in accordance with the provisions of Exhibit D.

Article 4.2 is deleted in its entirety and replaced by the following Article:

4.2 Any payments due during the Term of this Agreement shall be payable to Universal Biosensors in United States dollars by wire transfer.

Article 8.1 is deleted in its entirety and replaced by the following Section:

8.1

Subject to Section 9.1, this Agreement shall be effective for an initial term commencing on the Effective Date until December 31st, 2006. After December 31st, 2006, this Agreement shall automatically renew for successive one (1) year periods on the same terms and conditions of this Agreement, unless either party has given to the other party prior written notice of termination not less than 9 months prior to the end of the relevant one year period, in which case the Agreement will terminate at the end of the relevant one year period.

8.2

Notwithstanding anything to the contrary in Article 8.1, if either party to this Agreement materially defaults or materially breaches the terms of this Agreement other than by reason of force majeure, the other party shall have the right to terminate this Agreement by giving written notice to that effect to the defaulting party thirty (30) days in advance of the date of termination specified in the notice. However, if the default or breach is corrected or made good by the party receiving notice within thirty (30) days after the notice of termination has been received, this Agreement shall be canceled but shall remain in full force and effect.

The Parties agree that all other provisions in the Agreement remain effective.

Page 2 of 3

In witness whereof, LifeScan and Universal Biosensors have caused these present to be signed.

AGREED AND ACCEPTED TO:

UNIVERSAL BIOSENSORS INC		LIFESCAN, INC.
By:	/s/ Andrew Denver	By:	/s/ Eric P. Milledge
Name:	Andrew Denver	Name:	Eric P. Milledge
Title:	Chairman	Title:	Company Group Chairman
Date:	Jan 9 2006	Date:	01/04/06

Page 3 of 3

EXHIBIT D

In consideration for the rights, licenses, and options granted herein to LIFESCAN, from January 1, 2006 LIFESCAN shall make payments to UNIVERSAL BIOSENSORS of five hundred thousand DOLLARS US (US $500,000.00) within thirty (30) days of the beginning of each calendar quarter during the Term. Any payments due hereunder shall be payable to UNIVERSAL BIOSENSORS in United States Dollars by wire transfer.

Exhibit 10.2

DEVELOPMENT AND RESEARCH AGREEMENT

     THIS DEVELOPMENT AND RESEARCH AGREEMENT (the “Agreement”) is made and entered into this 1^st day of April, 2002 (the “Effective Date”) by and between Universal Biosensors, a Delaware corporation having a principal place of business at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 (“UNIVERSAL BIOSENSORS”) and LifeScan, Inc., a California corporation having its principal place of business at 1000 Gibraltar Drive, Milpitas, California 950935 (“LIFESCAN”). LIFESCAN and UNIVERSAL BIOSENSORS are sometimes referred to herein individually as a “PARTY” and collectively as the “PARTIES.”

WITNESSETH

     WHEREAS, UNIVERSAL BIOSENSORS has the expertise and will have the facilities to conduct research programs relating to a variety of fields; and

     WHEREAS, LIFESCAN desires to fund a portion of the research to be conducted by UNIVERSAL BIOSENSORS;

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties agree to the following:

Article 1. Definitions.

     As used herein, the following terms shall be defined as follows:

     1.1 “Affiliate” means any entity that directly or indirectly controls, is controlled by, or is under common control with a party to the Agreement. “Control” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the entity, whether through the ownership of voting securities, by contract or otherwise.

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     1.2 “Development” means a modification of a component, device, material, or process.

     1.3 “Field” means a field-of-use.

     1.4 “Joint Know-How” means all information, technology, and Developments developed jointly by, or at the joint instruction of, employees or agents of both of the Parties in the course of carrying out the Program including, without limitation, ideas, techniques, processes, practices, trade secrets, methods, knowledge, know-how, skill, expertise, test data and results, analytical and quality control data, results or descriptions, devices, delivery systems, compounds, compositions of matter, and materials and all improvements thereto.

     1.5 “LIFESCAN Field” means: a.) measurement of analytes for purposes of diagnosing, managing, monitoring, prognosticating, treating, or curing diabetes: b.) measurement of blood coagulation; and c.) measurement for purposes of diagnosing, managing, monitoring, prognosticating, treating, or curing blood coagulopathies, excluding the measurement of total hemoglobin.

     1.6 “LIFESCAN’s Acquired Know-How” means all know-how, data, and information acquired from USF Filtration and Separations Group Inc. (“FSG”) by LIFESCAN and related to the LIFESCAN Acquired Patents.

     1.7 “LIFESCAN’s Acquired Patents” means those applications and patents acquired by LIFESCAN from FSG and identified on Exhibit A attached hereto and made a part hereof.

     1.8 “Program” means research conducted by UNIVERSAL BIOSENSORS in the LIFESCAN Field jointly with, or as directed by, LIFESCAN in the areas set forth on Exhibit B attached hereto and made a part hereof.

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     1.9 “UNIVERSAL BIOSENSORS’ Fields” means all Fields outside of LIFESCAN’s Field.

     1.10 “UNIVERSAL BIOSENSORS’ Know-How” means all information, technology and Developments developed solely by, or at the sole instruction, of an employee or agent of UNIVERSAL BIOSENSORS in the course of the Program including, without limitation, ideas, techniques, processes, practices, trade secrets, methods, knowledge, know-how, skill, expertise, test data and results, analytical and quality control data, results or descriptions, devices, delivery systems, compounds, compositions of matter, and materials and all improvements thereto.

     1.11 “Term” means a period beginning on the Effective Date and extending for a period of two (2) years unless extended or sooner terminated by the Parties in accordance with Article 8.

Article 2. Program.

     2.1 During the Term, UNIVERSAL BIOSENSORS shall use its best efforts to perform the Program and any other areas mutually agreed upon by the Parties.

a.)	Details of the work to be carried out in each of the areas set forth on Exhibit B shall be mutually agreed upon in writing by the Parties.
b.)	UNIVERSAL BIOSENSORS shall furnish to LIFESCAN written calendar quarterly reports disclosing the progress of the Program, data and summaries of research findings, Joint Know-How and UNIVERSAL BIOSENSORS Know-How conceived or reduced to practice during the subject quarter, and goals and objectives for the subsequent quarter.
c.)	LIFESCAN shall have reasonable access to any UNIVERSAL BIOSENSORS’ facilities involved in work on the Program and, in addition, UNIVERSAL BIOSENSORS shall provide to LIFESCAN such

3

	information regarding the results of the Program as LIFESCAN may reasonably request to enable LIFESCAN to enjoy the rights granted herein pursuant to Article 3.
d.)	UNIVERSAL BIOSENSORS will manage the Program in consultation with LIFESCAN and any substantial modifications to the Program will be subject to the written approval of LIFESCAN.

     2.2 Supervision of the Program shall be provided by a steering committee (the “Steering Committee”) that consists of two persons appointed by each party and the Vice President of R & D of LIFESCAN, who will be the chairperson of the Steering Committee. The Steering Committee shall meet about every three (3) months at mutually agreed locations, by video conference, or as otherwise mutually agreed to by the parties.

     2.3 The Parties anticipate that work on the Program will be performed at UNIVERSAL BIOSENSORS’ facility in Melbourne, Australia.

     2.4 UNIVERSAL BIOSENSORS shall assist LIFESCAN:

a.)	as is reasonably necessary in obtaining regulatory approvals in any country in which LIFESCAN desires to sell a product that is developed, or any portion of which is developed, in the course of carrying out the Program; and
b.)	as is deemed necessary by LIFESCAN’s patent attorneys in filing, prosecuting, maintaining, and defending LIFESCAN’s Acquired Patents.

During the Term, such assistance shall be at no cost to LIFESCAN except for the costs of travel and accommodations for travel requested by LIFESCAN. After expiration or termination of the Agreement, such assistance shall be at LIFESCAN’s cost.

     2.5 If the Term extends beyond two (2) years from the Effective Date, then notwithstanding any other term of this Agreement, LIFESCAN shall have the option, in

4

its sole and absolute discretion, to terminate UNIVERSAL BIOSENSORS’ responsibility for performing work on the Program at any time by providing written notice to UNIVERSAL BIOSENSORS. UNIVERSAL BIOSENSORS’ responsibility for performing work on the Program, and LIFESCAN’s responsibility for funding such work, shall terminate thirty (30) days after such notice. Promptly after the end of the Term either if it extends only for two (2) years after the Effective Date or if the Term extends beyond that two (2) years and is terminated on thirty (30) days notice as provided in this Section 2.5, UNIVERSAL BIOSENSORS shall transfer to LIFESCAN all Joint Know-How existing as of the end of the Term. Such information shall include, without limitation, copies of all relevant data, drawings, notebooks, and samples. In addition, UNIVERSAL BIOSENSORS shall offer to LIFESCAN such consultation with UNIVERSAL BIOSENSORS employees as may be reasonably necessary to permit LIFESCAN and its agents to continue work on the Program. Such consultation shall be at no cost to LIFESCAN except for costs of necessary travel and accommodations for UNIVERSAL BIOSENSORS’ employees.

     2.6 As to the Joint Know-How, the parties agree as follows:

a.)

LIFESCAN will, at LIFESCAN’s sole discretion, accept liaison and financial responsibility for:

(i.) preparation by a patent attorney in independent practice nominated by LIFESCAN and approved by UNIVERSAL BIOSENSORS of a patent application or applications on the patentable aspects of the Joint Know-How; (ii.) filing upon execution by the inventors of such application or applications at least in the those countries listed on Exhibit C (the “Jurisdictions”) attached hereto and made a part hereof provided that UNIVERSAL BIOSENSORS may elect, at its own expense, to file the application or applications in additional countries; and (iii.) prosecution by the attorney of the application or applications to allowance or to the point of necessary appeal from a final rejection by an examiner in the Jurisdictions.

5

b.)	Except as may be later separately agreed upon by the parties in writing, LIFESCAN does not accept responsibility for:
	(i.) filing or prosecution of any appeal from a final rejection by an examiner in any of the Jurisdictions of any patent application; or
	(ii.) the conduct of any interference in which an application or patent may become involved.
c.)	LIFESCAN will furnish UNIVERSAL BIOSENSORS copies of;
	(i.) any applications filed pursuant to paragraph 2.6 a.)(ii.);
	(ii.) any substantive office actions received from any of the Jurisdictions, pertaining to the applications filed pursuant to paragraph 2.6a.)(ii.); and
	(iii.) any substantive responses to office actions filed pursuant to subparagraph 2.6a.)(iii.).
d.)	UNIVERSAL BIOSENSORS shall assist, as is deemed necessary by LIFESCAN, in preparing, filing, and prosecuting the applications filed pursuant to this Section 2.6 and maintaining and defending the patents issuing therefrom. During the Term, such assistance shall be at no cost to LIFESCAN except for the costs of travel and accommodations for travel requested by LIFESCAN. After expiration or termination of the Agreement, such assistance shall be at LIFESCAN’s cost.
e.)	In the event that LIFESCAN elects not to proceed with the filing or prosecution of any application under this Section 2.6,

6

	UNIVERSAL BIOSENSORS shall have the right at any time thereafter and by written notice to LIFESCAN to assume and continue at its own expense for, as applicable, any or all of filing, prosecution, appealing or conducting any interference of the application. Upon receipt by LIFESCAN of such notice, LIFESCAN shall: (i.) be relieved of all further financial and other responsibility in respect to the application;
	(ii.) shall have no further rights thereto in all countries for which UNIVERSAL BIOSENSORS has assumed the payments;
	(iii.) shall enter into such assignments or other reasonably necessary documents in respect thereto in all countries for which UNIVERSAL BIOSENSORS assumes financial responsibility so as to properly vest ownership and the right to prosecute the application in UNIVERSAL BIOSENSORS or its nominee; and
	(iv.) shall provide to UNIVERSAL BIOSENSORS the file history of the application in LIFESCAN’s possession.
f.)	Upon issuance of any patents resulting from applications filed pursuant to paragraph 2.6a.)(ii.), LIFESCAN will accept responsibility for payment of maintenance fees for the jurisdictions and other countries elected by LIFESCAN. However, LIFESCAN shall have the right at any time to discontinue the payment of any or all maintenance fees in any or all such countries. In the event LIFESCAN discontinues such maintenance payments, UNIVERSAL BIOSENSORS may, at its option and by written

7

notice to LIFESCAN, maintain the patent at its own expense and license it to third parties. Upon receipt by LIFESCAN of such notice, LIFESCAN;

(i.) shall be relieved of all further financial and other responsibility in respect to the patent at issue;

(ii.) shall have no further rights thereto in all countries for which UNIVERSAL BIOSENSORS has assumed the payments;

(iii.) shall enter into assignments or other reasonably necessary documents in respect thereto in all countries for which UNIVERSAL BISOSENSORS assumes financial responsibility so as to properly vest ownership and the right to maintain the patent in UNIVERSAL BIOSENSORS or its nominee; and

(iv.) shall provide to UNIVERSAL BIOSENSORS the file histories of the patent in LIFESCAN’s possession.

     2.7 As to the UNIVERSAL BIOSENSORS Know-How, the parties agree as follows:

a.)	LIFESCAN will, at LIFESCAN’s sole discretion, accept liaison and financial responsibility for:
	(i.) preparation by a patent attorney in independent practice nominated by LIFESCAN and approved by UNIVERSAL BIOSENSORS of a patent application or applications, on the patentable aspects of the UNIVERSAL BIOSENSORS Know-How, that is directed to subject matter within the LIFESCAN Field or filed as a continuation or continuation-in-part of one or more of

8

LIFESCAN’s Acquired Patents and is directed to subject matter within the LIFESCAN Field and;

	(ii.) filing upon execution by the inventors of such application or applications at least in the Jurisdictions, provided that UNIVERSAL BIOSENSORS may elect, at its own expense, to file the application or applications in additional countries; and (iii.) prosecution by the attorney of the application or applications to allowance or to the point of necessary appeal from a final rejection by an examiner in the Jurisdictions.
b.)	Except as may be later separately agreed upon by the parties in writing, LIFESCAN does not accept responsibility for:
	(i.) filing or prosecution of any appeal from a final rejection by an examiner in any of the Jurisdictions of any patent application; or (ii.) the conduct of any interference in which an application or applications may become involved.
c.)	LIFESCAN will furnish UNIVERSAL BIOSENSORS copies of;
	(i.) any applications filed pursuant to paragraph 2.7 a.)(ii.);
	(ii.) any substantive office actions received from any of the Jurisdictions, pertaining to the applications filed pursuant to paragraph 2.7a.)(ii.); and
	(iii.) any substantive responses to office actions filed pursuant to subparagraph 2.7a.)(iii.).
d.)	UNIVERSAL BIOSENSORS shall assist, as is deemed necessary by LIFESCAN, in preparing, filing, and prosecuting the applications

9

filed pursuant to this Section 2.7 and maintaining and defending the patents issuing therefrom. During the Term, such assistance shall be at no cost to LIFESCAN except for the costs of travel and accommodations for travel requested by LIFESCAN. After expiration or termination of the Agreement, such assistance shall be at LIFESCAN’s cost.

e.)	In the event that LIFESCAN elects not to proceed with the filing or prosecution of any application under this Section 2.7, respectively, UNIVERSAL BIOSENSORS shall have the right at any time thereafter and by written notice to LIFESCAN to assume and continue at its own expense filing, prosecution, or both of the application. Upon receipt by LIFESCAN of such notice, LIFESCAN:
	(i.) shall be relieved of all further financial and other responsibility in respect to the application;
	(ii.) shall have no further rights thereto in all countries for which UNIVERSAL BIOSENSORS has assumed the payments;
	(iii.) shall enter into such assignments or other reasonably necessary documents in respect thereto in all countries for which UNIVERSAL BIOSENSORS assumes financial responsibility so as to properly vest ownership and the right to prosecute the application in UNIVERSAL BIOSENSORS or its nominee; and
	(iv.) shall provide to UNIVERSAL BIOSENSORS the file histories of the application in LIFESCAN’s possession.

10

f.)	Upon issuance of any patents resulting from applications filed pursuant to paragraph 2.7a.)(ii.), LIFESCAN will accept responsibility for payment of maintenance fees for the jurisdictions and all other countries elected by LIFESCAN. However, LIFESCAN shall have the right at any time to discontinue the payment of any or all maintenance fees in any or all such countries. In the event LIFESCAN discontinues such maintenance payments, UNIVERSAL BIOSENSORS may, at its option and by written notice to LIFESCAN, maintain the patent at its own expense and license it to third parties. Upon receipt by LIFESCAN of such notice, LIFESCAN:
	(i.) shall be relieved of all further financial and other responsibility in respect to the patent at issue;
	(ii.) shall have no further rights thereto in all countries for which UNIVERSAL BIOSENSORS has assumed the payments;
	(iii.) shall enter into such assignments or other reasonably necessary documents in respect thereto in all countries for which UNIVERSAL assumes financial responsibility so as to properly vest ownership and the right to maintain the patent in UNIVERSAL BIOSENSORS or its nominee; and
	(iv.) shall provide to UNIVERSAL BIOSENSORS the file histories of the patent in LIFESCAN’s possession.

Article 3. Rights; Licenses; Options.

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     3.1 All right, title and interest in and to the Joint-Know-How shall be owned solely by LIFESCAN.

     3.2 LIFESCAN hereby grants to UNIVERSAL BIOSENSORS and UNIVERSAL BIOSENSORS accepts a perpetual, royalty-free, paid-up, exclusive, worldwide right and license, with the right to sublicense, in UNIVERSAL BIOSENSORS’ Fields to make, have made, use, and sell under and otherwise exploit in any way the Joint Know-How and all patent applications directed to the Joint Know-How and patents issuing therefrom.

     3.3 All right, title, and interest in and to UNIVERSAL BIOSENSORS Know-How shall be owned by UNIVERSAL BIOSENSORS.

     3.4 UNIVERSAL BIOSENSORS hereby grants to LIFESCAN, and LIFESCAN accepts, a perpetual, royalty-free, paid-up, exclusive, worldwide right and license, with the right to sublicense, in the LIFESCAN Field to make, have made, use, sell under and otherwise exploit in any way the UNIVERSAL BIOSENSORS Know-How and all patent applications directed to UNIVERSAL BIOSENSORS Know-How and any patents issuing therefrom.

     3.5 It is acknowledged by the Parties that, during the Term and thereafter, UNIVERSAL BIOSENSORS will be conducting research and development in one or more of the UNIVERSAL BIOSENSORS’ Fields utilizing LIFESCAN’s Acquired Know-How, LIFESCAN’s Acquired Patents, or both. In the event that, during the Term, UNIVERSAL BIOSENSORS make a Development in any of the UNIVERSAL BIOSENSORS’ Fields that UNIVERSAL BIOSENSORS desires to license or sublicense to third parties in a UNIVERSAL BIOSENSORS’ Field, then during the Term UNIVERSAL BIOSENSORS shall promptly disclose to LIFESCAN in writing full details of such Development.

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a.)	Within sixty (60) days after receipt of the full details, LIFESCAN may notify UNIVERSAL BIOSENSORS of its interest in licensing the Development in the Field, in which case UNIVERSAL BIOSENSORS shall enter into good faith negotiations with LIFESCAN regarding such a license and, during the negotiations, shall not offer to any third party a license or negotiate with any third party, worldwide, with respect to the sublicense of that Development in the relevant Field.
b.)	If LIFESCAN fails to notify UNIVERSAL BIOSENSORS of its interest, or if no agreement is reached by the parties within one hundred and twenty (120) days after negotiations begin, then UNIVERSAL BIOSENSORS may offer a license of the Development in the relevant Field to a third party; provided, however, that UNIVERSAL BIOSENSORS shall not enter into a license with a third party on terms more favorable to the third party than those last offered to LIFESCAN. Unless UNIVERSAL BIOSENSORS believes that the terms offered to the third party are clearly less favorable to that party than were the terms last offered to LIFESCAN, UNIVERSAL BIOSENSORS shall seek the advice of a qualified but disinterested expert to determine whether the terms offered to the third party are more or less favorable than those last offered to LIFESCAN.
c.)	Before terms are offered to a third party, it must first be determined that no substantial progress had been made in the Development to be licensed subsequent to the time that the Development was described to LIFESCAN. If substantial progress has been made, then the full details of the progress must first be described and the Development offered to LIFESCAN, as set forth above; provided, however, that in granting a license to the third party when permitted under subparagraph b.), the license may confer automatic rights to enhancements or modifications to Developments without the need to make any further offers to LIFESCAN

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     3.6 To enable UNIVERSAL BIOSENSORS to undertake the Program as provided herein, LIFESCAN grants for the duration of the Program and UNIVERSAL BIOSENSORS accepts a limited, royalty-free, non-exclusive license to use the LIFESCAN Acquired Patents and LIFESCAN Acquired Know-How in the LIFESCAN Field for the research and development activities to be carried out in accordance with the Program together with the right to grant a sublicense to UNIVERSAL BIOSENSORS’ subsidiary, Universal Biosensors Pty. Limited (“Subsidiary”), whose facility may undertake the Program as a contractor to UNIVERSAL BIOSENSORS.

a.)	In the event that UNIVERSAL BIOSENSORS grants a sublicense to its Subsidiary, UNIVERSAL BIOSENSORS shall be responsible for obtaining assignments from the employees of the Subsidiary assigning the rights in any intellectual property conceived by the Subsidiary employee in carrying out the Program to UNIVERSAL BIOSENSORS.
b.)	UNIVERSAL BIOSENSORS shall be fully responsible for the performance of the Subsidiary as contractor and sublicensee.

Article 4. Payments.

     4.1 In consideration for the rights, licenses, and options granted herein to LIFESCAN, LIFESCAN shall make payments to UNIVERSAL BIOSENSORS of TWO HUNDRED AND FIFTY THOUSAND DOLLARS US (US $250,000.00) within thirty (30) days of the beginning of each calendar quarter during the Term.

     4.2 Any payments due hereunder shall be payable to UNIVERSAL BIOSENSORS in United States dollars by wire transfer.

Article 5. Infringement.

     5.1 UNIVERSAL BIOSENSORS and LIFESCAN shall each give prompt notice to one another of any infringement of Joint Know-How or UNIVERSAL BIOSENSORS’ Know-How by third parties as may come to its respective knowledge.

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     5.2 LIFESCAN shall have the right, but not the obligation, to pursue legal action against infringement of the UNIVERSAL BIOSENSORS’ Know-How or any patent directed to any of the UNIVERSAL BIOSENSORS’ Know-How in the LIFESCAN Field by third parties, including defending any declaratory judgment action. UNIVERSAL BIOSENSORS shall cooperate with LIFESCAN and provide such non-monetary assistance as LIFESCAN may reasonably request in connection with such action. Further, UNIVERSAL BIOSENSORS shall have the right to participate in and be represented by independent counsel in such action at its own expense. LIFESCAN shall incur no liability to UNIVERSAL BIOSENSORS as a consequence of such litigation or any resulting unfavorable decision including any decision holding any patent directed to any of the UNIVERSAL BIOSENSORS’ Know-How invalid or unenforceable.

     5.3 UNIVERSAL BIOSENSORS shall have the right, but not the obligation, to pursue legal action against infringement of the Joint Know-How or any patent directed to any of the Joint Know-How in the UNIVERSAL BIOSENSORS’ Field by third parties, including defending any declaratory judgment action. LIFESCAN shall cooperate with UNIVERSAL BIOSENSORS and provide such non-monetary assistance as UNIVERSAL BIOSENSORS may reasonably request in connection with such action. Further, LIFESCAN shall have the right to participate in and be represented by independent counsel in such action at its own expense. UNIVERSAL BIOSENSORS shall incur no liability to LIFESCAN as a consequence of such litigation or any resulting unfavorable decision including any decision holding any patent directed to any of the Joint Know-How invalid or unenforceable.

Article 6. Confidentiality.

     6.1 All confidential information provided by one Party to the other shall be marked as such and maintained confidential by the recipient during the Term of this Agreement and for a period of three (3) years following termination or expiration of this Agreement. Confidential information may be used by the recipient only for the purposes of the Agreement. Such purposes shall include, without limitation, activities that are

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necessary for the development and marketing of products. Confidential information disclosed orally by one Party to the other shall be reduced to written form and marked “Confidential” and sent to the other Party within thirty (30) days after the oral disclosure. The receiving Party shall guard all such confidential information with at least the same level of care as it guards its own.

     6.2 Notwithstanding the foregoing, the receiving Party shall be relieved of the confidentiality obligations herein and shall not be prevented by this Agreement from using any information received by it from the disclosing Party if:

a.)	the information was previously known to the receiving Party;
b.)	the information is or becomes generally available to the public through no fault of the receiving Party, including information disclosed as a result of either or both publication or laying open for inspection by the public of any patent applications that the disclosing Party may file;
c.)	the information is acquired in good faith in the future by the receiving Party from a third Party who is not under an obligation of confidence to the disclosing Party with respect to such information; or
d.)	the information independently developed by or for the receiving Party without benefit of confidential information received from the disclosing Party.

     6.3 During the term of this Agreement, UNIVERSAL BIOSENSORS and LIFESCAN each agree not to disclose information that relates to the Program to any third party without prior written consent, which consent shall not be unreasonably withheld; provided, however, that the parties may disclose such information to persons in their respective businesses with a need to know

     6.4 During the Term of this Agreement, UNIVERSAL BIOSENSORS and LIFESCAN each agree not to disclose the specific terms of this Agreement to any third

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party without prior written consent unless such disclosure: a.) is required by statute, law, or the requirement of any securities exchange to make such disclosure; and b.) confidential treatment of the disclosed terms is requested by the disclosing party.

Article 7. Warranty.

     7.1 UNIVERSAL BIOSENSORS warrants that it has the ability to enter into the Agreement, that there are no outstanding written or oral agreements to which UNIVERSAL BIOSENSORS is a party that are inconsistent with the Agreement, and that it will not, during the Term, enter into any written or oral agreements in conflict with the Agreement. Nothing herein shall constitute a warranty that LIFESCAN can practice the Joint Know-How or UNIVERSAL BIOSENSORS’ Know-How or any Development free from all third party patent rights.

     7.2 UNIVERSAL BIOSENSORS warrants that it has entered into agreements with its employees to assign to UNIVERSAL BIOSENSORS their rights in and to all Joint Know-How, UNIVERSAL BIOSENSORS’ Know-How, and all inventions arising therefrom as well as patents and patent applications directed to such inventions. UNIVERSAL BIOSENSORS also warrants that it will enforce the same to ensure that UNIVERSAL BIOSENSORS has perfected its title to the Joint or UNIVERSAL BIOSENSORS’ Know-How, all inventions arising therefrom, as well as patents and patent applications directed to such inventions. Furthermore, UNIVERSAL BIOSENSORS warrants that: a.) it has caused or will cause all additional personnel performing work pursuant to the Program, including any subcontractors, to execute similar agreements with respect to rights in and to all Joint Know-How, UNIVERSAL BIOSENSORS’ Know-How, and all inventions arising therefrom as well as all patents and patent applications directed to such inventions; and b.) warrants that it will enforce such agreements to ensure that UNIVERSAL BIOSENSORS has perfected its title thereto.

     7.3 LIFESCAN warrants that it has the ability to enter into this Agreement, that there are no outstanding written or oral agreements to which LIFESCAN is a party

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that are inconsistent with the Agreement, and that it will not, while the Agreement is in force, enter into any written or oral agreement in conflict with the Agreement.

Article 8. Term and Termination.

     8.1 Subject to Section 9.1, this Agreement shall be effective for the Term and shall continue in full force and effect unless terminated by operation of any provision herein. The Term may be extended by the written, mutual agreement of the Parties.

     8.2 If either party to this Agreement materially defaults or materially breaches the terms of this Agreement other than by reason of force majeure, the other party shall have the right to terminate this Agreement by giving written notice to that effect to the defaulting party thirty (30) days in advance of the date of termination specified in the notice. However, if the default or breach is corrected or made good by the party receiving notice within thirty (30) days after the notice of termination has been received, this Agreement shall not be canceled but shall remain in full force and effect.

Article 9. General Provisions.

     9.1 Surviving Provisions. The provisions of paragraphs 2.6d.) through f.) and 2.7d.) through f.), Sections 2.4, 2.5, 3.1, 3.2, 3.3, 3.4 3.5, and 9.10, and Articles 5, 6, and 7 shall survive the expiration or termination of this Agreement.

     9.2 Notice. All communications, reports, payments and notices shall be effective when delivered personally, or sent by facsimile transmission, air courier, or registered or certified mail, return receipt requested, and addressed as follows:

     If to UNIVERSAL BIOSENSORS:

Beth Hughes

Venable Attorneys at Law

18

8010 Towers Crescent Drive

Suite 300

Vienna, Virginia 22181

USA

With a copy to:

Mr. Denis Hanley

Fax: 612 4365 5872

If to LIFESCAN:	LIFESCAN, INC.
	1000 Gibraltar Drive
	Milpitas, CA 95035
	Attn: President
	Fax No.: (408) 956-4701
With copy to:	Chief Patent Counsel
	Johnson & Johnson
	One Johnson & Johnson Plaza
	New Brunswick, N.J. 08933

9.3	Assignment. The rights and obligations in and to this Agreement shall be binding upon and inure to the benefit of the parties, their legal representatives, successors and assigns. Neither party may assign this Agreement without the prior written consent of the other party, except
	a.) LIFESCAN may freely assign his Agreement in whole or in part to an Affiliate or to a successor in the entire business to which this Agreement pertains;

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b.) UNIVERSAL BIOSENSORS, at the end of the Term, may freely assign the benefit of this Agreement as part of the sale of the whole or part of its business;

c.) LIFESCAN, prior to the end of the Term, shall not unreasonably withhold its consent to an assignment as part of the sale of the whole or part of UNIVERSAL BIOSENSORS’ business.

. Any attempted assignment or transfer of such rights or obligations without such consent, except as provided herein, shall be void and shall automatically terminate all rights of the party attempting to do so under this Agreement.

     9.4 Integration. It is the mutual desire and intent of LIFESCAN and UNIVERSAL BIOSENSORS to provide certainty as to their future rights and remedies against each other by defining the extent of their mutual undertaking as provided herein. Both LIFESCAN and UNIVERSAL BIOSENSORS acknowledge and agree (a) that no representation or promise not expressly contained in this Agreement has been made by the other party hereto or by any of its agents, employees, representatives or attorneys; (b) that such Agreement is not being entered into on the basis if, or in reliance on, any promise or representation, expressed or implied, covering the subject matter hereof, other than those which are set forth expressly in this Agreement; and (c) that each party has had the opportunity to be represented by counsel of its own choice in this matter, including the negotiations which precede the execution of this Agreement

     9.5 Entire Understanding. This Agreement represents the entire understanding between UNIVERSAL BIOSENSORS and LIFESCAN with respect to the subject matter in this Agreement, and supersedes any and all implied or express understandings, agreements or obligations between the parties with respect thereto whether written or oral.

     9.6 Undertakings by LIFESCAN. LIFESCAN makes no representation or warranty that LIFESCAN or an Affiliate will market any product resulting from the

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Program or that, if LIFESCAN or an Affiliate does market a product, such product will be the exclusive means by which LIFESCAN or an Affiliate will participate in the LIFESCAN Field or any other Field.

     9.7 Force Majeure. Neither party shall be liable for failure to perform as required by any provisions of this Agreement where such failure results from a cause beyond such party’s control, such as acts of God, regulation or other acts of civil or military authority, required approval of government bodies, fires, strikes, floods, epidemics, quarantine restrictions, riot, delays in transportation and inabilities due to causes beyond such party’s control to obtain necessary labor, materials, or manufacturing facilities. In the event of any delay attributable to any of the foregoing causes, the time for performance affected thereby shall be extended for a period equal to the time lost by reason of such delay.

     9.8 No Waiver. The waiver by either party, whether express or implied, of any provisions of this Agreement, or of any breach or default of either party, shall not be construed to be a continuing waiver of such provision, or of any succeeding breach or default, or a waiver of any other provisions of this Agreement.

     9.9 Inoperability and Reform. In the event that any term or provision of this Agreement shall be inoperable either by operation of law or otherwise, the remainder of this Agreement shall remain in full force and effect, and the parties shall negotiate in good faith to revise the provision in question to accomplish the original intent of the parties.

     9.10 Arbitration. Any controversy or claim arising out of or relating to this Agreement or the validity, inducement, or breach thereof, shall be settled by arbitration before a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then pertaining (available at www.adr.org), except where those rules conflict with this provision, in which case this provision controls. Any court with jurisdiction shall enforce this clause and enter judgment on any

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award. The arbitrator shall be an attorney who has at least 15 years of experience with a law firm or corporate law department of over 25 lawyers or who was a judge of a court of general jurisdiction. He shall be selected within ten days of commencement of the arbitration from the AAA’s National Roster of Arbitrators pursuant to agreement or through selection procedures administered by the AAA. The arbitration shall be held in San Francisco, California and in rendering the award the arbitrator must apply the substantive law of New York (except where that law conflicts with this clause), except that the interpretation and enforcement of this arbitration provision shall be governed by the Federal Arbitration Act. Within 45 days of initiation of arbitration, the parties shall reach agreement upon and thereafter follow procedures assuring that the arbitration will be concluded and the award rendered within no more than eight months from selection of the arbitrator. Failing such agreement, the AAA will design and the parties will follow procedures that meet such a time schedule. Each party has the right before or, if the arbitrator cannot hear the matter within an acceptable period, during the arbitration to seek and obtain from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the status quo or preserve the subject matter of the arbitration. THE ARBITRATOR SHALL NOT AWARD ANY PARTY PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES. NO PARTY MAY SEEK OR OBTAIN PREJUDGMENT INTEREST OR ATTORNEYS’ FEES OR COSTS.

     9.11 Restriction of Distribution of This Agreements. This Agreement shall not be distributed to persons other than those personnel or LIFESCAN, Affiliates, and UNIVERSAL BIOSENSORS who have a need to know its contents and those whose knowledge of its contents will facilitate performance of the obligations of the parties under the Agreement, other than as may be required in medical emergency, or by statute, law, regulation or judicial order.

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9.12 Choice of Law. The interpretation, validity, and performance of this Agreement shall be governed by the laws of the State of New York, except for such laws directing application of the laws of another jurisdiction.

     9.13 No Publicity. Neither party will originate any publicity, news release, or other public announcement, written or oral, whether to the public press, to stockholders, or otherwise, relating to this Agreement, to any amendment hereto or to performance hereunder or the existence of an arrangement between the parties, without the prior written approval of the other party except as required by statute, law. Regulation, or judicial order. However, if such disclosure is required by statute, law, regulation or judicial order the disclosing party shall give reasonable prior notice of such disclosure to the other party and give such other party an opportunity to review and approve the disclosure. Neither party shall use the name of the other party in any promotional materials or advertising without the prior express written permission of such other party.

     IN WITNESS WHEREOF, LIFESCAN and UNIVERSAL BIOSENSORS have caused these presents to be signed.

LIFESCAN, INC.		UNIVERSAL BIOSENSORS
By:	/a/ Eric P. Milledge	By:	/s/ Denis Hanley
Name:	Eric P. Milledge	Name:	Denis Hanley
Title:	Company Group Chairman	Title:	Director

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EXHIBIT A

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EXHIBIT B

1.	Enhancements in performance for a less than 5 second assay, which assay is to be described by LIFESCAN (the “Assay”), the enhancements to include greater hematocrit performance and temperature range.
2.	Reduction in Assay volume below 0.5 ml.
3.	Interfacing on an electrochemical sensor moiety to a sample collection moiety to permit regular, programmed sensing of glucose concentration from a single sampling source.
4.	Reduction of the number of steps required to generate a result through the integration of various sensor, handling, sample collection, and quality control requirements.
5	Use of second mediators and the like as a means to reduce the quantities of PQQ-GDH enzyme required for the Assay.
6.	Evaluation of alternate PQQ-GDH enzymes for greater sensitivity and specificity.
7.	Use of technology to measure signals generated from other assay configurations including, without limitation, immunoassays and competitive binding assays.
8.	Development of other diagnostic tests useful in the LIFESCAN Field.
9.	Development of manufacturing methodology useful in the LIFESCAN Field, but which may also be useful in UNIVERSAL BIOSENSORS’ Field.

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EXHIBIT C

Australia
Canada
EPO:

France
Germany
Italy
Netherlands
Spain
United Kingdom

Japan
United States

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EX-10.3

Exhibit 10.3

INDEMNIFICATION AGREEMENT

     THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of the day of [Month] 2007, by and between Universal Biosensors, Inc., a Delaware corporation (the “Corporation”), and [Executive name] (“Indemnitee”), an officer of the Corporation.

RECITALS

     A. It is essential to the Corporation to retain and attract as directors and officers of the Corporation the most capable persons available.

     B. The substantial increase in corporate litigation subjects directors and officers to expensive litigation risks at the same time that the availability of directors’ and officers’ liability insurance has been severely limited.

     C. Indemnitee does not regard the protection available under the Delaware Corporation Law, the Charter or the Bylaws of the Corporation as adequate in the present circumstances, and may not be willing to serve as a director or officer without adequate protection, and the Corporation desires Indemnitee to serve in such capacity.

AGREEMENTS

     NOW, THEREFORE, the Corporation and Indemnitee do hereby agree as follows:

     1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as a director and/or an officer of the Corporation for so long as he is duly elected or appointed or until such time as he tenders his or her resignation in writing.

     2. Definitions. As used in this Agreement:

          (a) The term “Proceeding” shall include any threatened, pending or completed action, suit, investigation or proceeding, and any appeal thereof, whether brought by or in the right of the Corporation or otherwise and whether civil, criminal, administrative or investigative, and/or any inquiry or investigation, in which Indemnitee may be or may have been involved as a party or otherwise, by reason of the fact that Indemnitee is or was a director or officer of the Corporation, by reason of any action taken by him or her or of any inaction on his or her part while acting as such a director or officer, or by reason of the fact that he is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification or reimbursement can be provided under this Agreement.

          (b) The term “Expenses” shall include, without limitation, expenses, costs and obligations, paid or incurred, of investigations, judicial or administrative proceedings or appeals, amounts paid in settlement by or on behalf of Indemnitee, attorneys’ fees and disbursements and any expenses reasonably and actually incurred in establishing a right to indemnification under Section 8 of this Agreement including, without limitation, those incurred in investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend with respect to any claim, issue or matter relating thereto or in connection therewith, but shall not include, in the case of indemnification sought under Section 4, the amount of judgments, fines or penalties against Indemnitee.

          (c) References to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation or its subsidiaries which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Agreement.

     3. Indemnity in Third-Party Proceedings. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is a party to or threatened to be made a party to any Proceeding (other than a Proceeding by or in the right of the Corporation to procure a judgment in its favour) by reason of the fact that Indemnitee is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against all Expenses, judgments, fines and penalties actually and reasonably incurred by Indemnitee in connection with the defence or settlement of such Proceeding, but only if he acted in good faith and in a manner which he reasonably believed to be in the best interests of the Corporation, or, in the case of a criminal action or proceeding, in addition, had no reasonable cause to believe that his or her conduct was unlawful. The termination of any such Proceeding by judgment, order of court, settlement, conviction, or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation (or that Indemnitee did not meet any other particular standard of conduct or have any other particular belief or that a court has determined that indemnification is not permitted by applicable law), and with respect to any criminal proceeding, that such person had reasonable cause to believe that his or her conduct was unlawful.

     4. Indemnitee in Proceedings by or in the Right of the Corporation. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is a party to or threatened to be made a party to any Proceeding by or in the right of the Corporation to procure a judgment in its favour by reason of the fact that Indemnitee is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against all Expenses actually and reasonably incurred by Indemnitee in connection with the defence or settlement of such Proceeding, but only if he acted in good faith and in a manner which he reasonably believed to be in the best interests of the Corporation, except that no indemnification for Expenses shall be made under this Section 4, in respect of any Proceeding as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless and only to the extent that any court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. Notwithstanding the foregoing, Indemnitee shall have no right to indemnification for Expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.

     5. Indemnification Prohibited. Notwithstanding the provisions of Sections 3 and 4, no indemnification shall be made in connection with any Proceeding charging improper personal benefit to the Indemnitee, whether or not involving action in his or her official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him or her.

     6. Indemnification of Expenses of Successful Party. Notwithstanding any other provision of this Agreement whatsoever, to the extent that Indemnitee has been successful on the merits or otherwise (including a settlement) in defence of any Proceeding or in defence of any

claim, issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses reasonably and actually incurred in connection therewith.

     7. Advances of Expenses. Expenses incurred by the Indemnitee pursuant to Sections 3 and 4 in any Proceeding shall be paid by the Corporation in advance as soon as practicable but not later than seven business days after receipt of the written request of the Indemnitee provided that Indemnitee shall (i) affirm in such written request that he acted in good faith and in a manner which he reasonably believed to be (in the case of conduct in his or her official capacity) in the best interests of the Corporation and (ii) undertake to repay such amount to the extent that it is ultimately determined that Indemnitee is not entitled to indemnification, and further provided that a determination has been made that the facts then known would not preclude indemnification pursuant to the terms of this Agreement.

     8. Right of Indemnitee to Indemnification Upon Application; Procedure Upon Application.

          (a) Any indemnification under Sections 3 and 4 shall be made as soon as practicable but in any event no later than 30 days after receipt by the Corporation of the written request of Indemnitee.

          (b) The right to indemnification or advances as provided for in this Agreement shall be enforceable by Indemnitee in any court of competent jurisdiction. Indemnitee’s expenses reasonably incurred in connection with successfully establishing Indemnitee’s right to indemnification or advances, in whole or in part, in any such Proceeding shall also be indemnified by the Corporation.

          (c) The Corporation shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable.

     9. Indemnification Hereunder Not Exclusive.

          (a) Notwithstanding any other provision of this Agreement, the Corporation hereby agrees to indemnify the Indemnitee to the full extent permitted by law, whether or not such indemnification is specifically authorized by the other provisions of this Agreement, the Corporation’s Certificate of Incorporation, the Bylaws, or by statute. In the event of any changes, after the date of this Agreement, in any applicable law, statute, or rule which expand the right of a Delaware corporation to indemnify a member of its board of directors or any officer, such changes shall be, ipso facto, within the purview of Indemnitee’s rights, and Corporation’s obligations, under this Agreement. In the event of any changes in any applicable law, statute, or rule which narrow the right of a Delaware corporation to indemnify a member of its board of directors or any officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

          (b) The indemnification provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the Certificate of Incorporation, the Bylaws, any agreement, any vote of shareholders or disinterested directors, the laws of the State of Delaware, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office.

     10. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for some or a portion of the Expenses, judgments, fines or penalties actually and reasonably incurred by him or her in the investigation,

defence, appeal or settlement of any Proceeding but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines or penalties to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defence of any or all claims, issues or matters relating in whole or in part to an indemnifiable event, occurrence or matter hereunder, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection with such defences.

     11. Effect of Federal Law. Both the Company and the Indemnitee acknowledge that in certain instances, federal law will override Delaware law and prohibit the Corporation from indemnifying its offices and directors. For example, the Corporation and Indemnitee acknowledge that the Securities and Exchange Commission has taken the position that indemnification is not permissible for liabilities arising under certain federal securities law, and federal law prohibits indemnification for certain violations of the Employee Retirement Income Security Act.

     12. Liability Insurance.

          (a) The Corporation shall from time to time make the good faith determination whether or not it is practicable for the Corporation to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors with coverage for losses from wrongful acts, or to ensure the Corporation’s performance of its indemnification obligations under this Agreement. Among other considerations, the Corporation will weigh the costs of obtaining such insurance against the protection afforded by such coverage.

          (b) Indemnitee hereby releases the Corporation and its respective authorized representatives from any claims for indemnification hereunder if and to the extent that Indemnitee receives proceeds from any liability insurance policy or other third-party source in payment or reimbursement for such claims. Indemnitee hereby agrees to assign all proceeds Indemnitee receives under any such insurance policy or third-party agreement to the extent of the amount of indemnification made to Indemnitee under the terms of this Agreement. Finally, Indemnitee shall cause each insurance policy or other third-party agreement by which the Indemnitee may be entitled to payment or reimbursement to provide that the insurance company or the third-party agreement by which the Indemnitee may be entitled to payment or reimbursement to provide that the insurance company or the third party waives all right of recovery by way of subrogation against the Corporation in connection with any claim for indemnification under this Agreement. If such waiver of subrogation cannot be obtained except with the payment of additional sums in premiums or otherwise, the Indemnitee shall notify the Corporation of this fact. The Corporation shall then have ten (10) days after receiving such notice to agree to pay such additional sums. If a waiver of subrogation rights is not obtainable at any price or if the Corporation shall fail to agree to pay such additional sums, Indemnitee shall be relieved of the obligation to obtain the waiver of subrogation rights with respect to any particular insurance policy or third-party agreement.

     13. Saving Clause. Nothing in this Agreement is intended to require or shall be construed as requiring the Corporation to do or fail to do any act in violation of applicable law. The provisions of this Agreement (including any provision within a single section, paragraph or sentence) shall be severable in accordance with this Section 13. If this Agreement or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, the Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments, fines and penalties with respect to any Proceeding to the full extent permitted by any applicable portion of this agreement that shall not have been invalidated or by any other applicable law, and this Agreement shall remain enforceable to the fullest extent permitted by law.

     14. Notice. Indemnitee shall, as a condition precedent to his or her right to be indemnified under this Agreement, give to the Corporation notice in writing as soon as practicable of any claim made against him or her for which indemnity will or could be sought under this

Agreement. Notice to the Corporation shall be directed to 103 Ricketts Road, Mount Waverley, Victoria 3149, Australia Attention: Chairman (or such other address as the Corporation shall designate in writing to Indemnitee), together with a copy thereof to PFM Legal, PO Box Q92, QVB Post, Sydney NSW 1230, Australia. All notices, requests, demands and other communications shall be deemed received three days after the date postmarked if (i) delivered by hand and receipted for by the party to whom such notice or other communication shall have been directed, or (ii) sent by prepaid mail, properly addressed. In addition, Indemnitee shall give the Corporation such information and cooperation as it may reasonably require and shall be within Indemnitee’s power.

     15. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute the original.

     16. Applicable Law. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware without giving effect to its rules of conflicts of laws.

     17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties and their respective successors and assigns (including any direct or indirect successors by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Corporation), spouses, heirs, and personal and legal representatives. The Corporation shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Corporation, by written agreement in form and substance satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director and/or officer of the Corporation or of any other enterprise at the Corporation’s request.

     18. Attorneys’ Fees. In the event of an action instituted by or in the name of the Corporation under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’ fees and disbursements, incurred by Indemnitee in defence of such action (including with respect to Indemnitee’s counterclaims and cross claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defences to such action were made in bad faith or were frivolous..

     19. Whole Agreement. This Agreement constitutes the entire agreement between the parties and supersedes, as of the date of this Agreement, all prior negotiations, representations or agreements, either written or oral, including, without limitation, any previous deeds of indemnity with the Corporation or its subsidiaries, with respect to the subject matter hereof

     20. Subsequent Instruments and Acts. The parties hereto agree that they will execute any further instrument and perform any acts that may become necessary from time to time to carry out the terms of this Agreement.

     21. Limitations Period. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Corporation or any affiliate of the Corporation against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Corporation or its affiliates shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern.

     IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be duly executed and signed as of the day and year first above written.

Universal Biosensors, Inc.
	a Delaware corporation
By:
Authorized Officer:

INDEMNITEE:

          Printed Name: [Executive name]

EX-10.4

Exhibit 10.4

Dated: 20

JANE SERGI

(“the Landlord”)

-and-

UNIVERSAL BIOSENSORS PTY LTD

[ACN 098 234 309]

(“the Tenant”)

LEASE

Premises:	103 Ricketts Road
	Mount Waverley, Victoria, 3149

OAKLEY THOMPSON & CO.

Solicitors & Consultants

Level 17

500 Collins Street

MELBOURNE VIC 3000

Tel: (03) 8676 0222

Fax: (03) 8676 0275

DX 30975 Stock Exchange

Ref: SC:KD:2004 0589

This document has been prepared by the Law Institute of Victoria for use by solicitors only and is nat for sale to the public.
It may require to be added to or amended to ensure its suitability for a particular transaction.
For that reason this document should only be used by a solicitor.

COPYRIGHT

Law Institute of Victoria

May 2000 Revision

LEASE OF REAL ESTATE

(WITH GUARANTEE & INDEMNITY)

(Commercial Property)

	The Landlord leases the Premises to the Tenant for the Term and at the Rent and on the conditions set out in this lease.
	The Guarantor, if any, agrees to be bound by the Guarantor’s obligations set out in this lease. EXECUTED AS A DEED ON
	DATE:
To be executed under seal	EXECUTION & ATTESTATION:
	EXECUTED by JANE SERGI in the presence	)
	of:	)
		)
	Signature of Witness
	Name of Witness [please print]

EXECUTED by UNIVERSAL BIOSENSORS PTY LTD	)
(ACN 098 234 309) in a manner	)
authorised by the Corporations Act with the authority of the director(s):	)
/s/ Denis Hanley	/s/ Ian Bennett
Signature of Director/Secretary	Signature of Secretary
Denis Hanley	Ian Bennett
Name of Director/Secretary in full	Name of Secretary in full
[Delete if not applicable]	[Delete if not applicable]

This document has been prepared by the Law Institute at Victoria for use by solicitors only and is not for sale to the public.
It may require to be added to or amended to ansure its suitabilily tor a particular transaction.
For that reason this document should only be used by a solicitor.

LEASE OF REAL ESTATE

COPYRIGHT

Law Institute of Victoria

May 2000 Revision

CONDITIONS

     DEFINITIONS AND INTERPRETATION

     This lease is to be interpreted according to the following rules.

1.1 The listed expressions have the meaning set out opposite them:

EXPRESSION	MEANING
guarantor	the person named in item 3
item	an item in the schedule to this lease
landlord	the person named in item 1, or any other person who will be entitied to possession of the premises when this lease ends’
landlord’s installations	the installations listed in item 5 and those installed by the landlord after the lease starts
premises	the land and buildings described in item 4 and the landlord’s installations
rent	the amount in item 6, or as varied in accordance with this lease
tenant	the person named in item 2, or any person to whom the lease has been transferred
tenant’s installations	the installations listed in item 7 and those installed by the tenant after the lease starts
term	the period stated in item 8
valuer	a person holding the qualifications or experience specified under section 13DA(1A) of the Valuation of Land Act 1960.
Act	the Retail Tenancies Reform Act 1998.

1.2	References to laws include regulations, instruments and by-laws and all other subordinate legislation or orders made by any authority with jurisdiction over the premises. Illegal means contrary to a law as defined in this sub-clause.
1.3	This lease must be interpreted so that it complies with all laws applicable in Victoria. If any provision of this lease does not comply with any law, then the provision must be read down so as to give it as much effect as possible. If it is not possible to give the provision any effect at all, then it must be severed from the rest of the lease.
1.4	The law of Victoria applies to this lease.
1.5	Any change to this lease must be in writing and signed by the parties.
1.6	An obligation imposed by this lease on or in favour of more than one person binds or benefits all of them jointly and each of them individually.
1.7	The use of one gender includes the others and the singular includes the plural and vice versa.
1.8	If the landlord, tenant or guarantor is an individual, this lease binds that person’s legal personal representative. If any of them is a corporation, this lease binds its transferees.
1.9	This lease, including all guarantees and indemnities is delivered and operates as a deed.

2 TENANT’S OBLIGATIONS

2.1 The tenant must:

2.1.1	pay the rent without any deductions to the landlord on the days and in the way stated in item 9. No demand for rent is necessary and the landlord may direct in writing that the rent be paid to another person.
2.1.2	pay when due the outgoings listed in item 10 for which the tenant receives notices directly, and reimburse within 7 days those which the landlord requests; but:

(a)	land tax, if it is one of the outgoings, is to be calculated on a single holding basis, as if the landlord were not an absentee; and
(b)	the tenant is not obliged to pay special fees or charges for capital items levied by a body corporate.

2.1.3	produce receipts for paid outgoings within 7 days of a request.
2.1.4	pay when due all charges for the provision of services to the premises including gas, electricity, water and telephone.
2.1.5	pay when due the expenses of operating, maintaining and repairing any heating or air conditioning equipment serving the premises but excluding expenses of a capital nature.

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2.1.6	comply with the landlord’s requirements in relation to any of the landlord’s installations or any services provided by the landlord.
2.1.7	pay or reimburse within 7 days of a request the premiums and charges for the following insurance policies taken out by the landlord:

(a)	damage to and destruction of the premises, for their full replacement value, for the risks listed in item 11,
(b)	removal of debris,
(c)	breakdown of the landlord’s installations,
(d)	breakage of glass,
(e)	public-risk for the amount stated in item 12, or if nono is stated, for $10 million, and
(f)	loss of rent and outgoings for the period stated in item 13, or if none is stated, for 6 months, but if the Act applies, only to the extent permitted by the Act.

2.1.8	pay when due the costs of removal of waste and sewage.
2.1.9	pay the appropriate apportionment of the outgoings listed in item 10 and the premiums referred to in clause 2.1.7 at the start and end of the term, and in each of these cases the landlord must produce the relevant assessments and invoices to support the calculation.
2.1.10	pay on demand interest at the rate stated in item 14 on any rent or other money which the tenant has not paid within 7 days of the due date. Interest is to be calculated daily from the due date and continues until the overdue money is paid.
2.1.11	pay on demand the landlord’s reasonable expenses of:

(a)	compliance with the landlord’s disclosure obligations under section 8 of the Act (If applicable).
(b)	the negotiation, preparation, settling, execution and stamping of this lease.
(c)	obtaining the consent of the landlord’s mortgagee (including a chargee or debenture holder) to this lease.
(d)	change, transfer, surrender or ending of this lease, except at the end of the term, or where the change occurs at the landlord’s request.
(e)	the subletting of the premises.
(f)	any breach of this lease by the tenant.
(g)	the exercise or attempted exercise by the landlord of any right or remedy against the tenant, but, if the Act applies, only to the extent to which the Act permits recovery.

2.1.12	pay the stamp duty on this lease, on any renewal, and any additional stamp duty after a review of rent.
2.1.13	comply with all laws relating to the use or occupation of the premises.
2.2	The tenant must not, and must not let anyone else:
2.2.1	use the premises except for the permitted use stated in item 15.
2.2.2	use the premises for any illegal purpose.
2.2.3	carry on any noxious or offensive activity on the premises.
2.2.4	do anything which might cause nuisance, damage or disturbance to a tenant, occupier or owner of any adjacent property.
2.2.5	conduct an auction or public meeting on the premises.
2.2.6	use radio, television or other sound-producing equipment at a volume that can be heard outside the premises.
2.2.7	do anything which might affect any insurance policy relating to the premises by causing: .
	—       it to become void or voidable or;
	—       any claim on it being rejected or;
	—       a premium to be increased.
2.2.8	keep or use chemicals, inflammable fluids, acids, or other hazardous things on the premises except for the permitted use, or create fire hazards.
2.2.9	place any sign on the exterior of the premises without the landlord’s written consent.
2.2.10	make any alteration or addition to the premises without the landlord’s written consent. Consent is entirely in the landlord’s discretion.

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2.2.11	install any fixtures or fittings, except those necessary for the permitted use, without the landlord’s written consent.
2.2.12	bring onto the premises any object which by its nature or weight might cause damage to the premises, without the landlord’s written consent.
2.2.13	except in an emergency, interfere with any of the services or equipment in the premises or in any property of which the premises form part.

2.3 The tenant must:

2.3.1	take out and keep current an insurance cover in the names of the landlord and the tenant for public risk for the amount stated in item 12, or if none is stated, for $10 million, or other sum reasonably specified from time to time by the landlord, with an extension which includes the indemnities given by the tenant to the landlord in this lease.
2.3.2	maintain the insurance cover with an insurer approved by the landlord, but the landlord must not withhold approval unreasonably.
2.3.3	ensure that each insurance policy requires the insurer to give 21 days written notice of cancellation to the landlord before cancelling or refusing to renew the policy.
2.3.4	produce satisfactory evidence of insurance cover on written request by the landlord.

3 REPAIRS AND MAINTENANCE

3.1	In this clause, if this lease is a renewal under an option in an earlier lease (whether or not the renewal is, or an earlier renewal was, on terms substantially different to those of the option), “start of the lease” means the starting date of the first lease to contain an option for renewal.
3.2	Except for fair wear and tear and subject to clause 3.4, the tenant must keep the premises in the same condition as at the start of the lease and properly cleaned, repaired and maintained. The tenant must also comply with all notices or orders affecting the premises which are issued during the term.
3.3	In addition to its obligations under clause 3.2, the tenant must:

3.3.1	refinish all finished surfaces and renew all office carpets in a workmanlike manner with as good quality materials as previously at least once every 5 years during the term and any other term.
3.3.2	keep the premises free from rubbish, keep waste in proper containers and have it removed regularly.
3.3.3	immediately replace glass which becomes cracked or broken with glass of the same thickness and quality.
3.3.4	immediately repair defective windows, lights, doors, locks and fastenings, and replace missing light-globes and fluorescent tubes, keys and keycards.
3.3.5	maintain in working order all plumbing, drainage, gas, electric, solar and sewerage installations and fire protection apparatus.
3.3.6	promptly give written notice to the landlord or the landlord’s agent of:

(a)	damage to the premises or of any defect in the structure of or any of the services to the premises
(b)	service by any authority of a notice or order affecting the premises
(c)	any hazards threatening or affecting the premises
(d)	any hazards arising from the premises for which the landlord might be liable.

3.3.7	immediately make good damage caused to adjacent property by the tenant or its employees, agents, contractors, customers or visitors.
3.3.8	permit the landlord, its agents or workmen to enter the premises during normal business hours, after giving reasonable notice except in cases of emergency:

(a)	to inspect the premises,
(b)	to carry out repairs or agreed alterations, and
(c)	to do anything necessary to comply with notices or orders of any authority, bringing any necessary equipment.

3.3.9 carry out repairs within 14 days of being served with a written notice of any defect or lack of repair which the tenant is obliged to make good under this lease. If the tenant does not comply with the notice, the landlord may carry out the repairs and the tenant must repay the cost to the landlord on demand.

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3.3.10	only use persons approved by the landlord to repair and maintain the premises
3.3.11	take all precautions required by law against fire, but not if this requires structural alterations or installation of equipment unless they are required by the nature of the tenant’s use of the premises.
3.3.12	comply with all reasonable directions of the landlord or the insurer of the premises as to the prevention, detection and limitation of fire.
3.3.13	on vacating the premises, remove all signs and make good any damage caused by the removal.
3.3.14	take reasonable precautions to secure the premises and their contents from theft, keep all doors and windows locked when the premises are not in use, and comply with the landlord’s directions for the use and return of keys or keycards.
3.3.15	permit the landlord or its agent access to the premises at reasonable times by appointment to show the premises:

(a)	to prospective purchasers at any time during the term; and
(b)	to prospective tenants within 3 months before the end of the term, and to affix “for sale” or “to let” signs in a way that does not unduly interfere with the permitted use.

3.3.16	refund on demand all increases in insurance premiums paid by the landlord as the result of the tenant’s use of the premises.
3.3.17	carry on its business efficiently and keep the premises open during the business hours which are normal for the permitted use.
3.3.18	maintain the grounds and gardens of the premises in good condition, tidy, free from weeds and well watered.

3.4 The tenant is not obliged:

3.4.1	to repair damage against which the landlord must insure under clause 6.2 unless the landlord loses the benefit of the insurance because of acts or omissions by the tenant or the tenant’s employees, agents, contractors, customers or visitors.
3.4.2	to carry out structural repairs or make payments of a capital nature unless the need for them results from:

(a)	negligence by the tenant or the tenant’s employees, agents, contractors, customers or visitors; or
(b)	failure by the tenant to perform its obligations under this lease; or
(c)	the tenant’s use of the premises.

4 LEASE TRANSFERS AND SUBLETTING

4.1 The tenant must not transfer this lease or sublet the premises without the landlord’s written consent, and section 144 of the Property Law Act 1958 and clause 9.1 do not apply.

4.2 The landlord:

4.2.1	subject to sub-clause 4.2.2, must not unreasonably withhold consent to a transfer of this lease or a sublease of the premises if the tenant has complied with the requirements of clause 4.3.
4.2.2	may withhold consent at the landlord’s discretion if the Act does not apply, and a transfer of this lease would result in the Act applying, or applying if this lease is renewed for a further term.

4.3 To obtain the landlord’s consent to a transfer or sublease the tenant must -

4.3.1	ask the landlord in writing to consent to the transfer or sublease,
4.3.2	give the landlord

(a)	in relation to each proposed new tenant or sub-tenant -
	—       its name and address
	—       two written references as to its financial circumstances
	—       two written references as to its business experience
(b)	a copy of the proposed document of transfer or sublease.

4.3.3 If the Act applies and -

(a)	the tenant has complied with this clause 4.3, and
(b)	the landlord fails to respond by giving or withholding consent within 21 days, then the landlord is to be taken as having consented.

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4.3.4 If the Act does not apply, the landlord may request any additional information reasonably required to enable it to make a decision.

4.4	If the landlord consents to the transfer or sublease, the landlord, tenant and new tenant or sub-tenant and the guarantor must execute the documents submitted under sub-clause 4.3.2(b). The new tenant or sub-tenant and the directors of them if they are corporations must execute a deed binding each of them to carry out the obligations of the tenant under this lease and a guarantee and indemnity in the form of clause 15.
4.5	The tenant must pay the landlord’s reasonable expenses incurred in connection with an application for consent or the granting of consent and the completion of the documents, as well as the stamp duty on the documents.
4.6	The tenant must not give up possession or share occupancy of the premises or grant a licence to anyone else without the landlord’s written consent, which may be given or withheld in the landlord’s discretion.
4.7	The obligations to the landlord of every tenant who has transferred this lease continue until this lease ends. They do not continue into any period of overholding after this lease ends, nor into any renewed term: at those times they are the responsibility only of the tenant in possession. This clause does not prevent the landlord from enforcing rights which arise before this lease ends.

5 GENERAL AGREEMENTS BETWEEN LANDLORD AND TENANT

5.1 When the term ends, the tenant must -

5.1.1	return possession of the premises to the landlord in clean and repaired condition as required by this lease, and
5.1.2	remove the tenant’s installations and other property from the premises and make good any damage caused in removing it.

	If the tenant leaves any of its installations or other property on the premises after the end of the lease, unless the landlord and tenant agree otherwise, that property will be considered abandoned and will become the property of the landlord.
5.2	The tenant indemnifies the landlord against any claim resulting from any act or failure to act by the tenant or its employees, agents, contractors, customers or visitors while using the premises.
5.3	The tenant —

5.3.1	uses and occupies the premises at its own risk; and
5.3.2	releases the landlord from and indemnifies the landlord against all claims resulting from accidents occurring on the premises except in those cases where the accident is caused by the landlord or a person for whom the landlord is responsible.

6 LANDLORD’S OBLIGATIONS

6.1	The landlord must give the tenant quiet possession of the premises without any interruption by the landlord or anyone connected with the landlord as long as the tenant does what it must under this lease.
6.2	The landlord must take out policies of insurance against the risks listed in item 11 at the start of the term and must keep them current as long as the tenant pays or reimburses the premiums and charges for those covered by the tenant’s obligations in sub-clause 2.1.7.
6.3	The landlord must, subject to clause 2.1.11(c), obtain the written consent to this lease of all mortgagees or debenture holders whose interests would otherwise have priority over this lease.

7 EVENTS OF DEFAULT AND LANDLORD’S RIGHTS

7.1 The landlord may re-enter the premises and end this lease if -

7.1.1	the tenant does not pay the rent for 14 days — no demand is necessary; or
7.1.2	the tenant does not meet its obligations under this lease; or
7.1.3	the tenant—

(a)	becomes bankrupt, or
(b)	takes or tries to take advantage of Part X of the Bankruptcy Act, or
(c)	makes an assignment for the benefit of its creditors, or
(d)	enters into a composition or arrangement with its creditors, or

6

(e) is unable to pay its debts when they fall due; or

7.1.4 the tenant is a corporation and -

(a)	an order is made or a resolution is passed to wind it up except for reconstruction or amalgamation, or
(b)	goes into liquidation, or
(c)	is placed under official management, or
(d)	has a receiver, including a provisional receiver, or receiver and manager of any of its assets or an administrator appointed, or
(e)	has an inspector appointed under the Australian Securities and Investments Commission Act, or
(f)	without the landlord’s written consent, there is a different person in effective control of the tenant as a result of changes in -

(i)	membership of the company or its holding company;
(ii)	beneficial ownership of the shares in the company or its holding company;
(iii)	beneficial ownership of the business or assets of the company,
but this paragraph does not apply if the tenant is a public company listed on an Australian stock exchange, or a subsidiary of one; or

7.1.5	a warrant issued by a court to satisfy a judgment is not satisfied within 30 days of being issued; or
7.1.6	the tenant, without the landlord’s written consent -

(a)	discontinues its business on the premises, or
(b)	leaves the premises unoccupied for 7 days.

7.2	Re-entry by the landlord ends this lease, but the landlord retains the right to sue the tenant for unpaid money or for damages for breaches of its obligations under this lease.
7.3	For the purpose of section 146(1) of the Property Law Act 1958, 14 days is fixed as the period within which the tenant must remedy a breach capable of remedy and make reasonable compensation in money.
7.4	Breach by the tenant of any of the following clauses of this lease is a breach of an essential term: 2.1.1, 2.1.2, 2.1.7, 2.1.12, 2.2.1, 2.2.2, 2.3, 3.2, 3.3.6, 3.3.8, 3.3.9, 3.3.12, 3.3.16, 3.3.17, 4.1, 4.6 and 13.1 and any additional provision set out in item 22.
7.5	Even though the landlord does not exercise its rights under this lease on one occasion, it may do so on any later occasion.

8 DESTRUCTION OR DAMAGE

8.1 If the premises are damaged so that they cannot be used for the permitted use —

8.1.1	a fair portion of the rent and outgoings is to be suspended until the premises are again wholly fit for the permitted use,
8.1.2	the suspended portion of the rent and outgoings must be proportional to the nature and extent of the damage.

8.2	If the premises are partly destroyed, but not substantially destroyed, the landlord must reinstate the premises as soon as reasonably practicable.
8.3	If the premises are wholly or substantially destroyed —

8.3.1	the landlord is not obliged to reinstate the premises and
8.3.2	if the reinstatement does not start within 3 months, or is not complete within 6 months, the landlord or the tenant may end this lease by giving the other written notice.

8.4

The tenant will not be entitled to suspension of rent or outgoings under sub-clause 8.1.1 nor to end the lease under sub-clause 8.3.2 if payment of an insurance claim is property refused in respect of the damage or destruction because of any act or omission by the tenant, or its employees, agents, contractors, customers or visitors, and the landlord will not be obliged to reinstate the premises under clause 8.2.

8.5

If the Act does not apply and there is a dispute under this clause, either party may request the senior office-bearer of the Australian Property Institute — Victorian Division to nominate a practising valuer member of that Institute to determine the dispute as an expert or the parties may refer the dispute to mediation under clause 16.

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9 CONSENTS AND WARRANTIES BY THE PARTIES

9.1 The landlord must not unreasonably withhold its consent to any act by the tenant which needs consent unless any other clause provides otherwise, but -

9.1.1	the landlord may impose reasonable conditions before consenting and
9.1.2	the tenant must reimburse the landlord’s reasonable expenses resulting from an application for its consent, including fees paid to consultants.

9.2	This lease, together with the attached disclosure statement if there is one, contains the whole agreement of the parties. Neither party is entitled to rely on any warranty or statement in relation to
	—       the conditions on which this lease has been agreed,
	—       the provisions of this lease or
	—       the premises
	which is not contained in those documents.

10 OVERHOLDING AND ABANDONMENT OF THE PREMISES

10.1 If the tenant remains in possession of the premises without objection by the landlord after the end of the term :

10.1.1	the tenant, without any need for written notice of any kind, is a monthly tenant on the conditions in this lease, modified so as to apply to a monthly tenancy;
10.1.2	either party may end the tenancy by giving one month’s written notice to the other at anytime;
10.1.3	the monthly rent starts at one twelfth of the annual rent which the tenant was paying immediately before the term ended unless a different rent has been agreed; and
10.1.4	the landlord may increase the monthly rent by giving the tenant one month’s written notice.

10.2 If the tenant vacates the premises during the term, whether or not it ceases to pay rent:

10.2.1 the landlord may:

(a)	accept the keys,
(b)	enter the premises to inspect, maintain or repair them, or
(c)	show the premises to prospective tenants or purchasers,

	without this being re-entry or waiver of the landlord’s rights to recover rent or other money under this lease.
10.2.2	this lease continues until a new tenant takes possession of the premises, unless the landlord:

(a)	accepts a surrender of the lease, or
(b)	notifies the tenant in writing that a breach by the tenant is being treated as a repudiation of the lease, or
(c)	ends the lease by re-entry.

11 RENT REVIEWS TO MARKET

11.1	In this clause “review period” means the period following each review date listed in item 16 until the next review date or until the end of this lease.
	The review procedure on each review date is -

11.1.1	Each review of rent may be initiated by either party unless item 17 states otherwise but. if the Act applies and requires that the review be compulsory and not optional, the review is compulsory.
11.1.2	A party may initiate a review by giving the other party a written notice stating the market rent which it proposes for the review period. If the party receiving the notice does not object in writing to the proposed market rent within 14 days, it becomes the rent for the review period.
11.1.3	If:

• the party receiving the notice serves an objection to the proposed market rent within 14 days; and

• the parties do not agree on the market rent within 14 days after the objection is served

the parties must appoint a valuer to determine the market rent.

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	If the parties do not agree on the name of the valuer within 28 days after the objection is served, the valuer must be nominated by the senior office-bearer of the Australian Property Institute — Victorian Division, at the request of either party.
11.1.4	In determining the current market rent for the premises the valuer must:

(a)	consider any written submissions made by the parties within 21 days of their being informed of the valuer’s appointment
(b)	determine the market rent as an expert and, unless the Act applies:
(c)	assume that the premises are available to be leased on the same conditions as those contained in this lease including any options for renewal, but with a tenant in possession
(d)	take into account the conditions of this lease including the permitted use
(e)	assume that the tenant has met all its obligations under this lease
(f)	ignore the tenant’s installations and all improvements made by the tenant to the premises without obligation to do so
(g)	ignore the goodwill of the tenant’s business and
(h)	take into account current market rents for comparable premises in the locality.

11.1.5	The valuer must determine a market rent at least equal to the current rent before the review.
11.1.6	Sub-clause 11.1.5 does not apply if the Act applies.
11.1.7	The valuer must make the determination of the rent and inform the parties in writing of the amount of the determination and the reasons for it as soon as possible after the end of me 21 days allowed for submissions by the parties.
11.1.8	If—

(a)	no determination has been made within 42 days of the parties
	—       appointing the valuer, or
	—       being informed of the valuer’s appointment, or
(b)	the valuer resigns, dies, or becomes unable to complete the valuation,
then the parties may immediately appoint a replacement valuer qualified as stated in sub-clause then 11.1.3, or seek a replacement from the body named in sub-clause 11.1.3.

11.2	The valuer’s determination binds both parties.
11.3	The landlord and tenant must bear equally the valuer’s fee for making the determination. If either pays more than half the fee, the difference may be recovered from the other.
11.4	Until the determination is made by the valuer, the tenant must continue to pay the same rent as before the review date. Within 7 days of being informed of the valuer’s determination, the parties must make any necessary adjustments.
11.5	Unless the Act applies, no rent review may take place unless started within 12 months after any review date, but otherwise a delay in making a rent review does not prevent the review from taking place ana being effective from the review date.

12 FURTHER TERM(S)

12.1 The landlord must renew this lease for the further term or terms stated in item 18 if -

12.1.1	there is no unremedied breach of this lease by the tenant of which the landlord has given the tenant written notice and
12.1.2	the tenant has not persistently committed breaches of this lease of which the landlord has given notice during the term and
12.1.3	the tenant has requested the renewal in writing not more than 6 months nor less than 3 months before the end of the term. The latest date for exercising the option is stated in item 19.

12.2 The renewed lease

— starts on the date after this lease ends,

— has a starting rent determined in accordance with clause 11,

— must contain the same terms as this lease but with no option for renewal after the last option fir a further term stated in item 18 has been exercised.

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12.3 If the tenant is a corporation and was required to provide directors’ guarantees for this lease, the tenant must obtain guarantees of its obligations under the renewed lease from its directors in the form of clause 15.

13 SECURITY DEPOSIT

13.1	The tenant must pay a security deposit to the landlord of the amount stated in item 20 and must maintain the deposit at that amount.
13.2	The landlord may use the deposit to make good the cost of remedying breaches of the tenant’s obligations under this lease and the tenant must pay whatever further amount is required to bring the deposit back to the required level.
13.3	After this lease has ended and the tenant has vacated the premises, the landlord must refund the unused part of the deposit within 2 months.

14 NOTICES

14.1	A notice given under this lease may be given:
	—       by post
	—      by facsimile
	—      by delivery to the party’s:
	—      last known address
	—      registered office, or
	—      if to the tenant, at the premises.

14.2	Posted notices will be taken to have been received 72 hours after posting unless proved otherwise.
14.3	Notices delivered or sent by facsimile after 5.00 p.m. will be taken to have been received at 9.00 a.m. on the next business day at the place where it is received.

15 OBLIGATIONS OF GUARANTOR(S) UNDER GUARANTEE AND INDEMNITY

15.1 The guarantor in consideration of the landlord having entered into this lease at the guarantor’s request —

15.1.1	guarantees that the tenant will perform all its obligations under this lease for the term and any renewed term or terms and during any period of overholding after the end of the term and
15.1.2	must pay on demand any amount which the landlord is entitled to recover from the tenant under this lease and
15.1.3	indemnifies the landlord against all loss resulting from the landlord’s having entered into this tease whether from the tenant’s failure to perform its obligations under it or from this lease being or becoming unenforceable against the tenant.

15.2 The liability of the guarantor will not be affected by —

15.2.1	the landlord granting the tenant or a guarantor time or any other indulgence, or agreeing not to sue the tenant or another guarantor, or
15.2.2	failure by any guarantor to sign this document, or
15.2.3	transfer or variation of this lease, but if this lease is transferred the guarantor’s obligations, other than those which have already arisen, end when the term ends and do not continue into a term renewed by a new tenant nor a period of overholding.
15.2.4	the fact that this lease cannot be registered at the Land Titles Office.

15.3 The guarantor agrees that —

15.3.1	the landlord may retain all money received including dividends from the tenant’s bankrupt estate, and need allow the guarantor a reduction in its liability under this guarantee only to the extent of the amount received and
15.3.2	the guarantor must not seek to recover money from the tenant to reimburse the guarantor for payments made to the landlord until the landlord has been paid in full and
15.3.3	the guarantor must not prove in the bankruptcy or winding up of the tenant for any amount which the landlord has demanded from the guarantor and

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15.3.4 the guarantor must pay the landlord all money which the landlord refunds to the tenant’s liquidator or trustee in bankruptcy as preferential payments received from the tenant.

15.4	If any of the tenant’s obligations are unenforceable against the tenant, then this clause is to operate as a separate indemnity and the guarantor indemnifies the landlord against all loss resulting from the landlord’s inability to enforce performance of those obligations. The guarantor must pay the landlord the amount of the loss resulting from the unenforceability.
15.5	If there is more than one guarantor, this guarantee binds them jointly and each of them individually.

16 DISPUTE RESOLUTION

16.1 Unless the Act applies, if the words “The mediation procedure applies to this lease” are included in item 21, the mediation procedure applies to this lease. In that event the parties must attempt to resolve any dispute by the mediation procedure, except disputes about:

16.1.1	unpaid rant and interest charged on it
16.1.2	review of rent
16.1.3	a dispute to be resolved in another way prescribed by any other provision of this lease.

16.2 The mediation procedure is:

16.2.1	a party may start mediation by serving a mediation notice on the other party.
16.2.2	the notice must state that a dispute has arisen and identify what the dispute is.
16.2.3	the parties must jointly request appointment of a mediator. If the parties fail to agree on the appointment within 7 days of service of the mediation notice, either party may apply to the President of the Law Institute of Victoria or the nominee of the President to appoint a mediator.
16.2.4	once the mediator has accepted the appointment the parties must comply with the mediator’s instructions.
16.2.5	if the dispute is not resolved within 30 days of the appointment of the mediator, or any other period agreed by the parties in writing, the mediation ceases,

16.3	The mediator may fix the charges for the mediation which must be paid equally by the parties.
16.4	If the dispute is settled, all parties must sign the terms of agreement and these terms are binding on the parties.
16.5	The mediation is confidential and -

16.5.1	statements made by the mediator or the parties, and
16.5.2	discussions between the participants to the mediation, before after or during the mediation, cannot be used in any legal proceedings.

16.6	It must be a term of the engagement of the mediator that the parties release the mediator from any court proceedings relating to the lease or the mediation.
16.7	The mediator is not bound by the rules of natural justice and may discuss the dispute with a party in the absence of any other party.
16.8	If the Act applies, so that a dispute must be referred to the Victorian Civil and Administrative Tribunal, the parties agree that each may be represented by a legal practitioner or legal practitioners of its choice.

17 GST

17.1	“GST” means GST within the meaning of the GST Act.
	“GST Act” means A New Tax System (Goods and Services Tax) Act 1999 (as amended). Expressions used in this clause 17 and in the GST Act have the same meanings as when used in the GST Act
17.2	Except where this lease states otherwise, each amount payable by a party under this lease in respect of a taxable supply by the other party is expressed as a GST exclusive amount and the recipient of the supply must, in addition to that amount and at the same time, pay to the supplier the GST payable in respect of the supply.

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17.3	An amount payable by the tenant in respect of a creditable acquisition by the landlord from a third party must not exceed the sum of the value of the landlord’s acquisition and the additional amount payable by the tenant under clause 17.2 on account of the landlord’s GST liability.
17.4	A party is not obliged, under clause 17.2, to pay the GST on a taxable supply to it under this Lease, until given a valid tax invoice for the supply.
17.5	An adjustment of the consideration payable under this lease to take account of the New Tax System changes referred to in the Trade Practices Act 1974 must not constitute price exploitation within the meaning of that Act or breach the guidelines in force from time to time published by the Australian Competition and Consumer Commission under Part VB of that Act.

18 CONSUMER PRICE INDEX

18.1	“Consumer Price Index” means the index published by the Australian Government Statistician under the heading “All Groups” for Melbourne.
	“Rent adjustment date” means the first day of a year specified in item 16 as a year whose rent will be fixed by reference to the Consumer Price Index. “Review date” means a date specified in item 16.
18.2	An adjustment of rent by reference to the Consumer Price Index is made using the following formula:

AR = R x	CPIB
	CPIA

where:	AR means adjusted rent;
	R means rent before adjustment;
	CPIB means the Consumer Price Index index figure for the quarter preceding the relevant rent adjustment date; and
	CPIA means the Consumer Price Index index figure for the quarter preceding the most recent previous rent adjustment date or review date or, where there is no previous rent adjustment date or review date, the quarter preceding the start of the term.

18.3	If CPIB is not published until after the rent adjustment date, the adjustment is made when it is published but the adjustment takes effect from the relevant rent adjustment date. In the meantime, the tenant must continue to pay the rent at the old rate and, when the adjustment is made, the tenant must immediately pay the shortfall or the landlord must immediately repay the excess, as the case may be.
18.4	If the base of the Consumer Price Index is changed between the two comparison dates an appropriate compensating adjustment must be made so that a common base is used.
18.5	If the Consumer Price Index is discontinued or suspended then the calculation is to be made using whatever index is substituted for it. If no other index is substituted for it, the calculation is to be made using the index or calculation which the senior office-bearer of the Australian Property Institute — Victorian Division (acting as an expert and not as an arbitrator) decides is appropriate in the circumstances. This decision is binding.
18.6	Unless the Act applies, the adjustment is not made if it would result in a decrease in the rent payable.

19	ADDITIONAL PROVISIONS
	Any additional provisions set out in item 22 -

19.1	bind the parties and
19.2	if inconsistent with another provisions of this lease, override them.

• • • • •

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SCHEDULE.

Item 1 [1.1]	Landlord	Jane Sergi of 8 Annesley Court Mount Waverly, Victoria, 3149.
Item 2 [l.l]	Tenant	Universal Biosensors Pty Ltd (ACN 098 234 309) 103 Ricketts Road Mount Waverley, Victoria, 3149
Item 3 [1.1]	Guarantor	Bank guarantee equivalent to two (2) months’ rental.
Item 4 [1.1]	Premises Land	103 Ricketts Road, Mount Waverley, Victoria, 3149.
Item 5 [l.l]	Landlord’s Installations	See Annexure A
Item 6 [l.l]	Rent	$174,353.95 per annum, exclusive of Goods and Services Tax.
Item 7 [l.l]	Tenant’s Installations	Not applicable.
Item 8 [l.l]	Term of the lease	One (1) term of two (2) years and nine (9) months starting on 7 December 2004.
Item 9 [2.1.1]	How Rent is to be paid	Monthly in advance to the Landlord commencing on 7 December 2004.
Item 10 [2.1.2]	Outgoings which the Tenant must pay or reimburse	If there are any building operating expenses, building rate expenses or premises rate expenses the Landlord may pre- estimate them for any period of up to a year, and collect an equal part of them each month during the period on the same day as rent is due, and collect any shortfall from (or credit any excess to) the Tenant at the end of each financial year. For the first year of the lease, the monthly payment on account of such expenses is as follows (save and except for Land Tax which will be paid at the rate provided below):

City of Monash Council Rates:	$	4,333.50
Land Tax (Single Holding Basis:	$	4,000.00
Water Rates:	$	917.00
Insurance:	$	1.174.40
	$	10,424.90
being monthly payments of:	$	868.74

Air Conditioning Service Contract and FBS fire servicing shall be paid directly by the tenant.

	Tenant’s proportion of Building Outgoings	100%
Item 11 [2.1.7]	Risks which the insurance policies must cover	Fire, Flood, Lighting, Storm and Tempest, Explosion, Riots and Civil Commotion, Strikes, Malicious damage, Earthquake, Impact by Vehicles, Impact by Aircraft and articles dropped from them, Internal Flood Water and such other risks as the Landlord reasonably specifies from time to time.
Item 12 [2.1.7 & 2.3]	Amount of public risk insurance cover	$10,000,000.00.
Item 13 [2.1.7]	Period of loss of rent and outgoings insurance	Not applicable.
Item 14 [2.1.10]	Interest rate on overdue money	The rate fixed from time to time pursuant to the Penalty Interest Rates Act 1983 .
Item 15 [2.2.1]	Permitted use	Office and factory.
Item 16 [2.-2.1,11,18]	Review date(s)	Annually — adjusted by way of four percent (4%) increase as follows:
		Year 2:       $181,328.10 (exclusive of GST) per annum
		Year 3:       $188,581.25 (exclusive of GST) per annum
Item 17 [2.1.1,11,18]	Who may initiate reviews	Not applicable.
Item 18 [12]	Further term(s)	None.
Item 19 [12]	Latest date for exercising option	Not applicable.
Item 20 [13]	Security deposit	Deposit equal to one (1) months rental. The deposit will be applied by the Landlord to the first month’s rental.
Item 21 [16.1]	The mediation procedure applies to this lease
Item 22 [19]	Additional provisions	22. 1 The Landlord agrees to paint and repair where required the facade of the building.
		22.2 The Landlord agrees to repair rising damp where required in the reception area and toilet area.
		Right of First Refusal
		22.3 In consideration of the entry into this Lease and if the Tenant is not in default under it, the Landlord grants to the Tenant the right of first refusal to purchase the property should the Landlord decide to sell it during

	the term of this Lease or any extension thereof.
22.4	If the Landlord decides to sell the property he may only do so on the following terms:
(a)	The Landlord shall extend an offer of sale to the Tenant.
(b)	The Tenant shall have fourteen (14) days to exercise the right of purchase.
(c)	The Landlord shall nominate a price and other conditions on which it is prepared to sell the property.
(d)	The Tenant may indicate his acceptance of the offer by responding in writing with fourteen (14) days and submitting an executed contract of sale of land for the properly.
(e)	If the Tenant fails to respond in writing to the offer within fourteen (14) days, then this right of first refusal shall he deemed waived.
(f)	Should the Tenant fail to exercise the right of first refusal hereby granted, the Landlord may sell the property on terms no less favourable than those offered to the Tenant
22.5	The right of first refusal shall not apply if the Landlord chooses to sell the property at Public Auction.

Reinstatement of Premises

22.6	The Tenant is not responsible for reinstating any variations made to the premises at the end of this Lease.
22.7	For the purpose of item 22.6 of this Schedule, references to “Variation” mean a non-structural fit out installed by USF Filtration Pty Ltd (ACN 002 490 208) or the Tenant.
22.8	Nothing contained in item 22.6 and item 22.7 of this Schedule shall affect the obligations of the Tenant pursuant to clause 3 and clause 5 of this Lease.

Land Tax

22.9 The Landlord and the Tenant agree that the maximum amount of land tax (calculated on a single holding basis) to be paid or reimbursed by the Tenant will be $4,000.00 per annum.

ANNEXURE“A”

LANDLORD’S INSTALLATIONS

• Air conditioning

• Ceiling lighting

• Fire system

• Security System

• Reception desk

• Floor coverings

• Computer cabling

• Fixed cupboards and shelves

Production Area

• Vacuum system

• Electrical points

• Compressed air system

Laboratories

• Fume extraction cupboard

Office Area

• Boardroom sink

• Boardroom shelving

• Blinds

• Fixed shelving in photocopy room

Canteen

• Kitchen units

• Dishwasher

EX-10.5

Exhibit 10.5

HEYRAM PROPERTIES PTY. LTD.
A C N 067 342 385
(Lessor)

and

UNIVERSAL BIOSENSORS PTY LTD
ABN 35 098 234 309
(Lessee)

and

(Guarantor)

L E A S E
Premises: 1 Corporate Avenue Rowville, Victoria 3178

KAHNS LAWYERS
Level 9
341 Queen Street
MELBOURNE VIC 3000
Ref: JC:PF/06/7340

THIS LEASE is made on 16th October 2006

BETWEEN:	HEYRAM PROPERTIES PTY LTD ACN 067 342 385 of 1 Corporate Avenue Rowville Vic 3178	(“Lessor”)
AND:	UNIVERSAL BIOSENSORS PTY LTD ABN 35 098 234 309 of 103 Ricketts Road Mt Waverley Vic 3149	(“Lessee”)

RECITALS:

A.	The Lessor is registered as the proprietor of the Land on which the Premises is located.
B.	The Lessor has agreed to grant to the Lessee and the Lessee has agreed to take from the Lessor a lease of the Premises for the Term at the rental and subject to the covenants and conditions as hereinafter appearing.
1.	DEFINITIONS AND INTERPRETATION
	In this Lease unless the context otherwise requires:
	“Act” means the Retail Leases Act 2003.
	“Building” means the building known as and situate at the place specified in Item 2 of the Schedule.
	“chattels” means the items specified in the Schedule.
	“Clause” means a clause in this Lease.
	“Commencement Date” means the date specified in item 5 of the Schedule.
	“Further Term” means the further term or terms specified in the Schedule.
	“GST” means GST within the meaning of the GST Act.
	“GST Act” means the A New Tax System (Goods and Services Tax) Act 1999 (as amended).
	“Guarantor” means the guarantor referred to in the Schedule and his heirs executors administrators and assigns and if the Guarantor is a corporation its successors and permitted assigns.
	“Land” means the land described in the Schedule.
	“Lease” means this lease including any schedule, appendix and annexure hereto.
	“Lessee” means the Lessee and his heirs executors administrators and assigns and if the Lessee is a corporation its successors and permitted assigns.
	“Lessor” means the Lessor his successors and assigns or other person entitled to the reversion immediately expectant upon the termination of the Term and includes any person claiming through or under the Lessor.
	“Lessor’s Fixtures” means all fixtures fittings plant equipment air-conditioning and ventilation equipment lifts and escalators (if any) partitions goods chattels or other items brought on to the Premises by the Lessor and shall exclude any equipment, partitions goods chattels or other items installed by the Lessee.
	“Outgoings Year” means each 12 month period from 1 July to 30 June of the following year.
	“Permitted Use” means the use specified in the Schedule.
	“Premises” means the premises specified in the Schedule and includes the Lessor’s Fixtures provided that where the said premises form part of a building the premises shall not include the outside walls bounding the premises.
	“rental” means the rental specified in the Schedule or as adjusted varied or reviewed from time to time and a reference to the word “rent” shall be a reference to the word rental and vice versa.
	“Schedule” means the schedule to this Lease.
	“Term” means the term specified in the Schedule.
	Words importing the singular include the plural and vice versa and the masculine gender the feminine or neuter and vice versa and words importing persons include corporations and vice versa.
	A person includes the legal personal representative successors and assigns of that person.
	Where two or more Lessees are parties hereto the covenants obligations and agreements on their part herein contained refer to and shall bind them and any two or greater number of them jointly and each of them severally.
	A reference to a statute includes all regulations under and amendments to that statute whether by subsequent statute or otherwise and statute passed in substitution for the statute referred to or incorporating any of its provisions.
	Any headings or marginal notes have been inserted for guidance only and do not form part of this Lease.

2.	DEMISE
	In consideration of the rents covenants and conditions hereinafter reserved and contained and on the part of the Lessee to be observed and performed the Lessor subject to the covenants conditions powers reservations and provisos herein contained HEREBY LEASES to the Lessee the Premises TOGETHER WITH the chattels described in the Schedule TO HOLD for the Term and at the rental set out in the Schedule.
3.	LESSEE’S POSITIVE COVENANTS
3.1	Rental
	During the continuance of the Term the Lessee shall duly and punctually to pay to the Lessor the rental (together with GST) by the payments at the times and in the manner provided in the Schedule.
3.2	Review of Rental
	The rental shall be reviewed at the times and in the manner provided in the Schedule.
3.3	Deductions
	The Lessee shall not at any time deduct or set-off any monies payable or claimed by the Lessee to be payable by the Lessor from or against any rental or other monies payable by the Lessee to the Lessor pursuant to any of the provisions hereof.
3.4	Rates and Outgoings
3.4.1	The Lessee shall pay or at the election of the Lessor reimburse the Lessor for all the following proper and reasonable costs, expenses, rates, taxes, charges, assessment, impositions and the like with respect to this Lease and the Premises during the Term hereof (but excluding those items listed in clause 3.4.3):

(a)	all municipal and other rates taxes assessments and charges levies and impositions including water consumption, excess water charges and state land tax (assessed on the basis that the Land is the only land owned by the Lessor);
(b)	all telephone electricity gas and other like outgoings;
(c)	all reasonable costs, expenses and other outgoings incurred by the Lessor to repair and maintain the Premises and the Lessor’s Fixtures [where required by the Act];
(d)	any other rates taxes charges assessments or other impositions which shall during the term of this Lease or any extension thereof be imposed or charged in connection with the provision of any off street parking or other like service or the cost of construction thereof;
(e)	the insurance premiums referred to in Clauses 3.11 and 4.16 hereof;
(f)	all charges connected with the operation of the Lessee’s business on the Premises including all licence and inspection fees in respect thereof; and
(g)	any body corporate or like fees, charges levies or expenses payable by the Lessor in respect of the Premises.

	(to be referred to as “Outgoings”) save that where the Act applies, the Lessor may only require payment or reimbursement by the Lessee of such rates, taxes, expenses and other outgoings as are not prohibited from recovery from the Lessee under the Act.
3.4.2	To the extent that any of the said costs, expenses, rates, taxes, charges, levies, assessments, impositions and the like shall not be separately assessed in respect of the Premises then the Lessee shall pay that proportion of the whole which the area of the Premises bears to the total area comprised in the relevant charge or assessment. Despite the foregoing the parties agree that the area occupied by the telecommunications tower pursuant to the telecommunications tower lease shall be disregarded and shall not be taken into account to reduce the Lessee’s liability to pay outgoings. To the extent that any such periodic costs, expenses, rates, taxes, charges, levies, impositions and the like are for a period not coinciding with the Term of this Lease then any appropriate adjustments shall be made at the commencement and at the end of the Term.
3.4.3	The following Outgoings shall be excluded:

(a)	capital expenditure by the Lessor on plant, machinery, equipment or structural repairs to the building (not caused by the Lessee’s fit out);
(b)	any liability or expenditure payable by or recoverable from some other lessee or lessees of the building or from any other person (such as income from a third party advertiser or telecommunications aerial);

(c)	any liability or expenditure recoverable by the Lessor through a claim on the Lessor’s insurance policies for the building, including when an insurance claim is in progress;
(d)	costs, expenses and interest in connection with money borrowed by the Lessor and;
(e)	any other capital expenditure or deduction which should not be considered an outgoing or operating expense of the Building under normal accounting policies or practice; and
(f)	income tax payable by the Lessor.

3.4.4	The Lessor must provide an Outgoings reconciliation within 3 months of the end of the Outgoings Year. The Lessee shall have the right to audit the outgoings.
3.4.5	The Lessee will be required to pay the Lessor’s cost of undertaking an annual Occupational Health and Safety (OH&S) audit. The cost of the OH&S audit will be borne by the Lessee and recovered through the Outgoings. The Lessor agrees that before conducting an OH&S Audit, it will review the Lessee’s building specifications and operating procedures that are required to be maintained by certain government and regulatory authorities in the conduct of the Lessee’s business. Should the information provided by the Lessee suffice, the OH&S Audit may be waived at the Lessor’s discretion, acting reasonably.
3.4.6	For the avoidance of doubt, the Lessee is obligated to pay Outgoings for the general upkeep of the building, including but not limited to gardening, cleaning, insurances and general operational charges. The Lessee is not obliged to pay capital based building costs such as external painting, machinery replacement, or costs relating to potential design faults of the building such as cracked pavements.
3.5	Repairs and Cleaning
3.5.1	At all times during the Term the Lessee will and sufficiently at his own cost repair clean maintain and keep in such good order and condition as at present the Premises and all fixtures fittings (including maintenance of the air-conditioning producing evidence of a current maintenance contract on demand by the Lessor) and things belonging thereto or which at any time during the Term shall be erected or put therein by the Lessor or by the Lessee with the Lessor’s consent reasonable wear and tear and damage by fire storm or tempest excepted and to keep and at the expiration or sooner determination thereof peaceably and quietly to yield and give up unto the Lessor the Premises with the appurtenances and all fixtures fittings and things therein including the Lessor’s Fixtures in a good state of repair order and condition as at present reasonable wear and tear and damage by fire storm or tempest excepted (the Lessee having the right during the continuance of the Term to remove any fixtures and fittings supplied by the Lessee during the Term provided the Lessee shall make good to the satisfaction of the Lessor any damage caused by such removal) PROVIDED ALWAYS that any damage caused by fire storm or tempest as aforesaid shall not be excepted where any insurance moneys on the Premises or the Building or any property therein are non recoverable by the Lessor in consequence of some act or default of the Lessee or the servants licensees agents or invitees of the Lessee. In this clause the word “repair” shall include the cleaning and keeping free of all drains and waste pipes which are exclusively serving the Demised Premises.
3.5.2	The Lessee shall:

(a)	immediately repair and replace all broken glass and all damaged or broken heating lighting electrical equipment and plumbing installed in the Premises and all doors fastenings windows locks and keys and all the Lessor’s Fixtures and in the case of breakage of exterior plate glass or other windows to replace the same with glass or similar quality; and
(b)	regularly clean the Premises (including all windows and doors) and to keep the same free from dirt and rubbish and to store all refuse in proper receptacles and arrange for the regular removal thereof from the Premises.

3.5.3 Nothing in this Clause 3.5 obliges the Lessee to carry out structural repairs or alterations to the Premises or to be responsible for the cost thereof unless caused or contributed by (and then only to the extent caused or contributed by):

(a)	Lessee alterations to the Premises required to be amended back to the requirements of the Lessor;
(b)	some negligent act, omission or default by the Lessee or its employees, servants or agents;
(c)	failure by the Lessee to perform its obligations under this Lease; or
(d)	the Lessee’s particular use of the Premises.

3.5.4 The Lessee will be responsible for the organization of the contracts, and the charges associated with the ongoing operational maintenance of the Premises during the Term of the Lease. The Lessor may provide guidance relating to the preferred contractors to be used by the Lessee, with reasonable endeavours made to use them where possible.

3.6	Fittings
	Subject to clauses 4.8.4 and 4.8.5 hereof if the Lessee shall not have removed as of right any fixtures, fittings and things supplied by him during the Term of the Lease the Lessor may at his option himself cause any such fixtures fittings or things to be removed and any damage resulting to be made good and any alteration to be re-altered and may recover the costs thereof from the Lessee as a liquidated debt payable on demand. Any fittings fixtures or things not removed by the Lessee as of right or by requirement of the Lessor shall at the expiration of the Term be deemed abandoned by the Lessee and shall thereafter be and become the property of the Lessor.
3.7	Chattels
	The Lessee shall keep the chattels clean and in good repair order and condition as at present reasonable wear and tear and damage by fire storm or tempest excepted (subject to the recovery of insurance moneys as aforesaid) and to make good all damage thereto and to replace with similar articles of at least equal value to the reasonable satisfaction of the Lessor all such chattels as may at any time be destroyed or lost or so damaged as to be incapable of complete re-instatement to their former condition and not without the previous written consent of the Lessor to remove or permit to be removed from the Demised Premises (except only for the purpose of necessary repairs) any of the chattels.
3.8	Garden
	The Lessee shall cut maintain cultivate manage and manure any lawn and/or garden included in the Demised Premises in a good and proper manner and to replace any lawn trees or shrubs which may perish or be damaged removed or destroyed other than as a result of fire storm or tempest.
3.9	Lessor’s Entry and Defects
3.9.1	Subject to clause 3.9.2, the Lessee shall permit the Lessor his employees agents architects surveyors builders and workmen (subject to the right of supervision under clause 3.9.2) with all necessary materials equipment and appliances from time to time to enter upon the Premises at all reasonable times and upon reasonable notice (being at least two business days’ written notice) but at any time and without any notice in the case of an emergency:

(a)	to carry out any works or make any repairs or alterations or additions to the Premises and to enter upon all or any part of the Premises and to use the same for the purposes of effecting or carrying out any repairs alterations or additions or other works which the Lessor may consider necessary desirable or should have been completed by the Lessee under the Lease to any part of the Premises and/or of the Building;
(b)	when and as often as the Lessor shall require to view the state of repair and condition thereof and to make such reasonable investigations as the Lessor may deem necessary for the purpose of ascertaining whether or not there has been any breach of any of the covenants and conditions herein contained and to serve upon the Lessee a notice in writing of any want of repair or maintenance requiring the Lessee to repair the same in accordance with any covenant herein contained;
(c)	for the purpose of complying with the terms of any present or future legislation affecting the Premises or of any notice served upon the Lessor or the Lessee by any governmental semi-governmental municipal health licensing civic or other competent authority for the purpose of carrying out any repairs alterations or works (including the providing of lighting power and telephone services to the Lessee and any other purposes the effecting of which necessitates access to the ceilings walls or floors in the Premises) and also for the purpose of exercising the powers and authorities of the Lessor hereunder; and
(d)	In the event of the Premises and/or the Building being destroyed or damaged for the purpose of rebuilding the same or making the Premises and/or the Building fit for the occupation and use thereof by the Lessee and by the other occupiers thereof.

3.9.2

The Lessor acknowledges that the Lessee will use the Premises for the manufacture of sensors and will be required to impose high standards of safety, hygiene and cleanliness particularly in respect to laboratories and clean rooms. For this reason, the Lessee may grant access on the condition of close individual supervision the Lessor’s architects, workmen and contractors at all times while working in the Premises to ensure compliance with the strict regime of safety and cleanliness.

3.9.3

Where the Lessee has failed to repair and maintain the Premises in accordance with the provisions of this Lease within twenty-one (21) days of the date of service of any notice from the Lessor requiring the Lessee so to do in accordance with that notice, the Lessor may execute all or any of the required repairs

	as the Lessor shall think fit and without prejudice to the Lessor’s other remedies the Lessee shall pay to the Lessor the cost of such repairs as the Lessee ought to have effected.
3.9.4	In exercising its rights under Clause 3.8 the Lessor shall act reasonably in all the circumstances.
3.10	Creation of Easement
	For the purpose of the provision of public or private access to and egress from the Premises or the support of structures erected or hereafter erected on any adjoining lands or of services (including water drainage gas and electricity supply and telephonic and electronic communication services) the Lessee hereby permits the Lessor to transfer grant or create any easement licence privilege or other right or dedicate land in favour of any of the owners lessees tenants or occupiers or other persons interested in any land adjacent or near to the Premises or any public authority as the Lessor thinks fit and this Lease shall be deemed to be subject to any such easement licence privilege or other right or dedication PROVIDED HOWEVER that the Lessor in the exercise of the rights herein conferred shall not dedicate land or transfer grant or create any easement licence privilege or other right to any other person which would substantially and permanently derogate from the enjoyment of rights conferred on the Lessee by this Lease.
3.11	Insurance
3.11.1	The Lessee shall effect and keep current during the Term hereby created policies of insurance in the name of the Lessee and the Lessor in respect of the Premises for plate glass, fire, storm, tempest malicious damage, water damage, public risk ($20 million) and such other risks and for such amounts as the Lessor shall reasonably require and upon request to produce to the Lessor evidence of such policies and of the currency thereof. Responsibility for arranging Public Liability Insurance lies with the Lessee. The Lessee shall not require the Lessor’s consent for a change of insurer provided the insurer is of sufficient standing to meet any claim and is represented in Australia. The Lessor’s interest shall be noted on the policy and copies of the insurance certificate will be provided on demand. At no time shall the policy of documents be provided.
3.12	Orders
3.12.1	The Lessee shall comply with and observe all notices orders and directions given to either the Lessee or the Lessor by any statutory or public authority relating to the Premises and shall carry out the requirements thereof at his own expense.
3.12.2	This Clause shall not impose any liability on the Lessee in respect of structural repairs or alterations to the Premises except where any such notice order or direction that requires the carrying out of structural repairs or alterations to the Premises and has been occasioned by the nature of the Lessee’s business or by his use of the Premises whether permitted under this Lease or not or by the act neglect or default of the Lessee.
3.13	Use of Building and Premises
	The Lessee shall:

(a)	unless prevented by fire storm civil commotion Act of god tempest or earthquake or other inevitable happening continuously to use the Premises; and
(c)	use the Lessee’s best endeavours to protect and keep safe the Premises and any property contained therein from theft or robbery and when not in use to keep all doors and windows and other openings closed and securely fastened.

3.14	Regulations
	In the event of the Premises forming part of a building to comply with observe and perform all reasonable rules and regulations not inconsistent with these presents which are at the date hereof or may from time to time hereafter be prescribed by the Lessor generally for Lessees of the Building.
3.15	Indemnification of Lessor
3.15.1	The Lessee agrees to occupy use and keep the Premises at the risk of the Lessee and hereby releases to the full extent permitted by law the Lessor from all claims and demands of every kind and from all liabilities whatsoever (except to the extent that the same is caused or contributed to by any act, omission or the negligence of the Lessor, his employees agents architects contractors surveyors builders and workmen) which may arise in respect of any accident loss or damage to property or death of or injury to any person of whatsoever nature or kind in or near the Demised Premises and whether or not as a result of the creation of some dangerous thing or state of affairs by the Lessee or by any clerk servant workman

employee or agent of the Lessee and whether the existence of such dangerous thing or dangerous state of affairs was or ought to have been known to the Lessor or not and the Lessee agrees that (save as aforesaid) the Lessor shall have no responsibility or liability for any loss of or damage to fixtures or personal property of the Lessee occurring therein or relating thereto.

3.15.2

The Lessee hereby indemnifies the Lessor from and against all actions claims demands losses damages proceedings compensation costs charges and expenses for which the Lessor shall or may be or become liable (except to the extent that the same is caused or contributed to by any act, omission or the negligence of the Lessor, his employees agents architects contractors surveyors builders and workmen) whether during or after the term hereof in respect of or arising from (notwithstanding that any of such actions claims demands losses damages proceedings compensation costs charges and expenses shall have resulted from any act or thing which the Lessee may be authorised or obliged to do under these presents and notwithstanding that at any time waiver or other indulgence has been given to the Lessee in respect of any obligation of the Lessee under this clause):

(a)	loss damage or injury from any cause whatsoever to property or person within or outside the Premises occasioned or contributed to by the neglect or default of the Lessee or any servant agent subtenant or other person claiming through or under the Lessee to observe or perform any of the covenants conditions regulations and restrictions on the part of the Lessee hereunder whether positive or negative express or implied;
(b)	injury or loss which may be sustained by any person when using or entering or near any portion of the Premises whether in the occupation of the Lessor or of the Lessee or of any other person where such injury arises or has arisen as a result of the negligence of or as a result of the creation of some dangerous things or state of affairs by the Lessee or by any servant workman employee or agent of the Lessee and whether the existence of such dangerous thing or dangerous state of affairs was or ought to have been known to the Lessor or not;
(c)	the negligent or careless use misuse waste or abuse by the Lessee or any contractor sub-contractor licensee invitee client customer or visitor of the Lessee or any other person claiming through or under the Lessee of the water gas electricity lighting or mechanical or other services and facilities of the Premises or arising from any faulty fitting or fixture of the Lessee;
(d)	overflow leakage or escape of water (including rain water) gas electricity or any other harmful agent whatsoever in or from the Premises or from any sprinkler system or device or by waste entry from the roofs walls gutters downpipes or other part or parts of the Building in which the Premises are situate or arising from any defect in the gas electricity water sewerage or drainage supply connections or fittings or appliances or air conditioning and mechanical ventilation or other plant or equipment used in connection therewith and originating in from or about the Premises or whether originating within the Premises or not but caused or contributed to by any act or omission on the part of the Lessee or any agent servant contractor or employee of the Lessee or other persons claiming through or under the Lessee PROVIDED HOWEVER that this clause shall not operate if the overflow leakage or escape of water (including rain water) gas electricity or any other harmful agent arises directly or indirectly from the act, omission or negligence of the Lessor, his employees agents architects contractors surveyors builders and workmen;
(e)	failure of the Lessee to notify the Lessor of any defect in any of the mechanical installations or other services or appurtenances in the Premises;
(f)	loss damage injury or accidental death from any cause whatsoever to property or person caused or contributed to by the use of the Premises by the Lessee or other persons as aforesaid;
(g)	loss damage injury or accidental death from any cause whatsoever to the Premises or to any property or person within or outside the Premises occasioned or contributed to by any act omission neglect breach or default of the Lessee or other persons as aforesaid; and
(h)	all claims losses and damage to plate and other glass caused or contributed to by any act or omission on the part of the Lessee or other persons as aforesaid.

3.15.3	The obligations of the Lessee under this Clause 3.15 shall continue after the expiration or other determination of this Lease in respect of any act deed matter or thing happening before such expiration or determination.
3.16	Future Tenants and Purchasers
	The Lessee permits the Lessor or his agents at all times during:

(a) the three (3) calendar months immediately preceding the determination of the Term hereby granted or any extension thereof to affix upon any reasonable part of the Premises a notice for re-letting the same and during the same three (3) months to permit intending tenants with

written authority from the Lessor or his agents at reasonable times of the day upon appointment to view the Premises and

(b)

the Term hereby created or any extension thereof to affix upon any reasonable part of the Premises a notice for the sale of the same (or of the Building) and to permit, subject to compliance with clause 3.9.2, intending purchasers and others with written authority from the Lessor or his agents with 24 hours prior consent and at reasonable times of the day upon appointment to view the Premises. Any visitors to the Premises may be required at the Lessee’s discretion to have supervised access as detailed in clause 3.9.2.

3.17	Costs and Duty
	The Lessee shall pay to the Lessor the reasonable costs charges and expenses reasonably incurred of and incidental to and of any stamp duty payable on this lease, variation or assignment or subletting and/or any surrender or other termination and also all moneys costs (including charges for legal advice or assistance and charges for advice and assistance from other Consultants) charges and expenses which the Lessor may pay incur or expend in consequence of any default in the performance and observance of any covenant or agreement herein contained and on the part of the Lessee to be performed and observed or under or in the exercise or enforcement or attempted exercise or enforcement of any power or authority herein contained or in consequence of any request by the Lessee under any covenant clause or condition herein contained immediately the Lessor shall have expended or incurred the same. Where the Act applies, this clause shall only operate to the extent permitted by the Act as amended or replaced from time to time. Each party shall bear their own costs of the preparation negotiation and execution of these presents.
3.18	Interest
	The Lessee shall pay to the Lessor interest on any moneys due and unpaid pursuant to this Lease at the rate per annum equal to four percent (4%) higher than the rate for the time being fixed under Section 2 of the Penalty Interest Rates Act 1983 computed from the date on which such payment became due.
3.19	Keys
3.19.1	The Lessor will ensure that the base building proxy card system is operational and has the ability to be upgraded/reprogrammed by the lessee as part of their fit out. The Lessee shall be provided without cost a minimum of 15 access cards, and keys where available to the balance of the facility.
3.19.2	Upon the expiration or sooner determination of the Term of this Lease the Lessee shall surrender to the Lessor all security passes keys card-keys and other devices for the purpose of obtaining access to the Demised Premises held by the Lessee or any of the Lessee’s employees servants agents visitors and invitees irrespective of whether or not the same have been supplied by the Lessor.
3.20	Notice of Damage
	The Lessee shall give to the Lessor or his agents prompt written notice of any damage to or defect or want of repair in the Premises (or the Building) including the water pipes gas pipes electric light wirings or any of the services of the Building including but not limited to fire protection, air-conditioning and lifts or other the fittings or fixtures contained in the Premises and of any circumstances likely to be or cause any danger risk or hazard to the Premises or the Building or any person therein.
4.	LESSEE’S NEGATIVE COVENANTS
4.1	Permitted Use
	The Lessee shall not use or allow to be used the Premises for any purpose whatsoever other than the Permitted Use without the written consent of the Lessor and not to allow the Premises to be unoccupied for a period in excess of fourteen (14) days.
4.2	Licence Authorities and Permits The Lessee shall:

(a)	obtain and keep current all licences and permits required for the carrying on of all businesses conducted by the Lessee in or upon the Premises;
(b)	without in any way limiting the generality of anything elsewhere contained in this Lease, not

	without the Lessor’s prior written consent apply for or obtain or to permit or suffer the making of any application for or the grant or obtaining of any additional licence, permit or authority; and
(c)	not without the Lessor’s prior written consent make any variation or addition to any term, condition, obligation or undertaking in respect of any licence, permit or authority which may exist from time to time in respect of the Premises nor to make any application for or consent to or to cause or bring about any such variation or addition.

4.3	Conveniences
	The Lessee shall not to use or permit or suffer to be used the toilets, sinks, drainage or other plumbing facilities in the Premises or (where applicable) in the Building for any purpose other than those for which they were constructed or provided, and not to deposit or permit to be deposited therein any sweepings, rubbish, or other matter and any damage thereto by misuse shall be made good by the Lessee forthwith.
4.4	Vermin
	The Lessee shall take all reasonable precautions to keep the Premises free of rodents, vermin, insects, birds and animals and in the event of his failure so to do the Lessee will if and so often as required by the Lessor but at the cost of the Lessee employ pest exterminators approved by the Lessor.
4.5	Infectious Diseases
	In the event of any infectious illness occurring in the Premises the Lessee shall forthwith give notice thereof to the Lessor and to the proper public authorities and at the expense of the Lessee to thoroughly fumigate and disinfect the Premises to the satisfaction of the Lessor and such public authorities and otherwise to comply with their reasonable and lawful requirements in regard to the same.
4.6	Heating etc.
	The Lessee shall not to use or permit to be used any heating or cooling devices or any other device or machine which may interfere with the efficient running of any air conditioning system in the Premises and not to use any form of lighting other than that generated by electric current.
4.7	Assignment
	The Lessee shall not without the consent in writing of the Lessor first had and obtained transfer assign mortgage pledge underlet or part with possession of this Lease or any estate or interest therein or transfer assign mortgage pledge underlet or part with possession of the Premises or any part thereof or estate therein and the provisions of Section 144 of the Property Law Act 1958 are hereby expressly excluded PROVIDED HOWEVER that the Lessor shall not unreasonably arbitrarily or capriciously withhold his consent to the assignment of this Lease or to the sub-letting of the Demised Premises but before giving such consent the Lessor shall be entitled to the performance by the Lessee of the following conditions which so far as they are capable of prior performance shall be conditions precedent to the Lessee obtaining such consent, namely:

(a)	the Lessee is not in default of the covenants and agreements of the Lessee’s part herein contained and shall have duly and punctually performed up to the date of such assignment or sub-lease all covenants and agreements on the part of the Lessee herein contained;
(b)	the Lessee has submitted to the Lessor or his duly authorised agent or solicitor the name address and occupation of any proposed assignee or sub-lessee together with reasonable proof that such person is respectable responsible and solvent and without limiting the generality of the foregoing the Lessee shall provide to the Lessor at least two references as to the proposed assignee’s or sub-lessee’s financial circumstances and experience;
(c)	the Lessee shall at his expense procure the execution by such person of an assignment of this Lease or sub-lease in such form as the Lessor or his solicitor reasonably approves and in which categorically or by reference the assignee or sub-lessee as the case may be shall enter into covenants conditions agreements and stipulations with and grant powers to the Lessor in terms of the several covenants conditions agreements stipulations and powers herein expressed or such of them as may be required by the Lessor or his solicitor including but not limited to a covenant to the effect that the Lessee releases the Lessor from all claims against the Lessor in respect of or in any way arising from the Lease and that any such assignment or sub-lease does not affect the Lessor’s rights against the Lessee or against any person who has previously guaranteed the obligations of the Lessee under this Lease arising out of any past or future failure to pay the rental reserved by this Lease or to perform or observe the Lessee’s covenants and conditions contained in this Lease;
(d)	such assignment or sub-lease shall be perused by the solicitor for the Lessor at the cost and expense in all respects of the Lessee and an executed copy of such assignment or sub-lease

	duly stamped at the expense of the Lessee shall be delivered to the Lessor as soon as possible after execution by the Lessor;
(e)	the Lessee shall pay to the Lessor all reasonable costs charges and expenses reasonably incurred by the Lessor of and incidental to any enquiries made by the Lessor or his agent or solicitor as to the respectability responsibility and solvency of the proposed assignee or sub-lessee and of and incidental to the instructions for and perusing and approving copying and examining and obtaining execution of the said consent;
(f)	any guarantors of the present Lessee shall acknowledge their continuing obligations in respect of the assignee or sub-lessee subject always to the provisions of the Act where applicable;
(g)	if Clause 6.9.5(b) applies, the new bank guarantee has been provided;
(h)	for the purposes of this clause if the Lessee is an incorporated company a change in the effective control of the company by the person or persons who enjoy such control as at the date of this Lease (save where such change of control is solely referable to transfers of shares by inheritance) shall be deemed to be an assignment of this Lease and as such shall require the consent of the Lessor in the manner provided in this clause PROVIDED ALWAYS that this sub-clause shall not apply where the Lessee is a company the voting shares of which are listed on a recognised Stock Exchange in Australia or where the Lessee is and remains a wholly owned subsidiary of a company the voting shares of which are so listed; and
(i)	the Lessee shall be permitted to assign in whole or sub lease in whole or part subject to the consent of the Lessor;
(j)	any assignment or sub leasing will not trigger a market rent review;
(k)	no consent shall be required for sub leasing to related organizations or joint venture partners of the Lessee.

4.8	Alterations and Additions/Lessee’s Works
4.8.1	The Lessee shall not make or permit to be made any alterations or additions to the Premises (“Alterations”) or to any fixtures or fittings therein without first obtaining the consent in writing of the Lessor or his agents which shall not be unreasonably withheld.
4.8.2	The Lessor shall provide consent or request amendment to such proposed Alterations within 10 business days of such proposed Alterations being provided to the Lessor by the Lessee in accordance with Clause 4.8.3.
4.8.3	When applying to the Lessor for consent to make some alteration or addition to the Premises the Lessee shall submit to the Lessor or his agents for perusal full and clear plans specifications (including any necessary building permits) and other details and pay such reasonable expenses as the Lessor or his agents may incur in obtaining reports and advice on such plans specifications and details from architects engineers builders and other consultants and in having any works inspected.
4.8.4	All works shall be carried out in a proper and workmanlike manner to the satisfaction of the Lessor (acting reasonably) by qualified builders tradesmen or others approved by the Lessor and as soon as practicable after completion of the works the Lessee shall provide to the Lessor a certificate of completion by the Lessee’s builder or tradesman.
4.8.5	For avoidance of doubt, the Lessee, subject to final design intends to:

(a)	modify, increase or potentially dissemble in part or full all of the mezzanine structure (outside the 1,400 sqm of office), to make the building space more generic;
(b)	dismount office partitioning and return the premises to open plan ;
(c)	remove or modify ceilings underneath and around the mezzanine levels;
(d)	build laboratory (clean) rooms suitable for the production of sensor technology

Any of the Lessee’s works, carried out to the office and warehouse areas will not be subject to a redecoration clause during or at the end of the lease.

The Lessee will not be required to reinstate the mezzanine structure to its previous state upon final vacation.

For the avoidance of doubt, the Lessee will only be responsible for removing fixtures and fittings installed during the term of the Lease.

The Lessee shall be responsible for any upgrades required to the base building BCA requirements, given the level of the envisaged fit out.

4.8.6 Subject to fair wear and tear, the Lessee shall on final vacation, remove the Lessee’s fixtures and fittings, and make good any damage caused by their removal, only if requested by the Lessor within 14 days of serving notice to vacate.

The Lessee shall not be required to:

(a)	replace any floor coverings, including carpet;
(b)	repaint any part internal or external of the premises;
(c)	reinstate (or reconstruct) any alterations made to the mezzanine.

	Under no circumstances will the Lessee be required to make good the office building (being the 1,400 sqm structure, separate to the warehouse building), unless the lessee constructs specialized laboratory facilities within the 1,400 sqm office building
	The Lessor will have the right to request the make good of any fit out within the balance of the Premises (outside of the office area).
	Ownership of partitions, workstations, carpet and additional offices built or installed by the Lessee (as approved by the Lessor in the fit out phase) will revert to the ownership of the Lessor upon final vacation.
4.9	Services
	The Lessee shall not carry out any work which interferes with the electrical installations or wiring of the Premises or any drains water supply gas plumbing or other services contained in or about the Premises nor to do anything which may endanger any part of the Premises or the operation of any apparatus thereon nor install any electrical equipment on the Premises which may overload the cables switchboards or sub-boards through which electricity is conveyed to the Premises.
4.10	Statutory Notices
	Without prejudice to the Lessee’s obligations under Clauses 4.1 and 4.2, the Lessee shall not use or permit to be used the Premises or any part thereof or do or suffer to be done thereon anything whereby or by reason whereof any public or statutory authority may give or issue or be entitled to give or issue any notice including but without limiting the generality of the foregoing any notice requiring structural alterations or repairs to be made or carried out to any part of the Premises.
4.11	Nuisance etc.
	The Lessee shall not to use the Premises or permit the Premises to be used in any noisy noxious or offensive manner or do or permit on the Premises anything which in the opinion of the Lessor may be or become a nuisance disturbance hazardous or offensive or cause damage to the Lessor or any other persons.
4.12	Heavy Articles
	The Lessee shall not put any heavy articles machinery plant or equipment in the Premises save of such weight and in such place as the Lessor has by its prior written consent approved. The Lessor will not unreasonably withhold consent where the articles machinery plant or equipment are reasonably necessary for the Lessee’s use of the Premises and are of a nature and size as will not or in the reasonable opinion of the Lessor will not be likely to cause any structural or other damage to the floors or wall or any other parts of the Premises. The Lessor shall be entitled to obtain expert advice in relation to any proposal by the Lessee to bring articles machinery plant or equipment into the Premises and the risk of structural or other damage to the floors or walls or other parts of the Premises and the Lessee shall pay or reimburse the Lessor for any cost incurred by the Lessor in obtaining the advice.
4.13	Not to Deface
	The Lessee shall not cut make holes in mark deface drill damage nor suffer to be cut holed marked defaced drilled or damaged any of the walls ceilings or other parts of the Demised Premises except so far as may be reasonably necessary for the carrying out of alterations approved by the Lessor or for the erection or installation of the Lessee’s fixtures and fittings and on the removal of the Lessee’s fixtures and fittings the Lessee shall reinstate repair and make good any damage caused in or about the erection or removal thereof.

4.14	Blocking Windows etc.
	The Lessee shall not stop up darken or obstruct any windows or lights forming part of the Premises or permit any new window light opening doorway path passage or drain to be made in against out of or upon the Premises without the consent of the Lessor first had and obtained. In case any such window light opening doorway path passage or drain shall be made or attempted to be made the Lessee shall give immediate notice thereof to the Lessor and shall at the request of the Lessor and at the cost of the Lessee take such steps as may reasonably be required or deemed proper for rectifying the same.
4.15	Signs
	The Lessee shall not display or affix any signs notices or advertisements to the exterior of the Premises without the prior written consent of the Lessor which shall not be unreasonably withheld in the case of signs notices or advertisements usual in the normal conduct of the use permitted by this Lease and not to display or affix any signs notices or advertisements which in the reasonable opinion of the Lessor may be offensive or undesirable and at the expiration of the Term if required by the Lessor to remove any signs notices or advertisements and make good the Premises.
	The Lessee shall be granted exclusive naming and signage rights to the Building for $1pa, if demanded.
	Signage is not to effect the use or performance of the telecommunication aerial on the premises roof.
	The benefit of any signage or naming rights shall be disregarded at any rent review.
4.16	Insurance
	The Lessee shall not:

(a)

do or permit or suffer to be done any act matter or thing whereby any insurances in respect of the Premises may be vitiated or rendered void or voidable or whereby the rate of premium of any such insurance shall be liable to be increased or whereby any insurer is or might be entitled or enabled to decline or refuse any claim or to decline or refuse to renew any such insurance or to impose onerous conditions thereon; and

(b)

store any corrosive explosive volatile inflammable dangerous poisonous or toxic substances whether solid liquid or gaseous upon or about the Premises without the prior written consent of the Lessor which shall not be unreasonably withheld in the case of such reasonable quantities of such substances as may be required for the Lessee’s permitted business and save as aforesaid not to use any of such substances in or about the Premises for any purpose and forthwith to pay to the Lessor all extra premiums of insurance on the Premises and contents if any be required on account of extra risk caused by the use to which the Premises are put by the Lessee or by the bringing or keeping on the Demised Premises of any of the said substances or fluids.

4.17	Auction Sales
	The Lessee shall not hold or allow to be held any sale by auction on the Demised without the prior written consent of the Lessor which shall not be unreasonably withheld.
4.18	Obstructions
	The Lessee shall not obstruct the entrances stairways or passage ways of the Premises or of any part of the Building and which the Lessee is entitled to use pursuant to the covenants contained in this Lease and not to use the same for any purpose other than for ingress to and egress from and through the Premises.
5.	LESSOR’S COVENANTS
5.1	Quiet Enjoyment
	The Lessee paying the said rental and performing and observing all the covenants and conditions herein contained and on the part of the Lessee to be observed and performed shall be entitled to and may peaceably and quietly hold and enjoy the Premises during the Term hereby granted without any interruptions or disturbance from or by the Lessor or any person or persons claiming under or in trust for him.
5.2	Rates
	The Lessor shall pay all rates taxes and charges which may be assessed in respect of the Premises or the Building save and except such rates taxes and charges which pursuant to the covenants herein contained are to be paid by the Lessee.

5.3	No Warranty
	The Lessor does not expressly or impliedly warrant that the Premises are now or will remain suitable or adequate for all or any of the purposes or uses of the Lessee and all warranties (if any) as to suitability and adequacy of the Premises implied by law are hereby expressly negatived to the extent not prohibited by law.
5.4	Building Mechanics
	The Lessor warrants that it will undertake capital expenditure when necessary on all base building systems including air conditioning and fire services, unless damage to these base systems has been caused by the Lessee’s specific use.
	For the avoidance of doubt, base building systems excludes any items of Lessee fit out, such as supplementary air conditioning systems.
	The Lessor will repay the capital costs required to keep these base services operable as per manufacturing recommendations. The Lessee will arrange and monitor the maintenance programs.
5.5	Lessor’s Obligations
	Unless the action, damage or excessive wear has been directly caused by the Lessee’s specific use of the Premises or lack of the Lessee’s maintenance, the Lessor must, at is own expense:

(a)	maintain the structural integrity of the Premises and the building;
(b)	keep the roof of the Premises and the building in a waterproof condition;
(c)	maintain the exterior of the Premises, the building and any common areas and whenever necessary, repaint those areas (exterior) to ensure the exterior of the Premises and the building at all times appears well presented;
(d)	duly comply with all statutes, regulations, rules and by-laws applying in respect of the Premises and the building (excluding those caused or relating to the Lessee fit out).

6.	MUTUAL COVENANTS
6.1	Determination of Lease
	If

(a)	the rent (including GST) hereby reserved or any part thereof shall be in arrears for fourteen (14) days after written demand shall have been made for payment thereof, or
(b)	the Lessee being a Company shall go or be put into liquidation or shall have a Receiver a Receiver and manager, an Official Manager, or administrator appointed or makes an assignment for the benefit of or enters into an arrangement or composition with its creditors, or
(c)	execution is levied against the Lessee and not discharged within thirty (30) days, or
(d)	the Australian Securities & Investment Commission is directed to arrange for an investigation into the affairs or into particular affairs of the Lessee (being a company) pursuant to the Corporations Act 2001 (or where applicable each law of the Commonwealth or a State or Territory of Australia which corresponds with the Corporations Act 2001), or
(e)	the Lessee shall make default in the observance or performance of any of the covenants and conditions herein contained and on the part of the Lessee to be observed and performed,

then and in every or any of such cases it shall be lawful for the Lessor (although the Lessor may not have taken advantage of some previous breach or default of a like nature) forthwith or at any time thereafter to determine this Lease in respect of any breach or default by the Lessee of or in respect of any covenant or condition of this Lease to which Section 146 of the Property Law Act 1958 does not extend and in respect of any breach or default by the Lessee of or in respect of any covenant or condition of this Lease to which the said Section does extend then to determine this Lease upon or at any time after the expiration of fourteen (14) days after the date of service of the notice required to be served on the Lessee by sub-section 1 of the said Section 146 (which period of fourteen (14) days is hereby fixed as the time within which the Lessee is to remedy any such last mentioned breach or default if it is capable of remedy and to make reasonable compensation in money to the satisfaction of the Lessor for such breach or default) and to re-enter upon the Premises or any part thereof in the name of the whole and thereupon the Term shall absolutely cease and determine and the Lessor may also without notice eject from the Premises or any part thereof all persons without prejudice to any right of action or other remedy of the Lessor in respect of any breach of covenant on the part of the Lessee and the Lessor may remove any goods and chattels therein and store the same at the risk and cost of the Lessee and give a good and valid authority for the sale thereof for non-payment of storage charges.

6.2	Essential Covenants
6.2.1	Each of the covenants by the Lessee which are specified in this Clause are essential terms of this Lease:

(a)	The covenant to pay rent (including GST) throughout the Term at a date not later than seven (7) days after the due date for payment of each instalment of rent as set out in the Schedule (3.1);
(b)	The covenant to pay rates and other charges (3.4);
(c)	The covenant to use the Premises for the Permitted Use (4.1);
(d)	The covenants governing and restricting assignment and sub-leasing (4.7);
(e)	The covenant to comply with orders (3.11);
(f)	The covenant not to lodge a caveat (6.10.3); and
(g)	Any other covenant in respect of which the Lessee’s breach is serious persistent and of a continuing nature.

6.2.2	In respect of the Lessee’s obligation to pay rent, the acceptance by the Lessor of arrears or of any late payment of rent shall not constitute a waiver of the essentiality of the Lessee’s obligation to pay rent in respect of those arrears or of the late payment or in respect of the Lessee’s continuing obligation to pay rent during the Term.
6.2.3	The Lessee covenants to compensate the Lessor in respect of any breach of an essential term of this Lease and the Lessor is entitled to recover damages from the Lessee in respect of such breaches. The Lessor’s entitlement under this clause is in addition to any other remedy or right to which the Lessor is entitled (including the termination of this Lease).
6.2.4	Should the Lessee’s acts or omissions constitute a repudiation of the Lease (or of the Lessee’s obligations under the Lease) or constitute a breach of any Lease covenants, the Lessee covenants to compensate the Lessor for the loss or damage suffered by reason of the repudiation or breach.
6.2.5	The Lessor shall be entitled to recover damages against the Lessee in respect of repudiation or breach of covenant for the damage suffered by the Lessor during the entire Term of this Lease (but not including the Further Term (if any) unless the Lessee shall have exercised any option to take a renewed demise for a Further Term).
6.2.6	The Lessor’s entitlement to recover damages shall not be affected or limited by any of the following:

(a)	If the Lessee shall abandon or vacate the Demised Premises;
(b)	If the Lessor shall elect to re-enter or to terminate the Lease;
(c)	If the Lessor shall accept the Lessee’s repudiation; or
(d)	If (in the absence of mutual agreement between the parties) the Lease shall be surrendered by operation of law following default by the Lessee.

6.2.7	The Lessor shall be entitled to institute legal proceedings claiming damages against the Lessee in respect of the entire Lease Term (but not including the Further Term (if any) unless the Lessee shall have exercised any option to take a renewed demise for a Further Term) including the periods before and after the Lessee has vacated the Premises, and before and after the abandonment, termination, repudiation, acceptance of repudiation or surrender by operation of law referred to in Clause 6.2.6 whether the proceedings are instituted either before or after such conduct.
6.3	Damage
	If the Premises or any part thereof shall at any time during the Term be destroyed or damaged so as to be unfit for occupation and use and the policy or policies of insurance effected by the Lessor shall not have been vitiated or payment of the policy moneys refused in consequence of some act or default of the Lessee his servants or agents the rent hereby reserved and the outgoings or a fair proportion thereof according to the nature and extent of the damage sustained shall be suspended until the Premises shall be again rendered fit for occupation and use and in case of difference touching this proviso the same shall be referred to the award of a single arbitrator in case the parties can agree upon one and otherwise to two arbitrators one to be appointed by each party and in either case in accordance with the provisions of the Commercial Arbitration Act or any statutory modification thereof for the time being in force (with both parties having the right of legal representation) (and until the amount of rent and outgoings to be paid (if any) shall have been mutually agreed upon or determined as aforesaid the full rent and outgoings shall be payable and paid without deduction but the Lessor shall subsequently refund the amount (if any) paid by the Lessee in excess of the amount to be agreed or determined) PROVIDED ALWAYS that in the event of the Premises or the Building of which the Premises shall be a part (or both the Premises and such

	Building) being destroyed or so much damaged as to amount substantially to a destruction of the Premises the Lessor or Lessee shall be at liberty within four (4) months after the damage by notice to the other to determine this Lease as from the date of the damage but the Lessee shall not be entitled so to determine if the Lessor within three (3) months from the date of the damage gives notice to the Lessee of his intention to rebuild and proceeds with such rebuilding with reasonable expedition.
6.4	Overholding
	If after the expiration of the Term the Lessee remains in possession of the Premises without objection by the Lessor otherwise than pursuant to a further Lease granted by the Lessor then:

(a)	the Lessee shall be considered as and be a tenant from month to month of the Lessor,
(b)	the Lessee shall pay to the Lessor monthly in advance a monthly rental equal to the amount of rental payable in respect of the last full month prior to such expiration (or such other rental as may be agreed upon from time to time) and so that if the last payment relates to a period less than a month such payment shall be adjusted proportionately to the portion of the month to which it relates on a daily basis,
(c)	the Lessee shall also pay to the Lessor all sums which would have been payable pursuant to Clause 3.4 if the whole period of the tenancy from month to month pursuant to this present clause constituted the Term of the Lease and such sums shall be payable at the times and in the manner provided by the said Clause 3.4,
(d)	the said tenancy from month to month shall otherwise be upon the same terms and conditions as are herein contained so far as the same are applicable, and
(e)	the said tenancy from month to month may be determined by either party giving to the other not less than one month’s notice in writing of such determination and such notice may expire at any time.

6.5	Lessor’s Liability
6.5.1	The Lessor shall not be responsible or liable to the Lessee or any person claiming under or through him (whether by way of compensation or reduction in rent or otherwise) for any damage caused by any burglary theft breaking and entering or malicious damage caused by any person to the Premises or the Lessee’s tenants or trade fixtures fittings or goods or for any loss damage or injury to the goods property effects business or person of the Lessee caused by any flow of water moisture or liquid through the bursting of or any defect in or overflow from any pipe or from the lavatories, closets, basins, receptacles, roof, walls or drains of the Premises or of the Building or for any malfunction failure breakdown interruption or mishap involving any lift, stairs, passages, air-conditioning, lavatories, conveniences, fire equipment, water, gas or electricity services or parking space in such building or from a blockage of any sewers, wastes, drains, gutters, down-pipes or storm water drains;
6.5.2	The Lessor shall not be liable or responsible to the Lessee for any loss of enjoyment of light air or prospect arising from or in consequence of any increase in the height of adjoining or neighbouring buildings or for any alteration to the Premises.
6.5.3	Notwithstanding anything herein contained whether express or implied (and in particular but without limiting the generality of the foregoing Clause 3.15 ) the Lessor shall not in any way be liable for any injury loss or damage which may be caused to the Lessee or to the Lessee’s property or to the Lessee’s employees servants clients visitors customers agents or invitees or their property by reason of any happening on or in the vicinity of the Premises or Building howsoever caused except to the extent of any injury loss or damage caused or contributed to by any act omission or negligence of the Lessor.
6.5.6	Notwithstanding anything herein contained or any implication or rule of law to the contrary the Lessor shall not be liable for any damage or loss the Lessee may suffer by reason of the neglect or omission of the Lessor to do any act or thing to or in respect of the Premises and which (as between the Lessor and the Lessee) the Lessor might be legally liable to do unless the Lessor is known to have been aware of such neglect or omission or unless the Lessee shall have given to the Lessor notice in writing of such neglect or omission and the Lessor has without reasonable cause failed within a reasonable time thereafter to take proper steps to rectify such neglect or omission.
6.6	Option for Renewal
6.6.1	The Lessor covenants with the Lessee that if the Lessee shall be desirous of taking a renewal of the Lease of the Premises for the Further Term specified in the Schedule from the expiration of the Term and shall at least three (3) calendar months prior to the expiration of Term signify such desire by notice in writing to the Lessor and:

(a)	if the Lessee shall not then or at the expiration of the Term be in default hereunder, and
(b)	shall not have persistently been in default under the Lease during the Term of which written notices have been sent to the Lessee,

	then the Lessor will at the cost of the Lessee execute a new Lease to the Lessee of the Premises for such Further Term at an annual rental to be reviewed to market in accordance with clause 2 of Appendix A and otherwise such Lease shall be subject to the covenants agreements and provisions as are herein contained (including any guarantees) save and except this present covenant for renewal
6.6.2	The Lessor hereby notifies the Lessee that this option to renew must be exercised by the date set out in the Schedule as after that date the option will not be exercisable.
6.7	Lessor’s Successor
	In the event of any person other than the Lessor becoming entitled to receive the rental hereby reserved either by operation of law or otherwise the Lessee agrees that such person shall have the benefit of all covenants and agreements on the part of the Lessee hereunder and the Lessee at the cost of the Lessor will enter into such covenants with such other person in that regard as the Lessor may reasonably and properly require PROVIDED THAT such covenants will:

(a)	not provide any further obligations, liabilities or responsibilities on the Lessee as herein provided; and
(b)	provide, inter alia, that the new lessor shall be bound by the terms and conditions of this lease as if it were an original party.

6.8	Notices
6.8.1	Any notice required to be given to or served on the Lessee hereunder shall without prejudice to any other lawful mode of service be deemed to be duly given to or served upon the Lessee if served personally upon the Lessee or if addressed to the Lessee or delivered to or left at or posted by prepaid post to: a director of the Lessee or as otherwise nominated by the Lessee at an address notified by the Lessee from time to time.
6.8.2	Any notice or demand served or given by post shall be deemed to be duly given or served even if proved that it was not delivered and shall be deemed to have been served or given on the second day after the day on which it was posted (Saturdays, Sundays and public holidays excluded).
6.8.3	Any notice or demand need not be signed by or on behalf of the Lessor or if signed may be signed on behalf of the Lessor by any of the Lessor’s servants agents or officers or by the Lessor’s solicitors.
6.8.4	Any notice required to be given to or served on the Lessor hereunder shall without prejudice to any other lawful mode of service be deemed to be duly given to or served upon the Lessor if served personally upon the Lessor or if addressed to the Lessor or delivered to or left at or posted by prepaid post to the Lessor:

(i)	at the address of the Lessor set out herein, or
(ii)	at such other address as the Lessor may by written notice to the Lessee have previously so advised the Lessee.

6.9	Bank Guarantee
6.91	As a further consideration for the Lessor granting this Lease to the Lessee the Lessee has deposited with the Lessor a Bank Guarantee in the amount as shown in the Schedule (“the Bank Guarantee ”) shall be retained by the Lessor as a guarantee and security that the Lessee shall pay the rent hereby reserved and all other monies payable hereunder and perform and observe all the Lessee’s obligations hereunder.
6.9.2	If the Lessee defaults in payment of the said rent or of any other monies payable hereunder or in the performance or observance of any of the Lessee’s obligations hereunder the Lessor may and is hereby authorised by the Lessee at any time during the term hereof or thereafter to pay or reimburse itself out of the Bank Guarantee all unpaid rent and other monies and all monies costs and expenses which the Lessor incurs or might incur and any loss or damage which the Lessor suffers or might suffer in consequence or arising out of such default on the part of the Lessee as aforesaid.
6.9.3	If at any time the Lessor has recourse to the Bank Guarantee pursuant to this Clause or the Bank Guarantee is otherwise reduced below the amount set out in the Schedule, the Lessee shall immediately replace or substitute the Bank Guarantee so as to restore the Bank Guarantee to the amount set out in the Schedule.

6.9.4 Save as aforesaid if the Lessee at the end of the Term is not in default in payment of the said rent or of any other monies payable hereunder or in the performance and observance of the Lessee’s obligations hereunder the Lessor shall release to the Lessee the Bank Guarantee. .

6.9.5 In the event of:

(i)	an assignment of this Lease to a new lessee, the Lessor may call for a new bank guarantee for the bond monies from the new lessee; or
(ii)	an assignment of the reversion of this Lease to a new lessor, the new lessor (at the cost of the Lessor) may call for and require a new bank guarantee to the new lessor; and

upon receipt of the new bank guarantee, the previous bank guarantee shall be returned to the party that caused it to be issued or the Lessor shall confirm by deed that the previous bank guarantee is extinguished.

6.10	Miscellaneous
6.10.1	Nothing contained herein shall be deemed or construed by the parties hereto or by any third party as creating the relationship of partnership or of principal and agent or of joint venture between the parties hereto or any other relationship other than the relationship of Lessor and Lessee under the terms and conditions only as provided in this Lease.
6.10.2	Without in any way limiting any other provision or provisions herein contained should the Lessee fail to deliver up possession of the Premises in accordance with any notice to quit or of re-entry or upon the expiration or earlier determination of this Lease (except where the Lessee with the permission of the Lessor continues in occupation of the Premises as hereinbefore provided) and fails to return all the keys for the Premises to the Lessor it shall be competent for the Lessor to demand and recover from the Lessee in addition to any rental sums or damages due or arising hereunder a sum for use and occupation calculated at the same rate as the rental herein provided up to and including the date when such possession is delivered up as aforesaid (and it is hereby agreed with respect to the foregoing that the Lessee shall be deemed to be in possession whilst any plant fixtures fittings and furnishings equipment or any other chattels of the Lessee which the Lessor requires to be removed from the Premises have not been so removed and until all keys for the Premises have been returned to the Lessor) without any such notice to quit or other notice being waived or any proceedings to obtain possession being in any way prejudiced.
6.10.3	The Lessee hereby covenants and agrees that he shall not lodge nor allow any person claiming through him or acting on his behalf to lodge any caveat over the land of which the Premises forms part or any part thereof.
6.10.4	The Lessee hereby irrevocably makes nominates constitutes and appoints the Lessor to be the true and lawful attorney of the Lessee to act at any time after the power to re-enter herein contained shall have become exercisable or shall have been exercised (a sufficient proof whereof shall be the statutory declaration of the Lessor or its officers) to execute and sign a transfer assignment or a surrender of this Lease or withdrawal of caveat and for this purpose to use the name of the Lessee and generally to do execute and perform any act deed matter or thing relative to the Premises as fully and effectually as the Lessee could do in and about the Premises and the Lessee hereby covenants to ratify and confirm all and whatsoever the said attorney or any substitute shall lawfully do or cause to be done in and about the Premises.
7.	GST
7.1	GST Definitions
	For the purpose of this Clause 7 expressions set out in italics this clause bear the same meaning as those expressions in the GST Act.
	“GST” means GST within the meaning of the GST Act.
	“GST Act” means the A New Tax System (Goods and Services Tax) Act 1999 (as amended).
7.2	Amounts otherwise payable do not include GST.
	Except where express provision is made to the contrary, and subject to this clause 7, the consideration payable by any party under this Lease represents the value of any taxable supply for which payment is to be made.
7.3	Liability to Pay GST
	Subject to Clause 7.5 if a party makes a taxable supply in connection with this Lease for a consideration which, under Clause 7.2 or Clause 7.5, represents its value then the party liable to pay for the taxable

	supply must also pay, at the same time and in the same manner as the value is otherwise payable, the amount of any GST payable in respect of the taxable supply.
7.4	Reimbursements
	If this Lease requires the Lessee to pay, reimburse, or contribute to an amount paid or payable by the Lessor in respect of an acquisition from a third party for which the Lessor is entitled to claim an input tax credit, the amount required to be paid, reimbursed, or contributed by the Lessee will be the value of the acquisition by the Lessor plus, if the Lessor’s recovery from the Lessee is a taxable supply, any GST payable under Clause 7.3.
7.5	Tax Invoice
	A party’s right to payment under Clause 7.3 is subject to a valid tax invoice being delivered to the party liable to pay for the taxable supply.
8	GUARANTOR’S OBLIGATIONS
8.1	Liability of Guarantor
	In consideration of the Lessor entering this Lease at the Guarantor’s request, the Guarantor:

(a)	unconditionally guarantees to the Lessor the punctual performance by the Lessee of the Lessee’s obligations under this Lease;
(b)	must keep the Lessor indemnified against all loss or damage incurred by the Lessor as a result of the Lessee breaching this Lease; and
(c)	must keep the Lessor indemnified against all loss or damage incurred by the Lessor resulting from a trustee in bankruptcy or a liquidator of the Lessee disclaiming this Lease or from this Lease being unenforceable against the Lessee for some other reason.

8.2	Liability of Guarantor not affected
	The Guarantor is liable, even if:

(a)	one or more of the Guarantors dies;
(b)	the Lessor gives any extension of time or any other indulgence to the Lessee or any Guarantor;
(c)	this Lease is varied, assigned (but where the Act applies only insofar as permitted by the Act) or extended;
(d)	this Lease is not or cannot be registered at the Land Titles Office;
(e)	the Lessee grants a sub-lease, a licence or any other right to occupation;
(f)	the Premises is sold; or
(g)	the Lessor releases the Lessee or any Guarantor.

8.3	Bankruptcy or liquidation of the Lessee
	The Guarantor agrees that:

(a)	The Lessor may retain all money received including dividends from the Lessee’s bankrupt estate, and need allow the Guarantor a reduction in its liability under this guarantee only to the extent of the amount received;
(b)	the Guarantor must not seek to recover money from the Lessee to reimburse the Guarantor for payments made to the Lessor until the Lessor has been paid in full;
(c)	the Guarantor must not prove in the bankruptcy or winding up of the Lessee for any amount which the Lessor has demanded from the Guarantor; and
(d)	the Guarantor must pay the Lessor all money which the Lessor refunds to the Lessee’s liquidator or trustee in bankruptcy as preferential payments received from the Lessee.

9.	Option and First Right of Refusal to Purchase
	At any time prior to 1 April 2007 (unless varied under clause 15)), the Lessee may notify the Lessor in writing that it intends to exercise its right to purchase the Premises for the set sum of $6,000,000 (six million dollars) plus GST. Terms will be based upon a standard 10% deposit with balance of 90% to be paid in 60 days.
	Should the Lessee not exercise the right to purchase the Premises prior to 1 April 2007 (unless varied under Clause 15), at any time thereafter during the term of the Lease, if the Lessor wishes to sell the Premises, the Lessee must be given 3 business days written notice that the Premises is to be marketed for sale, prior to the commencement of the sale process.

	During this 3 business day period, the Lessor and Lessee agree to negotiate the sale of the Premises to the Lessee. Should no agreement for the purchase be reached, the Lessee has no further guaranteed right to purchase the Premises and the Lessor may commence the sale process.
10.	Lessor’s Works

(a)	The Lessor agrees to pay for the recarpeting of the office areas to a maximum value of $50 per square metre (being $70,000) for the 1,400 square metre office component.
(b)	The Lessee will arrange the works, using the Lessor’s selected carpet provider.
(c)	Should the Lessee spend more than the allowance, it will be at their own cost. Should the Lessee spend less than the allowance, the saving will be kept by the Lessor.
(d)	The Lessee shall not be required to lift existing partitions that may remain for laying the replacement carpet.
(e)	The Lessor agrees to assist in any process undertaken by the Lessee, such as submission of Planning Permits for building alterations to council, in a timely and cost efficient manner. Any reasonable costs of the Lessor relating to the permissions will be refunded by the Lessee.

11.	Car Parking
	All spaces at the premises as at the Access Date are to remain with the tenancy throughout occupation at no cost to the Lessee.
12.	Consent
	In all instances when granting consent under the lease the Lessor must not unreasonably withhold or delay its consent.
13.	Redecoration
	For the avoidance of doubt, no ‘re-decoration’ (inclusive of repainting, recarpeting and refinishing) during the lease is to be undertaken by the Lessee beyond proper and reasonable maintenance.
14.	Rent Free Period
	From the Commencement Date to 31 March 2007 (subject to review under clause 15.2), no rent shall be payable by the Lessee. However for the avoidance of doubt, Outgoings will be payable from the Commencement Date.
15.	ACCESS TO PREMISES
15.1	Access to Premises
	The Lessee shall receives keys and be granted full access to the Premises on the Commencement Date.
15.2	Extension of Dates by delays in the Access Date
	The Commencement Date in item 5 of the Schedule, the dates shown in clause 9 and the date shown in clause 14 (Rent Free Period) shall be extended if there is a delay in providing access to the Premises by the Lessor to the Lessee by 1 November 2006 by the same number of days as the length of the delay.

SCHEDULE

1.	PREMISES:	1 Corporate Avenue, Rowville, Vic 3178 (excluding area leased for the telecommunications aerial)
2.	BUILDING:	1 Corporate Avenue, Rowville, Vic 3178
3.	LAND:	Certificate of Title Volume 10225 Folio 341
4.	TERM:	Seven (7) years and five (5) months
5.	COMMENCEMENT DATE:	1 November 2006 (as amended in accordance with Clause 15.2)
6.	RENTAL:	$460,000 plus GST per annum
7.	PAYABLE:	Calendar monthly in advance.
8.	RENT REVIEW:	The rental shall be reviewed at the times and in the manner set out in Appendix A.
9.	PERMITTED USE:	Office, warehouse, manufacturing and laboratory
10.	FURTHER TERM:	Two (2) further terms of five (5) years each
11.	CHATTELS:	All fixtures and fittings in the Premises owned by the Landlord
12.	BANK GUARANTEE:	$250,000
13.	LAST DAY FOR EXERCISE OF OPTION:	1 January 2014
14.	GUARANTOR:	Nil

APPENDIX A

1	CPI RENTAL REVIEW
	The rental will be increased annually on each anniversary of the Commencement Date and each anniversary of commencement of any further term by 3.5%. Rental for the first year of any renewed term shall be reviewed to market in accordance with clause 2 below.
2	MARKET RENTAL REVIEW
2.1	The rental for the first year of any further term shall be reviewed to market in accordance with this clause.
2.2	The Lessor or lessee may initiate a review of the rental to market by giving the other party a written notice stating the current market rent which it proposes should apply from a Market Review Date.
2.3	All reviews of rental to market shall be initiated no earlier than 3 and no later than 6 months from a Market Review Date.
2.4	If the party receiving the notice does not object in writing to the proposed rent within 28 days, it becomes the rental from the Market Review Date.
2.5	If a party receiving the notice serves an objection to the proposed rent within 28 days and the parties do not agree on the rental within 28 days after the objection is served, or the parties must appoint a Valuer to determine the current market rent.
2.6	If the parties do not agree within 28 days after the objection is served, on the name of the Valuer, the Valuer must be nominated by the senior office-bearer of the Australian Property Institute — Victorian Division, at the request of either party.
2.7	In determining the current market rent for the Premises the Valuer must — use best valuation practice and consider all factors the valuer considers relevant but must:

(a)	Disregard;
1)	The value of the Lessees Works
2)	The incentive provided in the Lease;
3)	Lessee goodwill; and
4)	Any signage or naming rights granted under the Lease.
(b)	Have regard to;
1)	Written submissions from the parties;
2)	The provisions of the Lease including the whole Lease term (the Initial Term plus any further options);
3)	The assumption that the premises are vacant and available for lease; and
4)	The total amount of space the Lessee occupies in the building (having regard to telecommunication aerials for example).
(c)	Assume;
1)	The Lessee has a full make good clause.

	The cost of any determination procedure will be borne equally by the parties.
2.8	The Valuer must determine a current market rent not more than 10% higher and not less than 10% lower than the rental immediately before the review.
2.9	Clause 2.8 does not apply if the Act applies.
2.10	The Valuer must make the determination of the current market rent and inform the parties in writing of the amount of the determination and the reasons for it as soon as possible after the end of the 21 days allowed for submissions by the parties.
2.11	If -

(a) no determination has been made within 45 days of the parties

(i)	appointing the Valuer, or
(ii)	being informed of the Valuer’s appointment, or

(b) the Valuer resigns, dies or becomes unable to complete the valuation, then the parties may immediately appoint a replacement Valuer in accordance with Clause 2.6

2.12	The Valuer’s determination binds both parties.
2.13	The Lessor and Lessee must bear equally the Valuer’s fee for making the determination. If either pays more than half the fee, the difference may be recovered from the other.
2.14	Until the determination is made by the Valuer, the Lessee must continue to pay the same Rent as before the Market Review Date. Within 7 days of being informed of the Valuer’s determination, the parties must make any necessary adjustments.
2.15	In this Clause 2 a “Market Review Date” means the commencement of any further term of the Lease namely 1 April 2014 and 1 April 2019

EXECUTED by the parties:
THE COMMON SEAL of HEYRAM PROPERTIES. PTY. LTD was hereunto affixed in accordance with its constitution in the presence of:	) ) )

/s/ Bruce Heymanson                               Director	/s/ Andrew Ramsden ;                       Director
Bruce Heymanson                                  (Print name)	Andrew Ramsden                             (Print name)

THE COMMON SEAL of UNIVERSAL BIOSENSORS
PTY LTD was hereunto affixed in accordance with its
constitution in the presence of : )
)
)

/s/Mark Morrisson                                     Director	/s/ Andrew Denver           ;                       Director
Mark Morrisson                                     (Print name)	Andrew Denver                ;                       (Print name)

EX-10.6

Exhibit 10.6

Project No: GRA03395

	R&D Start Program    Grant Agreement
Australian Government
Department of Industry
Tourism and Resources
AusIndustry	Particular Conditions

Parties

Commonwealth of Australia
acting through the Industry Research
and Development Board
ABN 51 835 430 479
(Department of Industry, Tourism and
Resources)
Postal address	Department of Industry, Tourism and Resources
	GPO Box 85A
	MELBOURNE VIC 3001

The Grantee

	Universal Biosensors Pty Ltd
- ABN	35098234309
- ACN	098 234 309
- postal address	103 Ricketts Road
	MOUNT WAVERLEY VIC 3149
- business address	103 Ricketts Road
	MOUNT WAVERLEY VIC 3149

R&D Start Grant Agreement Particular Conditions
Version 7.3 — Release Date June 04
Author: R&D Start Program Management

1

Operative provisions

1. This Grant is made to the Grantee in respect of the Project by the Industry Research and Development Board on behalf of the Commonwealth to the Grantee under the R&D Start Program.

2. The Grant is made pursuant to the Industry Research and Development Act 1986 and the relevant Ministerial Directions issued under sections 19 and 20 of that Act.

3. The Grant is made on the terms and conditions of the Grant Agreement, which comprises the General Conditions (version 7.3) and the Particular Conditions (including the schedule).

4. The Grantee acknowledges that it has received and read a copy of the General Conditions (version 7.3), and agrees that the terms and conditions of the General Conditions form part of the Grant Agreement.

5. Terms defined in the General Conditions (version 7.3) have the same meaning in the Particular Conditions.

6. If there is an inconsistency between the Particular Conditions and the General Conditions (version 7.3), the Particular Conditions prevail to the extent of the inconsistency.

R&D Start Grant Agreement Particular Conditions
Version 7.3 — Release Date June 04
Author: R&D Start Program Management

2

Acceptance of terms

EXECUTED as a deed
Date of deed: 25 February 2005
Commonwealth of Australia	)
	)
SIGNED for and on behalf of the	)
COMMONWEALTH OF AUSTRALIA by	)
Jayne Facey a delegate of the	)
INDUSTRY RESEARCH AND	)
DEVELOPMENT BOARD in the presence	)
of:	)
Ruth Steele	)
Signature of witness	)
	)
	)
RUTH STEELE	)
Name of witness (block letters)	)
	)
	)	/s/ Jayne Facey
	)

Grantee

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

	)
	)
	)
	)
	)
Signed by	)
Universal Biosensors Pty Ltd	)
by:	)
/s/ Ian Bennett	)
Secretary	)	/s/ C. P. H. Kiefel
	)	Director
Ian Bennett	)	C. P. H. Kiefel
Name (please print)	)	Name (please print)
	)
	)
	)

R&D Start Grant Agreement Particular Conditions
Version 7.3 — Release Date June 04
Author: R&D Start Program Management

3

The Schedule

1	Project Title	Dry Chemistry Immunosensor
2	Project Reference Number	GRA03395
3	Project Duration
	(a) Commencement Date:	1 October 2004
	(b) Completion Date:	30 September 2007
4	Grant	A maximum amount of $2,366,064
5	Grant Percentage of Eligible Expenditure	50%
6	Interest Rates	5.40 % per annum
7	Project Planned Eligible Expenditure by Financial Year

[REDACTED]

8	Initial Payment	$192,666
9	Project Description and Planned Outcomes

The project will develop a single step, disposable immunosensor platform which needs no liquid reagents other than the sample. The platform will have the potential to give fully quanitiative results in minutes on microlitre volumes of sample at the doctor’s office or emergency ward without the operator carrying out any steps other than applying whole blood to the sensor. The target analyte is the acute phase protein C reactive protein, which indicates the presence of infection or other form of inflammation. The test will employ antibodies coupled to the enzyme glucose dehydrogenase in a dry chemical system.

R&D Start Grant Agreement Particular Conditions
Version 7.3 — Release Date June 04
Author: R&D Start Program Management

4

10 Performance Milestones and Planned Achievement Date

Major Milestone	Expected
	Achievement Date

[REDACTED]

11	Retention Amount $118,304
12	Reports

Review Type	Due Date	Report Period	Audit Report
			Y/N

[REDACTED]

R&D Start Grant Agreement Particular Conditions
Version 7.3 — Release Date June 04
Author: R&D Start Program Management

5

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

Unless the Grantee is otherwise notified by the Commonwealth, commercialisation reports will be required 1, 2 and 5 years after completion of the Project, in the format supplied by the Commonwealth at those times.

13 Notices

Notices must be addressed as follows:

a)	if given to the Commonwealth, addressed and forwarded to the Director, AusIndustry State Office, Department of Industry, Tourism and Resources for the attention of an AusIndustry Customer Service Manager at the following address:
	Address: PO Box 85A, MELBOURNE, VIC 3001 Facsimile No: 03 9268 7599 Email address: aivic@industry.gov.au

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

b)	if given by the Commonwealth, signed by an authorised delegate of the Industry Research and Development Board and forwarded to the Grantee at the following address:
	Dr D Rylatt Project Manager Universal Biosensors Pty Ltd Locked Bag 50 MOUNT WAVERLEY VIC 3149

or as otherwise notified in writing by the Grantee.

14	Special Conditions
	Nil
15	Repayment of Repayable Contribution under Start Premium
	Not Applicable

R&D Start Grant Agreement Particular Conditions
Version 7.3 — Release Date June 04
Author: R&D Start Program Management

6

NATIONAL BENEFIT INDICATORS — COMMERCIALISATION

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

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

As reflected in the project commercialisation plan, overseas commercialisation is reasonable when it will result in:

• the maintenance of Australia as the home base for future R&D, manufacture or product development;

• an increase in the number of the company’s Australian-based employees.

• Australian residents receiving commercial compensation through royalties, licence fees, equity, dividends or outright sale.

• ongoing development of the commercial outcomes arising from R&D activities involving domestic and/or international collaboration with other firms and/or research organisations.

As reflected in the project commercialisation plan, overseas production is reasonable in two circumstances:

(i) in cases where local production is demonstrably uneconomic on grounds of cost, the Board will consider:

• the level of commitment to retaining or enhancing the company’s R&D facilities in Australia.

• the degree of globalisation of the relevant industry sector.

• the relative input costs to production as identified by the company.

• the relative transport costs as identified by the company.

• the relative costs of skilled labour as identified by the company.

• legal barriers to entry to foreign markets.

• any other factors it finds relevant.

(ii) in cases where production or commercialisation demonstrably requires close physical interaction with overseas companies, customers, suppliers and competitors, the Board will consider:

• the level of commitment to retaining or enhancing the company’s R&D facilities in Australia.

• the mechanisms established to disseminate knowledge and market intelligence from overseas to the company’s Australian operations.

• the industry norms in terms of proximity.

• the level of competition in the industry sector and the need to innovate quickly.

• the nature of inputs which require close contact (for example, perishables or knowledge).

• any other factors it finds relevant.

R&D Start Grant Agreement Particular Conditions
Version 7.3 — Release Date June 04
Author: R&D Start Program Management

7

An Australian Government Initiative

Commercial Ready Program
Grant Agreement

General Conditions

Table of contents

Clause		Page
1	Interpretation		2
2	Warranties		6
3	Payment of Grant		7
4	Conduct of Project		9
5	Confidentiality		13
6	Evaluation		14
7	Project Outcomes		14
8	Other Financial Assistance		15
9	Acquittal of Grant		15
10	Termination		16
11	No Dealing with Grantee’s rights		17
12	Acknowledgement and Public Statements		18
13	Regulatory and Ethical Approvals		18
14	Goods and Services Tax		18
15	Notices		19
16	Right of Commonwealth to recover money		20
17	General		20

Commercial Ready Grant Agreement General Conditions
Version 1.0: November 2004 page 1

Operative provisions

1 Interpretation

1.1	Unless the contrary intention appears:
	annual capped grant amount means, for a financial year, the relevant amount stated in item 7 of the schedule and, in the absence of an amount being stated, the relevant amount for that financial year is zero.
	application means the application submitted by the Grantee in respect of which the grant has been awarded.
	Approved Financial Institution means a deposit taking institution authorised under the Banking Act 1959 (Cth) to carry on banking business in Australia.
	Board means the Industry Research and Development Board established by section 6 of the Industry Research and Development Act 1986.
	budget means the budget of planned eligible expenditure (by financial year) for the project in the form set out in item 7 of the schedule.
	commencement date is the date specified in item 3(a) of the schedule, or the date of execution of this deed, whichever is the later.
	completion date is the completion date for the project set out in item 3(b) of the schedule, or the date of termination of this deed, whichever is the earlier.
	confidential information comprises information described in item 13 of the schedule, and any other information that is by its nature confidential, but does not include any of the information specified in clause 12.3.
	control has the meaning given by section 50AA of the Corporations Act 2001 (Cth).
	deal with means:

(a)	sell, license, transfer, novate, declare a trust over or otherwise dispose of or procure or effect the disposal of, or in any way whatsoever deal with, any legal or equitable interest or right in 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 interest or right in the subject matter.

Department means the Department of Industry, Tourism and Resources or any successor.

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eligible activity means any one or more of ‘research and development activities’, ‘proof of concept activities’, or ‘early stage commercialisation activities’, all terms having the meaning given in the Guidelines.

eligible expenditure means expenditure incurred by the Grantee:

(a)	on the project;
(b)	during the project period (with the exception of final audit expenses incurred under clause 4.17 which may be incurred after the completion date); and
(c)	that qualifies as eligible expenditure under Program guidelines issued by the Program Delegate effective at the date of execution of this deed.

encumbrance means a security interest or any other legal or equitable interest or right which is either imposed by law or which is given to any person, over property or rights under a contract.

financial year means the 12 month period beginning 1 July of one year and ending 30 June of the following year.

floating charge has the meaning given by section 9 of the Corporations Act 2001 (Cth).

grant means the amount set out in item 4 of the schedule.

grant percentage is the percentage figure set out in item 5 of the schedule, which figure must not exceed 50%.

GST has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999.

Guide to Managing Your Grant means the document of that name (or any replacement document) provided by the Commonwealth to the Grantee from time to time, including details of the form and content of reports required by the Commonwealth for the purposes of this deed.

Guidelines means the Commercial Ready Program Guidelines dated 30 August 2004.

insolvency event means any of the following:

(a)	a person is or states that the person is unable to pay from the person’s own money all the person’s debts as and when they become due and payable;
(b)	a person is taken or must be presumed to be insolvent or unable to pay its debts under any applicable legislation;
(c)	an application or order is made for the winding up or dissolution or a resolution is passed or any steps are taken to pass a resolution for the winding up or dissolution of a person;

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(d)	an administrator, provisional liquidator, liquidator or person having a similar or analogous function under the laws of any relevant jurisdiction is appointed in respect of the corporation or any action is taken to appoint any such person;
(e)	a receiver or receiver and manager is appointed in respect of any property of a person;
(f)	a corporation is deregistered under the Corporations Act 2001 or notice of its proposed deregistration is given to the corporation;
(g)	a distress, attachment or execution is levied or becomes enforceable against any property or a person;
(h)	a person enters into or takes any action to enter into an arrangement (including a scheme of arrangement or a deed of company arrangement), composition or compromise with, or assignment for the benefit of, all or any class of the persons’ creditors or members or a moratorium involving any of them; or
(i)	anything analogous to or of a similar effect to anything described above under the law of any relevant jurisdiction occurs in respect of a person.

intellectual property means all statutory and other proprietary rights in respect of trade marks, patents, circuit layouts, copyrights, designs, moral rights, confidential information, expertise, knowledge, skills, techniques, methods, procedures, ideas and concepts, 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.

initial budget is the budget referred to in clause 4.5 that is current on the commencement date.

letter of offer means the letter from the Department to the Grantee confirming the Program Delegate’s approval of the grant for the project.

matching funding means any funds available to the Grantee for the project, other than:

(a)	progress payments;
(b)	funding obtained by the Grantee under a program administered by the Board or the Department;
(c)	funding of a kind that the Guidelines, or any other Program policies or guidelines issued by the Program Delegate from time to time, state is not to be regarded as matching funding; or
(d)	non-financial (in-kind) assistance.

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	particular conditions mean the conditions specific to the grant and the project.
	payment date means the date on which a progress payment is or is proposed to be paid.
	performance milestone means a performance milestone set out in item 10 of the schedule.
	planned outcomes mean the planned results of the project set out in item 9 of the schedule and the anticipated national benefits of the project described in the application.
	Program means the Commercial Ready program, a merit-based program that is administered by the Department and designed to increase the level of high quality innovation activity by small to medium sized businesses in Australia.
	Program Delegate means an employee of the Department who has been empowered by the Minister, or otherwise duly authorised, to carry out the relevant functions in respect of the Program.
	Program funding means the funding made available by the Parliament of the Commonwealth of Australia for the Program in any given financial year, being the funding specified in the Portfolio Budget Statement (as varied by any Portfolio Additional Estimates Statement) for that year.
	progress payment has the meaning given in clause 3.2.
	project means the project described in item 9 of the schedule.
	project intellectual property means intellectual property created in the course of the project including improvements, inventions and discoveries arising out of the conduct of the project.
	project period means the period beginning on the commencement date and ending on the completion date.
	quarter means any one of the 3 month periods ending 30 September, 31 December, 31 March or 30 June in a given financial year.
	related body corporate has the same meaning as in section 50 of the Corporations Act 2001 (Cth).
	retention amount is the amount specified in item 11 of the schedule and, in the absence of an amount being stated, is an amount equal to 5% of the grant.
1.2	Unless the contrary intention appears:

(a)	a person includes a firm, a body corporate, an unincorporated association or an authority;
(b)	the singular includes the plural and vice versa;
(c)	a reference to a statute, ordinance, code or other law includes regulations and other instruments made under it and

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	consolidations, amendments, re-enactments or replacements of any of them; and
(d)	where any word or phrase is given a defined meaning, any other part of speech or other grammatical form in respect of that word or phrase has a corresponding meaning.

1.4	Headings are inserted for convenience of reference only and are not to be used in the interpretation of this deed.
1.5	Where the last day of any period for the doing of an action falls on a day that is not a business day in the place that action is required to be done, the action must be done no later than the end of the next business day in that place.
1.6	A reference to the schedule is a reference to the schedule contained in the particular conditions.
1.7	A reference to this deed includes these terms and conditions and the particular conditions.

2 Warranties

2.1 The Grantee warrants that as at the date of execution of this deed and on each day during its term:

(a)	all information provided by the Grantee in the application is true and correct at the date of the application and on execution of this deed;
(b)	without limiting the generality of clause 2.1 (a):

(1)	the project involves any one or more eligible activities;
(2)	the planned outcomes for the project include either the production, establishment of the commercial or technical viability, or commercialisation of a new, clearly identified product, process or service;
(3)	the Grantee has or will have available to it sufficient funds to pay all costs and expenses incurred in relation to the project, including sufficient matching funding to pay for eligible expenditure not covered by the grant, as and when all amounts are due to be paid;

(c)	the Grantee has complied, and will at all times continue to comply, with any conditions specified in the letter of offer;
(d)	all information provided by the Grantee and included in this deed and any information given to the Commonwealth from time to time under this deed (including information contained in the particular conditions or included in any report required under this deed), is true and correct;

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(e)	the Grantee does not have any interests or obligations that conflict with its interests or obligations under this deed;
(f)	the Grantee, has and will have, at all times, all necessary rights in relation to intellectual property and technical information, including, but not limited to, all designs, specifications, data, drawings, plans, reports, models, prototypes and other things necessary to conduct the project, achieve the planned outcomes and commercialise the project (or its outcomes); and
(g)	the Grantee is not aware of any circumstances which adversely affects or might adversely affect the Grantee’s ability to fulfil its obligations under 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

Payment of Grant

3.1 The Commonwealth agrees to pay the grant to the Grantee in accordance with this deed, subject to sufficient Program funding being available on the relevant payment date, and this clause 3.

Progress payments

3.2	The grant will be paid in instalments (‘progress payments’) by direct credit to the bank account established by the Grantee under clause 4.13.
3.3	A progress payment may be made in advance for the next quarterly period, in the Commonwealth’s absolute discretion.
3.4	The Commonwealth is not obliged to make a progress payment:

(a) unless and until the Grantee provides evidence satisfactory to the Commonwealth that:

(1)	it has available to it sufficient matching funding to meet all eligible expenditure incurred to date, and forecast to be incurred during the next quarter, that is not met by the sum of the progress payments paid to date and the next scheduled progress payment, and
(2)	it has made satisfactory progress on the project, including by meeting all performance milestones due for completion on or before the payment date; or

(b) if, at the payment date for that payment:

(1) the sum of that progress payment and other progress payments made in the financial year in which the

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	payment date occurs, exceeds the annual capped grant amount for that financial year;
(2)	the sum of all progress payments made to date and the next scheduled payment, exceeds the grant percentage of the sum of eligible expenditure incurred to date and budgeted eligible expenditure for the next quarter;
(3)	the Commonwealth has terminated, or is entitled to terminate, the deed under clause 10; or
(4)	the Commonwealth reasonably believes that the Grantee is in default of any of its obligations under the deed, including by not submitting all reports due under this deed in the form and content satisfactory to the Commonwealth.

3.5 The Commonwealth may by notice to the Grantee request that the Grantee provide to the Commonwealth any information the Commonwealth reasonably requires for the purposes of determining any of the matters described in clause 3.4. The Grantee must provide information requested under this clause within 10 days of the Commonwealth’s request.

Retention amount

3.6 Without limiting the operation of clause 3.4, the Commonwealth may retain the retention amount until such time as the Grantee has completed the project, and submitted all reports due under this deed in the form and content satisfactory to the Commonwealth.

Commonwealth liability limited

3.7 The Commonwealth’s liability under this deed is limited:

(a) in any given financial year, to the lesser of:

(1)	the annual capped grant amount for that year; or
(2)	the grant percentage of total eligible expenditure incurred by the Grantee in that financial year; and

(b) in the aggregate, to the lesser of:

(1)	the grant; or
(2)	the grant percentage of total eligible expenditure.

Eligible expenditure

3.8 Expenditure that:

(a)	is not paid by the Grantee within 3 months of the completion date; or
(b)	for the purposes of clause 3.7(a) and assessing the Grantee’s entitlement to progress payments in any given financial

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	year, is not paid within 3 months of the end of that financial year; or
(c)	is incurred by the Grantee on an eligible activity in excess of the expenditure threshold for that activity referred to in clause 4.4, without the Commonwealth’s prior consent,

	will be deemed not to be eligible expenditure.
3.9	The Commonwealth’s determination as to whether expenditure on the project is eligible expenditure is final and binding on the Grantee.

4 Conduct of Project

Conduct of project

4.1 The Grantee agrees to undertake the project:

(a)	at a rate of progress and in a manner sufficient to achieve each performance milestone by the relevant due date specified in item 10 of the schedule;
(b)	with the aim at all times of achieving the planned outcomes; and
(c)	in accordance with any representations contained in the application and the other terms of this deed.

4.2	Any progress payments paid in advance under clause 3.3 must be expended by the Grantee on eligible expenditure incurred on the project.
4.3	Subject to clause 4.4, the Grantee may reallocate budgeted expenditure or vary its work methods and schedules as it considers necessary to undertake and complete the project, provided it does not materially change the project.
4.4	At any point in time, actual total eligible expenditure incurred by the Grantee on an eligible activity must not exceed 125% of the total amount allocated to that activity in the initial budget, without the Commonwealth’s prior written consent.

Initial Budget

4.5 The budget current at the date of this deed is set out in item 7 of the schedule. If on this date item 7 is incomplete, the Grantee must give the Commonwealth a complete budget within 7 days of execution of this deed.

Revised budget and Variation of annual capped grant amounts

4.6 The Grantee must give the Commonwealth:

(a) by 1 February of each financial year; and

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(b) at any time the Grantee wishes to request a variation to any one or more of the annual capped grant amounts,

	a revised budget in the approved form, including details of any changes the Grantee considers necessary so as to ensure the budget continues to accurately reflect planned eligible expenditure for the project, and an explanation as to why the requested changes are necessary.
4.7	The Commonwealth may either approve or reject a revised budget provided under clause 4.6.
4.8	If the revised budget is approved by the Commonwealth, the then current budget is replaced by the revised budget approved under clause 4.7.
4.9	On approving a revised budget under clause 4.7, the Commonwealth may in its absolute discretion:

(a)	vary any one or more of the annual capped grant amounts or the grant, and
(b)	make any other changes to the particular conditions that the Commonwealth considers reasonably necessary,

having regard to the changes in the timing or amount of actual or budgeted eligible expenditure on the project.

Project delay

4.10	The Grantee must notify the Commonwealth as soon as practicable, and in any event in its next report due under this deed, if a performance milestone is not achieved or is unlikely to be achieved by the date for achievement of that milestone set out in item 10 of the schedule.
4.11	When notifying the Commonwealth under clause 4.10, the Grantee must specify:

(a)	the reason for the delay;
(b)	the action the Grantee proposes to take to address the delay;
(c)	the anticipated date for achievement of the relevant performance milestone;
(d)	the expected effect (if any) the delay will have on the project, achievement of its planned outcomes and commercialisation of the project (or its outcomes); and
(e)	changes to key personnel, if any, having an impact on the matters reported under paragraphs (a) to (d).

4.12 If the Commonwealth considers in its absolute discretion that the failure by the Grantee to achieve a performance milestone by the relevant date specified in item 10 of the schedule may compromise the capacity of the Grantee to achieve the national benefits for the

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project contemplated under clause 7.1, the Commonwealth may issue a termination notice pursuant to clause 10.1.

Bank Account

4.13

The Grantee must establish a separate account with an Approved Financial Institution for the sole purpose of handling the grant and interest on the grant. The Grantee must, if it has not already done so, provide the Commonwealth with sufficient details to identify the account, within 7 days of execution of this deed.

4.14

The Grantee must not use the account established under clause 4.13 for any purpose other than one connected with this deed, including by not depositing funds other than progress payments into the account. The Grantee agrees to promptly provide the Commonwealth and the relevant Approved Financial Institution with an authority enabling the Program Delegate to obtain any details relating to use of the account, on request.

Reporting

4.15	The Grantee must give the Commonwealth the reports described in the Guide to Managing Your Grant, at the times set out in item 12 of the schedule.
4.16	If the Commonwealth requires a report to be audited, the report must be audited by a member of the Institute of Chartered Accountants, a member of CPA Australia or a Public Practice Certified Member of the National Institute of Accountants, not being an employee, shareholder, director other officeholder or related body corporate of the Grantee, or person having had any involvement in the preparation of the Grantee’s application or any other report required under this deed.
4.17	If in the Commonwealth’s opinion either the form or content of a report does not meet the requirements of this deed, or is not adequate for the Commonwealth’s purposes, the Grantee must submit a revised report satisfactory to the Commonwealth, within 28 days of receiving a notice from the Commonwealth requiring it to do so.

Records to be kept

4.18 The Grantee must keep to the Commonwealth’s satisfaction all records (including original receipts, invoices and bank statements) necessary to provide a complete, detailed record and explanation of:

(a)	expenditure by the Grantee on the project;
(b)	project activities, progress of the project and all steps taken by the Grantee for the purposes of meeting its obligations under clause 7.2;

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(c)	any amounts of GST paid by the Grantee in respect of any supply made to the Commonwealth under this deed; and
(d)	any other records relating to the project which are reasonably required by the Commonwealth from time to time.

4.19 Records required to be kept under clause 4.18 must be retained by the Grantee during the project period and for five years after the completion date.

Inspection and audit

4.20	The Department, and any person authorised in writing by the Program Delegate, 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, in order to review the Grantee’s compliance with this deed.
4.21	The Grantee must give the Department or its authorised representative all necessary facilities and assistance to enable them to conduct a review under clause 4.20.
4.22	In conducting a review, the Department or its authorised representative may take copies of any records (including books, documents, invoices, receipts and any other papers) that the Department or its authorised representative considers relevant to the project, or the Grantee’s compliance with this deed.
4.23	Without in any way affecting the statutory powers of the Auditor-General under the Auditor-General Act 1997 and subject to the provisions of that Act, the Auditor-General is a person authorised for the purposes of clause 4.20.

Compliance with laws

4.24 The Grantee agrees, in conducting the project, commercialising its outcomes and otherwise performing its obligations under this deed, to comply with all relevant legislation of the Commonwealth or of any State, Territory or local authority, including the Crimes Act 1914 and the Equal Opportunity for Women in the Workplace Act 1999.

Subcontracting

4.25	The Grantee may engage subcontractors to undertake work in relation to the project.
4.26	The Grantee will ensure that any subcontract entered into by the Grantee for the purposes of the project contains provisions equivalent to clauses 4.18–4.24 of this deed.

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4.27	The Grantee remains fully responsible for the performance of the project and meeting all its other obligations under this deed notwithstanding that the Grantee has subcontracted the performance of any part of the project.
4.28	The Grantee agrees to promptly notify the Commonwealth of any issues or disputes arising under or in relation to a subcontract that:

(a)	has or may result in the Grantee failing to comply with any of its obligations under this deed; or
(b)	involves the Grantee withholding payment to the subcontractor of an amount representing eligible expenditure incurred by the Grantee on the project.

4.29	On receipt of a notice under clause 4.28, the Commonwealth may in its absolute discretion withhold payment of any further progress payments, pending satisfactory resolution of the issue or dispute notified to the Commonwealth.
4.30	The Grantee agrees to give the Commonwealth a copy of any subcontract entered into by the Grantee for the performance of work on the project, within 14 days of the Commonwealth’s request to do so.

5 Confidentiality

5.1	Subject to clause 5.2, the Department agrees not to disclose any confidential information of the Grantee, without the Grantee’s consent.
5.2	The Commonwealth will not be taken to have breached its obligations under clause 5.1 to the extent that the Department discloses confidential information:

(a)	to its officers, employees, agents, external professional advisers or contractors solely to comply with obligations, or to exercise rights, under this deed;
(b)	to its internal management personnel solely to enable effective management or auditing of deed-related activities;
(c)	for a purpose directly related to the enforcement or investigation of a possible breach of any Commonwealth, State, Territory or local law;
(d)	to its responsible Minister, or in response to a demand by a House or a Committee of the Commonwealth Parliament;
(e)	within the Department, or with the Board or another government agency, where this serves the Department’s, the Board’s, or the Commonwealth’s legitimate interests;

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(f)	as required or permitted by any other law, or an express provision of this deed, to be disclosed; or
(g)	that is in the public domain other than due to a breach of this clause 5.

6 Evaluation

6.1	The Grantee must co-operate in any evaluation of the Program undertaken by or on behalf of the Commonwealth.
6.2	The Grantee must provide information and completed survey forms relating to the project or the Program at any time during the project period and for five years after the completion date, at the request of the Commonwealth or any third party engaged by the Commonwealth for the purposes of undertaking any Program evaluation.
6.3	The Grantee must comply with a request under clause 6.2 within 28 days of receiving the request.

7 Project Outcomes

7.1 The parties acknowledge that the giving of the grant for the purposes of the project is intended to deliver substantial national benefit to Australia. The parties agree that substantial national benefit will be deemed to have been satisfactorily delivered where:

(a)	on or by the completion date, the Grantee demonstrates to the Commonwealth’s satisfaction that the planned outcomes have been achieved; and
(b)	the Grantee commercialises the project (or its outcomes) as represented in the application, on normal commercial terms and within a reasonable time of completion of the project.

7.2 The Grantee agrees to use its best endeavours to:

(a)	ensure the planned outcomes are achieved; and
(b)	commercialise the project (or its outcomes) in accordance with clause 7.1(b).

7.3 Without limiting the operation of clause 7.2, the Grantee will be deemed to have breached that clause where the Commonwealth reasonably believes the Grantee has acted:

(a)	inconsistently with any material representation (as determined by the Commonwealth acting reasonably) included in the application; or
(b)	in a manner so as to reduce or prevent the national benefit contemplated under clause 7.1 from being achieved.

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7.4 The Grantee must immediately notify the Commonwealth (giving reasons) if at any time the Grantee:

(a)	believes the Grantee’s or the project’s capacity to achieve the planned outcomes has been compromised; or
(b)	wishes to commercialise the project (or its outcomes) other than as represented in the application and as a result of the proposed change:

(1)	the project would no longer be commercialised on normal commercial terms;
(2)	significantly additional aspects of the project would be commercialised in a country other than Australia; or
(3)	any overseas commercialisation would deliver significantly reduced national benefit when compared to the proposed commercialisation arrangements set out in the application.

7.5 If the Grantee fails to comply with either clause 7.2 or 7.4, 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 calculated in accordance with clause 16.2.

8 Other Financial Assistance

8.1

The Grantee must give the Commonwealth details of any financial assistance the project receives from another Commonwealth, State or Territory government source or agency, including the amount of the funding and the name of the program under which it was provided. The Grantee must provide the information required to be disclosed under this clause within 28 days of receiving notice of approval of that other financial assistance.

8.2

The Commonwealth may reduce the size of the grant (together with the retention amount and any annual capped grant amount) after taking into account that other financial assistance.

9 Acquittal of Grant

9.1 If at any time the sum of the progress payments paid to the Grantee under this deed exceeds:

(a)	the grant; or
(b)	the grant percentage of total eligible expenditure,

the Commonwealth may by notice to the Grantee require the Grantee to repay the amount of the excess to the Commonwealth, plus interest calculated in accordance with clause 16.2.

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9.2	If at the end of a financial year the total progress payments paid to the Grantee with respect to that year exceeds the annual capped grant amount for that year, the Commonwealth may by notice to the Grantee require the Grantee to repay the amount of that excess to the Commonwealth, plus interest calculated in accordance with clause 16.2.
9.3	If the Grantee expends the grant (or any progress payment) other than in accordance with this deed, the Commonwealth may by notice to the Grantee require the Grantee to repay the grant or so much of the grant as the Commonwealth determines, plus interest calculated in accordance with clause 16.2.

10 Termination

Immediate termination

10.1 The Commonwealth may immediately terminate this deed by notice to the Grantee if:

(a)	an insolvency event occurs in relation to the Grantee;
(b)	the Grantee ceases to carry on business, or a substantial part of its business;
(c)	the Grantee breaches any warranty contained in clause 2;
(d)	there is a change in control or ownership of the Grantee which the Commonwealth reasonably considers has an adverse effect on the Grantee’s ability to comply with any of its obligations under this deed;
(e)	the Grantee commits any breach in respect of which this deed provides (other than clause 10.2) a notice of termination may be given; or
(f)	the Grantee commits any breach which the Commonwealth reasonably considers is not capable of remedy.

Termination following notice

10.2 If the Grantee breaches this deed and the Commonwealth reasonably considers that the breach is capable of remedy, the Commonwealth may terminate this deed by notice to the Grantee, if the Grantee fails to remedy the breach within 28 days of receiving notice from the Commonwealth requiring it to do so.

Consequences of termination

10.3 On termination of the deed under this clause 10:

(a)	the parties are relieved from future performance of this deed, without prejudice to any right of action that has accrued at the date of termination;
(b)	the Grantee must give the Commonwealth:

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(1)	all outstanding reports due under this deed; and
(2)	any other reports described in the Guide to Managing Your Grant, or as otherwise notified to the Grantee,

in the form, content and within the timeframes specified in that guide or as otherwise notified to the Grantee; and

(c) the Commonwealth may (acting reasonably) by notice to the Grantee, require the Grantee to repay some or all of the grant, plus interest calculated in accordance with clause 16.2.

10.4 This deed may be terminated at any time by the mutual written agreement of the parties.

11 No Dealing with Grantee’s rights

11.1	Unless expressly authorised to do so under this deed, the Grantee must not deal with, or grant or create any encumbrance over its rights under this deed, or its interest in or rights over the project intellectual property or any other intellectual property necessary to conduct the project, achieve the planned outcomes or commercialise the project (or its outcomes) in accordance with this deed, 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 the Grantee deals with, or grants or creates any encumbrance over its rights under this deed, or its rights over or interest in the project intellectual property or any other intellectual property referred to in clause 11.1, without the prior written consent of the Commonwealth, the Commonwealth may issue a termination notice pursuant to clause 10.1.
11.4	The Commonwealth may impose conditions (a breach of which is a breach of this deed) in giving its consent under clause 11.1, including, but not limited to, requiring the Grantee and any other person concerned in a transaction referred to in clause 11.1 to execute all documentation as required by the Commonwealth.
11.5	The giving of a floating charge over the assets and undertakings of the Grantee is not to be taken to be a breach of clause 11.1.

12 Acknowledgement and Public Statements

12.1	The Grantee must acknowledge the grant and the Program in any public statements about the project made during the project period and for 5 years after the completion date.
12.2	The Commonwealth may publicise the awarding of the grant at any time after it is awarded.

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12.3 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 description of the project.

13 Regulatory and Ethical Approvals

13.1	The Grantee must obtain and maintain any necessary legal, regulatory or ethical approvals in relation to the conduct of the project.
13.2	The Commonwealth may give a notice to the Grantee to obtain or restore an approval referred to in clause 13.1 within 28 days, or a further period allowed by the Commonwealth, of receipt of the notice. If the Grantee does not comply with this notice, the Commonwealth may issue a termination notice pursuant to clause 10.1.
13.3	The Grantee expressly consents to the Commonwealth, its employees and agents making inquiries of any relevant regulatory agency within the scope of the warranties in clause 2.1 of this deed in connection with whether or not the Grantee is complying with those warranties or in connection with any other matter and acting in reliance on any information resulting from those inquiries.
13.4	The Grantee must assist with any inquiry referred to in clause 13.3, including by executing any authority or other document, as reasonably required by the Commonwealth.

14 Goods and Services Tax

14.1	Unless otherwise indicated, all consideration for any supply under this deed is exclusive of any GST imposed in relation to the supply.
14.2	If GST is imposed on any supply made by the Grantee to the Commonwealth under this deed, the Commonwealth will pay the amount imposed to the Grantee in addition to the consideration required under this deed.
14.3	If for any reason the Commonwealth pays to the Grantee an amount under clause 14.2 which is more than the GST imposed on the supply, the Grantee must repay the excess to the Commonwealth on demand, or the Commonwealth may set-off the excess against any other amounts due to the Grantee.
14.4	The Commonwealth is not liable to reimburse the Grantee for any amount in relation to which the Grantee may claim an input tax credit.

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14.5	If GST is imposed on any supply made by the Grantee to the Commonwealth under this deed in return for all or any part of the grant, the Commonwealth may issue a ‘recipient created tax invoice’ to the Grantee for the supply in question and the Grantee must not issue a tax invoice for that supply.
14.6	If for any reason the Grantee or the Commonwealth ceases to be registered for GST purposes, becomes aware of any reason why its registration may be cancelled, or ceases to satisfy any of the requirements of public ruling GSTR 2000/10, it must immediately notify the other party.
14.7	If the Grantee is of the opinion that it is a ‘government related entity’ and that the grant is ‘specifically covered by any appropriation under an Australian law’ for the purposes of section 9-15(3)(c) of the A New Tax System (Goods and Services Tax) Act 1999, the Grantee must immediately notify the Department and provide materials supporting that opinion.

15 Notices

15.1	Any notice, request, approval, consent or other communication to be given or served pursuant to this deed must be in writing and addressed and signed as the case may be, as specified in item 14 of the schedule.
15.2	A notice, request, approval, consent or other communication must be delivered by hand, sent by prepaid post, transmitted electronically or transmitted by facsimile.
15.3	A notice, request approval, consent or other communication will be deemed to be received:

(a)	if delivered by hand, upon delivery;
(b)	if sent by pre-paid ordinary post within Australia, upon the expiration of 2 business days after the date on which it was sent; and
(c)	if transmitted electronically or by facsimile, upon receipt by the sender of an electronic or facsimile acknowledgment that the communication has been properly transmitted to the recipient.

16 Right of Commonwealth to recover money

Debt due to the Commonwealth

16.1 An amount notified to the Grantee as owing to the Commonwealth under any of clauses 7.5, 9 or 10.3(c) is a debt due to the Commonwealth under this deed and is recoverable by the Commonwealth without further proof of the debt being necessary.

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Interest

16.2 If the Commonwealth requires interest to be paid by the Grantee under any of clauses 7.5, 9 or 10.3(c), the amount of interest will be calculated:

(a)	at the rate set out in item 6 of the schedule;
(b)	on a daily compounding basis upon the amount of the grant specified in the notice that is required to be repaid or reimbursed; and
(c)	from and including the date (or dates) of payment of the grant to the Grantee, up to but excluding the day on which the Grantee repays the total amount specified in the notice as owing to the Commonwealth, without any set-off, counter-claim, condition, abatement, deduction or withholding.

Commonwealth rights

16.3 Where the Grantee owes a debt to the Commonwealth under this deed, the Commonwealth may in its absolute discretion:

(a)	require the Grantee to repay the amount of the debt, within 28 days of receipt of notice of the debt; or
(b)	deduct the amount of the debt notified to the Grantee from any future progress payment (including the retention amount), or any other amount due from the Department to the Grantee.

16.4 Nothing in this clause 16 affects the right of the Commonwealth to recover from the Grantee, either under this deed or otherwise at law, the whole of any debt owed by the Grantee, or any balance that remains after deduction under clause 16.3(b).

17 General

17.1 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.

17.2	This deed and the transactions contemplated by this deed are governed by the law in force in the Australian Capital Territory.
17.3	Each party irrevocably and unconditionally submits to the nonexclusive 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.
17.4	Each party waives any right it has to object to an action being brought in those courts, including claiming that the action has been

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	brought in an inconvenient forum or that those courts do not have jurisdiction.
17.5	Unless expressly stated otherwise in this deed, obligations under this deed terminate 5 years after the completion date.
17.6	Unless expressly stated otherwise in this deed, any discretion conferred on the Commonwealth, or consent or approval referred to or required under this deed from the Commonwealth, may be exercised, given or withheld, or may be exercised or given subject to any conditions, as the Commonwealth (in its absolute discretion) thinks fit.
17.7	The Grantee must comply with the special conditions (if any) set out in item 15 of the schedule. If the special conditions are inconsistent with the rest of this deed, the special conditions will prevail to the extent of the inconsistency.

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EX-10.7

Exhibit 10.7

Universal Biosensors Inc.

Employee Option Plan

Plan Rules

PiperAlderman 

Universal Biosensors Inc.

Employee Option Plan

Plan Rules

1.	Definitions and Interpretation
1.1	In these rules, unless the contrary intention appears, the following terms have the following meanings:
	Board means the board of directors of the Corporation or any committee of that board;
	Business Day means any day except Saturday or Sunday or other public holiday in the State of Victoria, Australia;
	Corporation means Universal Biosensors Inc.;
	Eligible Person means any person considered by the Board to be employed by the Corporation or any other entity in the Group on a permanent basis (whether full time, part time or on a long term casual basis) and includes all executive and non-executive directors;
	Exchange Act means the Securities Exchange Act 1934 as amended from time to time;
	Exercise Price means the exercise price of an option determined under rule 6 as adjusted from time to time, if applicable, under rule 13;
	Expiry Date means, subject to rule 7, the date on which an Option lapses under rules 3.4(a) and 7.1;
	Group means the group of related or associated companies of which the Corporation is the holding company and includes any entity designated by the Board to be a member of the Group (even though not a subsidiary of the Corporation);
	Investor Rights Agreement means an investor rights agreement or stockholders’ agreement entered into between the Corporation and the shareholders of the Corporation (if any).
	Listed means that the Corporation is admitted to the official list of, or otherwise quoted on, a securities exchange;
	Listing Rules means the listing rules of a securities exchange on which the Corporation is Listed;
	Liquidity Event means:

(a) the date on which an agreement for the sale of the share capital of the Corporation is entered into or the acquisition by one of the shareholders of all of the remaining Shares, other than in the context of a solvent reconstruction where underlying beneficial ownership remains substantially unchanged;

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(b)	the date on which an agreement for the disposal by whatever means (including without limitation by sale, transfer, licence, declaration of trust or otherwise) of the whole or substantially the whole of the property, business or undertaking of the Corporation is entered into; or
(c)	reorganisation, merger or consolidation of the Corporation with another entity in which the Corporation will not survive.

	Option means an option to purchase Shares in the Corporation and granted under this Plan;
	Participant means a person who holds one or more Options or Shares issued on exercise of an Option;
	Plan means this Stock Option Plan;
	Securities Act means the Securities Act of 1933 as amended from time to time; and
	Share means a common stock in the capital of the Corporation.
1.2	In these rules, except where the context otherwise requires:

(a)	the singular includes the plural and vice versa;
(b)	a reference to the whole or part of any legislation includes any amendment, consolidation or re-enactment of the legislation or any legislative provision substituted for the legislation; and
(c)	headings are inserted for convenience only and do not affect construction or interpretation of these rules.

2.	Term of the Plan
2.1	This Plan takes effect on and from the date determined by the Board. This Plan takes effect from 31 December 2003.
2.2	Within 12 months from the date of adoption, this Plan will be approved by shareholders of the Corporation required under applicable state and federal law.
3.	Grant of Options
3.1	Subject to rule 3.3, the Board may, in its discretion and from time to time, grant to Eligible Persons any number of Options on such terms as they may determine in accordance with this Plan.
3.2	Options must be granted on the terms of this Plan and each Participant will be taken to have agreed to be bound by the terms of this Plan on the grant of Options to that Participant.
3.3	If and to the extent applicable at any time, the grant of Options under this Plan generally or to particular Eligible Persons is subject to receipt of any necessary shareholder or other approvals under:

(a)	the Securities Act or any other law applicable to the Corporation; and
(b)	if the Corporation is Listed, the applicable Listing Rules.

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3.4 Subject to any limitations under the Securities Act or any other law applicable to the Corporation, when granting Options to an Eligible Person the Board:

(a)	must determine the date on which the Options are to lapse (if not exercised or lapsed under rule 7 before that date);
(b)	may determine the dates on which the Options vest in the Participant and, subject to rule 8, thereby become exercisable by the Participant; and
(c)	may determine any other conditions which must be satisfied before the Options vest in the Participant or are otherwise exercisable by the Participant.

3.5	If at the time of issue of the Option, an Investor Rights Agreement has been entered into by shareholders of the Corporation, the Option certificates will bear a legend that the Shares issued on exercise of the Option will be held subject to the terms of the Investor Rights Agreement of the Corporation.
4.	Maximum Number of Options
4.1	The maximum number of Options that may be granted to Participants under this Plan from time to time is limited to such number as:

(a)	if the Corporation has an Investor Rights Agreement by-laws or certificate of incorporation, is consistent with that Investor Rights Agreement, by-laws or certificate of incorporation (as applicable);
(b)	if the Corporation is Listed, is consistent with any applicable Listing Rules; and
(c)	in any event is determined by the Board from time to time in its discretion having regard to regulatory constraints under the Securities Act or any other law applicable to the Corporation.

4.2	Any unpurchased Shares that are subject to an Option that terminates for any reason other than exercise shall, unless the Plan is terminated, become available for future grant under this Plan.
4.3	The Corporation will at all times reserve for issuance a number of its authorised but unissued Shares equal to the number of Shares issuable under this Plan.
5.	Notice of Grant
5.1	When Options are granted to an Eligible Person, the Eligible Person (now a Participant) is to be notified by the Corporation of the grant. The notice is to specify:

(a)	the number of Options granted;
(b)	the Exercise Price of the Options granted;
(c)	the date determined by the Board as the Expiry Date under rule 3.4(a);
(d)	if applicable, the dates on which the Options vest as determined by the Board under rule 3.4(b); and

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(e) if applicable, any other conditions attaching to the Options as determined by the Board under rule 3.4(c).

5.2	Subject to rule 5.3, the term of an Option commences on the date specified by the Board in its resolution to grant the Option.
5.3	An Eligible Person may, within ten Business Days after receipt of a notice of grant under rule 5.1, by notice to the Corporation decline to accept the Options referred to in the notice of grant. If notice is received from an Eligible Person under this rule, the Options will not be granted to that person. If no notice is received under this rule, the Options are deemed granted to that person.
6.	Exercise Price

The Exercise Price of each Option is to be such price as determined by the Board in its discretion when granting the Option.

7.	Expiry Date
7.1	Subject to rules 7.2 and 7.3, Options granted to a Participant lapse at 5:00 pm Sydney time on the date determined by the Board under rule 3.4(a) (unless exercised prior to that date).
7.2	If a Participant ceases to be an Eligible Person (other than through the death or permanent disability of the Participant):

(a)

all Options granted to a Participant which have not vested automatically lapse; and

(b)

all Options granted to the Participant which have vested lapse on the expiry of 90 days (or such longer period as determined by the Board) after the date on which the Participant ceases to be an employee, unless the employee ceases to be an employee as a result of termination for dishonesty, fraud or cause (as defined under applicable law) in which case the Options lapse immediately on ceasing to be an Eligible Person.

7.3 On the death or permanent disability of a Participant:

(a)	all Options granted to a Participant which have not vested automatically lapse; and
(b)	notwithstanding anything to the contrary in this Plan, the Options which have already vested in the Optionholder prior to death or permanent disability, lapse on the expiry of 12 months after the date of the Participant’s death or disability (except to the extent that the executor or beneficiaries of that Optionholder’s estate exercise any or all of those Options).

8.	Option Exercise
8.1	If an Option is subject to vesting conditions pursuant to rules 3.4(b) (ie time based vesting hurdles) and 3.4(c) (ie other vesting hurdles), it may only be exercised if it has vested and before it expires. While the Corporation is not Listed, the Board may in its absolute discretion accelerate the vesting of Options of any Optionholder.

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8.2	Subject to rule 8.1, an Option may be exercised by a Participant at such time(s) as the Board determines at the time of grant.
8.3	When exercised, each Option held by a Participant entitles the Participant to subscribe for and to be issued one Share (credited as fully paid). The subscription price for the Share is equal to and satisfied by payment of the Exercise Price of the Option.
8.4	No Option may be exercised if the issuance of Shares upon exercise or the method of payment of consideration for such Shares would constitute a violation of any applicable securities or other law or regulation. Unless the Shares are registered under the Securities Act and any applicable state securities law, as a condition to exercising an Option, the Participant shall provide the Corporation with such written assurances as the Corporation deems appropriate for the Option grant and exercise to qualify for exemption from registration. The assurances may include, among others, a representation that the Participant intends to hold the Shares for investment and not for distribution to the public. The Corporation has no obligation to register the Options or Shares under the Securities Act or any other law or to otherwise take any actions or incur any expenses to comply with an applicable securities or other law or regulation.
8.5	If, at the time a Participant purports to exercises any Option, there is an Investor Rights Agreement, the Participant must also execute the Investor Rights Agreement or, if the Board so determines, a deed of accession to such Investor Rights Agreement in form and substance satisfactory to the Board (pursuant to which the Participant will agree to be bound by the Investor Rights Agreement). Shares will not be issued to any Participant on exercise of an Option unless this rule is complied with.
9.	Manner of Exercise
9.1	A Participant may exercise Options by lodging with the Corporation a notice of exercise in a form approved or accepted by the Board accompanied by:

(a)	payment of the aggregate Exercise Price for the Options the subject of the notice;
(b)	the Participant’s option certificate;
(c)	a duly executed deed of accession (if required); and
(d)	the written assurances required under item 8.4 (if required).

9.2	On exercise of any Options by a Participant, the Corporation must issue Shares in accordance with this Plan. The Corporation must comply with the requirements of all applicable laws and, if the Corporation is Listed, the Listing Rules in connection with the manner and timing of issue of the Shares. The Corporation is not obliged to issue Shares unless it has received cleared funds on account of the exercise price of Options.
9.3	Shares issued on exercise of Options rank equally with all existing Shares from the date of the issue of such Shares.
9.4	Shares may only be issued in the name of the Participant exercising the Option unless the Board otherwise agrees.

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10.	Transfer
10.1	The rights and entitlements of a Participant to Options may not be transferred, assigned, encumbered or otherwise disposed of by the Participant except by transmission on death of the Participant or with the written agreement of the Board (which may be given or withheld in its discretion). Each Option certificate will bear a legend indicating that the Options may not be transferred otherwise than in accordance with the Plan and with all applicable laws.
10.2	While the Corporation is not Listed, the Shares issued on exercise of Options may not be transferred, assigned, encumbered or otherwise disposed of by the Participant except by transmission on death of the Participant or with the written agreement of the Board (which may be given or withheld in its discretion) and in accordance with Investor Rights Agreement and applicable laws.
10.3	If a transfer of Shares is restricted under the Plan or any other applicable law, each certificate representing the Shares shall bear a legend reflecting that the Shares are so restricted. Each certificate representing the Shares will bear one of the following legends as determined by the Board at the time of exercise:

(a)

“The shares represented by this certificate have been issued in reliance on regulation S promulgated under US Securities Act of 1933 (“Securities Act”) and may not be transferred except in accordance with regulation S, pursuant to registration under the Securities Act or pursuant to an available exemption from registration, and the holder agrees not to engage in hedging transactions with regard to such securities unless in compliance with the Securities Act”; or

(b)

“The shares represented by this certificate have been issued pursuant to an exemption under US Securities Act of 1933 (“Securities Act”) and cannot be transferred except pursuant to a registration under the Securities Act or pursuant to an available exemption from registration”.

	The Corporation shall not be liable for any refusal to transfer the Shares on the books of the Corporation unless the transfer complies with all terms and conditions of any restrictions imposed on the Shares.
10.4	Each Participant will, upon the request of the Corporation or the underwriters managing any public offering of the Corporation’s securities, refrain from selling or disposing of any securities of the Corporation without the prior written consent of the Corporation and the underwriters, as the case may be, for such period of time (not to exceed 180 days) after the effective date of the registration requested by the managing underwriters and subject to all restrictions as the Corporation or the underwriters may specify. The Participant and the Corporation shall cause any certificates representing the Shares to bear a legend in substantially as follows:
	“Sale, transfer, or hypothecation of the shares represented by this certificate is prohibited for a period of time following a public offering of the stock of the Corporation pursuant to the Stock Option Plan of the Corporation.”
	The legend shall be removed upon any resale of the Shares to the public in an offering registered with the Securities Exchange Commission or pursuant to Rule 144.

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11.	Quotation of Options and Shares
11.1	The Options will not be quoted on any securities exchange on which the Corporation is Listed.
11.2	If the Corporation is Listed at the time of exercise of any Options, the Corporation will make application to the relevant securities exchange for quotation of the Shares issued on exercise of the Options. Any such application is to be made in accordance with the requirements of the applicable Listing Rules.
11.3	The grant of each Option is subject to a condition that if the Corporation becomes Listed, the Participant or former Participant must sign any restriction (escrow) agreement required by the relevant securities exchange, in respect of the Option or any Shares issued on exercise of the Option.
12.	Participation in New Issues
	A Participant may only participate in issues of securities by the Corporation if the Option has been exercised and a Share allotted in respect of the exercise of that Option before the books closing date for determining entitlements to the security issue.
13.	Variations of Capital
13.1	Protection Against Adjustments
	In the event of:

(a)	a consolidation, subdivision or similar reconstruction of the issued capital of the Corporation; or
(b)	the declaration of a dividend on the common stock of the Corporation payable in common stock or securities convertible into common stock,

	the number of Shares to which a Participant is entitled on exercise of an Option will be adjusted so as to maintain the proportionate interest of the Participant and the Exercise Price will be adjusted to that the total amount payable on an exercise of all Options by each Participant will not alter.
13.2	Return of Capital
	If, prior to the exercise of an Option by a Participant, the Corporation makes a return of capital to holders of Shares generally, the Exercise Price will be reduced by the amount of the capital returned in respect of each Share.
13.3	Cumulative Adjustments
	The terms of this rule 13 relating to reconstructions, stock dividends and returns of capital may be applied on more than one occasion such that their effects may be cumulative. It is intended that the adjustments they progressively effect will be such as to reflect in relation to the Shares subject to Options, the adjustments which on the occasions in question are progressively effected in relation to Shares already on issue.

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13.4	Liquidation
	All outstanding Options shall terminate on the record date for the proposed final distribution of proceeds of the complete liquidation of the Corporation’s assets. The Corporation shall give the holder of each outstanding exercisable Option notice of any intended distribution of liquidation proceeds, whether final or interim, at least ten Business Days before the record date unless the Corporation determines in good faith that the fair market value of proceeds distributable with respect to share of common stock upon complete liquidation of the Corporation’s assets is likely to be less than the exercise price of an Option.
13.5	Notice of Adjustments
	Whenever the number of Shares subject to an Option or the Exercise Price is adjusted in accordance with these rules, the Corporation will give notice of the adjustment to the Participant holding the Option.
14.	Liquidity Events

(a)	On the occurrence of a Liquidity Event, all Options which have not yet vested, immediately vest and become exercisable ten Business Days preceding the Liquidity Event.
(b)	The Corporation shall give each holder of an outstanding exercisable Option 14 Business Days prior written notice of any Liquidity Event except:

(1)	in those cases where the Options will continue to be exercisable for securities in the same amount (subject to adjustment to the exercise prices) and of the same class as the securities into which the outstanding common stock of the Corporation will be converted as a result of the Liquidity Event; or
(2)	in those cases where the fair market value of the consideration distributable with respect to each share of common stock is likely to be less than the exercise price of the Option.

(c)	The Corporation may cancel any outstanding exercisable Option that is not exercised within five Business Days before a Liquidity Event, without prior notice, by paying the Participant an amount equal to the fair market value of the consideration that the Participant would receive in exchange for the Shares underlying the Option, less the exercise price of the Option.
(d)	All outstanding Options shall terminate upon the closing of a Liquidity Event unless the successor entity assumes the Options or substitutes options to purchase substantially equivalent securities of the successor or its parent or subsidiary.

15.	Plan and Option Amendments
15.1	The rights attaching to the Options may be amended by the Board subject to receipt of any necessary shareholder or other approval under:

(a)	the Securities Act or any other law applicable to the Corporation; and
(b)	if the Corporation is Listed, the applicable Listing Rules.

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PiperAlderman 

15.2	If the Corporation is Listed and the provisions of this Plan or the terms of issue of the Options are inconsistent with the Listing Rules, then the Listing Rules prevail to the extent of any inconsistency and the terms of the Options will be deemed modified accordingly without further action by the Corporation, the Board or the holder of the Option being necessary.
15.3	Without limiting the generality of rule 15.2, it is a term of each Option that, if the Corporation is Listed, the rights of the Participant who holds the Option are deemed modified from time to time as necessary to ensure the terms of the Options comply with the Listing Rules generally and in particular (but without limitation) as those rules apply to reorganisations of capital at the time of any re-organisation of the Corporation’s capital, in each case despite any inconsistent provision in the terms of this Plan.
15.4	Subject to rules 15.1 to 15.3 (inclusive) and, if the Corporation is Listed, to receipt of any necessary approvals under the Listing Rules, the terms of this Plan may be amended by the Board but without prejudice to the existing or accrued rights of Participants before any amendments are made.
15.5	If the Corporation becomes subject to section 16 of the Exchange Act, this Plan shall be administered in accordance with rule 16b-3 promulgated under the Exchange Act, or any successor rule. Unless the Board determines otherwise in a specific case, Options granted to persons subject to section 16(b) of the Exchange Act must comply with rule 16b-3 of the Exchange Act and shall contain such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from section 16 with respect to Plan transactions. In addition to the extent necessary and desirable to comply with rule 16b-3 of the Exchange Act or with section 422 of the Internal Revenue Code (or any other applicable law or regulation, including the requirements of an established stock exchange), the Corporation shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required.
15.6	The Board may suspend the exercisability of outstanding Options from time to time if appropriate to satisfy an exemption from registration under the Securities Act (section 4(2) of regulation S or rule 504, 505, 506 or 701 under the Securities Act), any state securities law, or as otherwise necessary to comply with any other applicable laws, including securities laws, accounting procedure, or for other good reason as the Board may determine.
16.	Administration of the Plan
16.1	This Plan will be administered by the Board. The Board will have power to:

(a)	delegate to any persons for such period and on such terms as it sees fit, the exercise of any of its powers or discretions under this Plan;
(b)	determine appropriate procedures for administration of this Plan consistent with these rules, including approving the form and content of forms and notices to be issued under this Plan; and
(c)	resolve conclusively all questions of fact, construction, interpretation or ambiguity in connection with the terms or operation of this Plan and the terms of Options granted under this Plan.

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PiperAlderman 

17.	Notices
17.1	Service of all documents required by this Plan shall be deemed to be affected if the Corporation sends the document by post to the last address or facsimile number of the Participant known to the Corporation.
17.2	A communication sent by post is deemed to be received on the third Business Day after posting. A communication sent by facsimile is deemed to be received at the time shown on the sender’s transmission report, if it shows that the transmission was successful.
18.	Termination of the Plan
	This Plan may be terminated at any time by resolution of the Board. Termination of this Plan will be without prejudice to the rights of Participants in respect of Options outstanding at the date of termination.
19.	Governing Law
	The terms of this Plan are governed by the laws of Delaware, United States of America.

page 10

EX-10.8

Exhibit 10.8

Employment Agreement

Universal Biosensors Pty Ltd
ACN 098 234 309

Salesh Balak

Contents

1.	Definitions and Interpretation	3
2.	Interpretation	4
3.	Appointment	4
4.	Term	5
5.	Position and Duties	5
6.	Remuneration and Benefits	6
7.	Confidential Information	7
8.	Cessation of Employment Obligations	8
9.	Intellectual Property	8
10.	Termination	9
11.	Non Competition	11
12.	Notice	12
13.	No Assignment	12
14.	Governing Law	12
15.	Counterparts	12

Universal Biosensors Pty Ltd — 2006 Employment Agreement

Employment Agreement

Parties

1. Universal Biosensors Pty Ltd ACN 098 234 309 of 103 Ricketts Road Mount Waverley, Victoria 3149, Australia (Company).

2. Salesh Balak of 46 Canterbury Avenue, Sunbury Victoria 3429 (Employee).

Recital

A. The Employee commenced employment with the Company on the Commencement Date. The Employee was previously employed pursuant to an employment agreement which has expired.

B. This agreement sets out the terms and conditions on which the Company has agreed to continue to employ the Employee.

Operative clauses

1.	Definitions and Interpretation
	In this agreement, unless the context other wise requires:
	Business means the research and development activities of the Company;
	Business Day means any day on which trading banks are open for business in Melbourne, Australia (other than a Saturday or a Sunday);
	Confidential Information means any information obtained by the Employee in the course of the Employment whether in written, electronic or oral form and including:

a.	all commercial information about the Company and the Business and persons with whom the Company and Business deal from time to time;
b.	all commercial information about the business, financial plans and strategy of the Company including without limitation any mining or processing lease arrangements and sales and marketing information;
c.	all trade secrets, know-how and other processes of the Business; and
d.	any information marked “confidential” or which the Company inform the Employee is confidential or a trade secret;

     but excluding:

e. information in the public domain at the date of this agreement;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

f.	information which comes into the public domain after the date of this agreement otherwise than by breach of the Employee’s obligation of confidentiality contained in this agreement; and
g.	information which the Employee lawfully possessed before obtaining it in the course of the Employment;

EBIT means earnings before interest and tax;

Effective Date means the date set out in item 2 of the schedule to this agreement

Employment means the employment of the Employee by the Company commencing on the Commencement Date.

2. Interpretation

In this agreement, unless the context otherwise requires:

2.1	headings do not affect interpretation;
2.2	singular includes plural and plural includes singular;
2.3	words of one gender include any gender;
2.4	reference to a person includes a corporation, joint venture, association, government body, firm and any other entity;
2.5	reference to a party includes that party’s personal representatives, successors and permitted assigns;
2.6	a provision must be read down to the extent necessary to be valid. If it cannot be read down to the extent, it must be severed;
2.7	another grammatical form of a defined expression has a corresponding meaning;
2.8	“$” or “dollars” is a reference to the lawful currency of Australia.

3. Appointment

3.1	Employment
	The Company continues to employ the Employee on the terms of this agreement.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

3.2	Location
	The Employee will be based in Victoria, Australia unless otherwise agreed by the Company and the Employee. The Employee may be required to travel from time to time as the business dictates.

4. Term

4.1	Start
	The Employee commenced employment with the Company on the Commencement Date. This agreement takes effect from the Effective Date.
4.2	End
	The Employment ends on the date set out in item 3 of the schedule (as extended from time to time under clause 4.3) or such earlier date the Employment ceases or is terminated under this agreement.
4.3	Extensions
	At least 3 months prior to the expiry of the term of the Employment in accordance with clause 4.2 or by prior application of this clause 4.3, the parties will meet to negotiate the terms of a replacement employment agreement. If the parties do not meet during that 3 month period or, if they fail to negotiate a replacement agreement during that period, the Employment is automatically extended for a further 12 calendar months on the same terms and conditions as this agreement.

5. Position and Duties

5.1	Title
	The Employee is to be employed in the role and with the title set out in item 4 of the schedule. The Company may from time to time change the title.
5.2	Responsibilities
	The Employee will be responsible for the matters or activities described in item 5 of the schedule. The Company may from time to time alter the duties or activities of the Employee.
5.3	Duties
	The Employee must:

5.3.1 report as directed by their supervisor or Company senior management in relation to the matters or activities for which the Employee is responsible;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

5.3.2	observe all Company policies, rules, regulations and directions;
5.3.3	perform the responsibilities for which the Employee is employed faithfully and to the best of the Employee’s ability and the parties will consult with each other where necessary to enable the Employee to properly perform his responsibilities;
5.3.4	use the Employee’s best endeavours in the furtherance of the business of the Company; and
5.3.5	work during normal business hours and other hours reasonably required by the Company.

5.4	Exclusivity
	The Employee will devote his time and attention exclusively to the Business and affairs of the Company.

6. Remuneration and Benefits

6.1 Salary

6.1.1	On and from the Effective Date, the Employee is entitled to a salary of the amount set out in item 6 of the schedule.
6.1.2	The salary is to be paid by equal monthly installments into a bank account nominated by the Employee.

6.2	Salary Review
	The annual salary in clause 6.1 is to be reviewed at the interval set out in item 7 of the schedule. Any increase is to be effective on such review date even if the determination of the amount of salary increase occurs later.
6.3	Other Benefits
	The Employee will be entitled to:

6.3.1	leave –annual leave as required by law to be taken at times to be agreed with the Company;
6.3.2	sick leave and long service leave – in accordance with the law;
6.3.3	expenses – reimbursement of expenses properly incurred in the course of the Employment subject to provision to the Company of receipts and related documentation in accordance with the policies and procedures established by the Managing Director from time to time; and

Universal Biosensors Pty Ltd — 2006 Employment Agreement

6.3.4	superannuation payments – in accordance with the law,
6.3.5	other benefits set out in item 8 of the schedule.

6.4 For the avoidance of doubt, all of the Employee’s entitlements accrue from the Commencement Date.

7. Confidential Information

7.1	Maintenance of Confidentiality
	During and after the Employment, the Employee may use or disclose Confidential Information only for the following purposes:

7.1.1	to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement;
7.1.2	if the Company has otherwise consented in writing;
7.1.3	if required by statute or law; or
7.1.4	if required to be used or disclosed by the Employee in connection with any actual, prospective or threatened legal proceedings.

7.2	Security
	The Employee must:

7.2.1	keep the Confidential Information in the Employee’s custody or control (to the extent not within the custody or control of the Company);
7.2.2	keep the Confidential Information in a reasonably secure manner;
7.2.3	immediately notify the Company of any suspected or actual unauthorised use, copying or disclosure of Confidential Information of which the Employee becomes aware;
7.2.4	at the Company’s expense, provide any assistance reasonably requested by the Company from time to time in relation to any proceedings the Company may institute to protect the Confidential Information from unauthorised use, copying or disclosure;
7.2.5	not make any unauthorised copies of the whole or any part of the Confidential Information; and
7.2.6	if required by the Company, mark copies of Confidential Information “confidential”.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

7.3	Continuing Obligations
	The obligations of the Employee under this clause 7, survive termination of the agreement.

8.	Cessation of Employment Obligations
	Upon cessation of the Employment, the Employee must:

8.1	deliver all Confidential Information in the Employee’s custody or control to the Company or at the Company’s direction.
8.2	delete all Confidential Information held in electronic or other media form in the Employee’s custody or control; and
8.3	if requested by the Company, provide a certificate confirming that the Employee has complied with its obligations under this clause.

9. Intellectual Property

9.1	Disclosure
	The Employee must promptly, fully and effectively disclose to the Company or its nominee in such form as the Company may reasonably require, full details of:

9.1.1	each and every invention (whether patentable or not), design (whether registerable or not), trademark or service mark;
9.1.2	any copyright material;
9.1.3	any trade secret or other Confidential Information;
9.1.4	any computer program material (including source codes, algorithms, logical ideas, concepts and processes, charts, tables and diagrams);
9.1.5	processes, know-how or improvements;
9.1.6	literary, artistic or other copyrightable works; and
9.1.7	any other intellectual property of any kind,

made, written, developed or discovered by the Employee (whether alone or with others) in the course of the Employment (whether in or out of working hours) and whether or not capable of statutory protection.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

9.2	Assignment
	In exchange for the benefits conferred on the Employee during the course of the Employment, the Employee agrees that by reason of this clause, all Intellectual Property created during the course of the Employment (whether in or out of working hours) belongs to and is the property of the Company or its nominee. Accordingly the Employee must:

9.2.1	at the request and expense of the Company; and
9.2.2	without additional compensation from the Company,

	sign all such documents or instruments (including assignment deeds) and do all such things as may be necessary to vest, confirm, perfect and record the ownership by the Company or its nominee throughout the world of its right, title and interest to any Intellectual Property and to enable the Company or its nominee to acquire and preserve such rights and to have the full enjoyment of such rights.
9.3	The Employee consents to:

9.3.1	all acts or omissions by the Company in relation to the Employee’s moral rights in all Intellectual Property; and
9.3.2	the infringement of the Employee’s moral rights in all Intellectual Property by the Company, its licensees, assignees and successors in title and any person authorised by the Company at the absolute discretion of the Company and without reference to the Employee.

9.4	Continuing Obligations
	The obligations of the Employee under this clause 9, survive termination of the agreement.

10. Termination

10.1 Resignation or Retirement

10.1.1	The Employee may resign or retire by giving not less than 3 months written notice to the Company. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.1.2	The resignation or retirement is effective on expiry of the notice period notified in accordance with clause 10.1.1.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.2 Termination for incapacity

10.2.1	The Company may terminate the Employment at anytime if the Employee is mentally or physically unfit to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement for a total of 2 months in any 12 month period.
10.2.2	The Company must give the Employee not less than 1 month’s written notice of its intention to terminate under this clause 10.2.

10.3	Termination for cause
	The Company may terminate the Employment at any time with immediate effect for cause, by giving written notice to the Employee specifying the cause of termination. For the purpose of this agreement “cause” means:

10.3.1	default by the Employee in the performance of the Employee’s responsibilities or the discharge of the Employee’s duties under this agreement;
10.3.2	fraudulent or dishonest conduct by the Employee;
10.3.3	intemperate use of alcohol or drugs by the Employee;
10.3.4	conviction of the Employee for the commission of a felony; or
10.3.5	willful or intentional injury to the Company’s Business or affairs.

10.4	Termination by Company on Notice
	The Company may terminate the Employment at any time by giving 3 months written notice to the Employee. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.5	Reasonableness
	The Employee acknowledges that the periods of notice or lack of a period of notice, as the case may be, as set out in this clause 10, are fair and reasonable.
10.6	Accrued Rights
	Termination of the Employment does not affect:

10.6.1 any accrued rights or remedies one party may have against another in connection with this agreement arising prior to termination; or

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.6.2 any accrued or future entitlement to any bonus under and in accordance with clause 6.3

10.7 Obligations on Termination or Cessation of Employment

10.7.1	Termination or cessation of the Employment does not affect the Employee’s obligations under clauses 7, 8, 9 or 11.
10.7.2	On termination or cessation of the Employment, the Employee must also deliver to the Company or its nominee:

(a)	all property belonging to or leased by the Company in the Employees control (including, without limitation, stationery, cheque books, books, documents, records, disks, access cards, keys, telephones, computers, credit cards and vehicles)
(b)	computer log-in codes and all other passwords and access codes; and
(c)	the matters required to be returned under clause 8.

10.8	Extension of Service
	This agreement can be extended as per clause 4.4.
10.9	Redundancy
	No “redundancy” or other termination payments, other than those set out in this agreement are payable.

11. Non Competition

11.1 Covenant

11.1.1 On termination of the Employment for any reason, if requested by the Company:

(a)	the provisions of clause 11.1.2 apply for up to 12 months after the Employment is terminated as well as applying during the period of the Employment; and
(b)	the provisions of clause 11.1.3 apply for up to 12 months after the Employment is terminated.

11.1.2 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person or entity carry on, be engaged in, or be associated with, a business similar to the business carried on by the Company.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

11.1.3 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person:

(a)	induce or attempt to induce any person to leave the employment of the Company; or
(b)	interfere with or seek to interfere with the relationship between the Company (on one hand) and any third party (on the other hand).

11.2.	Consideration by Company
	If the Company requests that the Employee undertake the provisions set out in clauses 11.1.1, 11.1.2 and/or 11.1.3, then the Company shall pay to the Employee the equivalent of their salary just prior to the termination of the Employment, for the period set out in clauses 11.1.1, 11.1.2 and/or 11.1.3.
11.3	Reasonableness
	The Employee acknowledges that the prohibitions and restrictions contained in this clause 11 are reasonable in the circumstances and necessary to protect the Company and the Business and its goodwill.

12.	Notice
	Notices or other communications must be given in writing in the English language to the address of the party listed at the beginning of this agreement or such other address as the party may notify to the other for the purpose of this agreement. The notice or communication may be delivered to the person’s address or facsimile.
13.	No Assignment
	Neither party may:

13.1	assign its rights under this agreement to a third party; or
13.2	cause a third party to assume its obligations under this agreement.

14.	Governing Law
	This agreement is governed by the law of Victoria.
15.	Counterparts
	This agreement may be executed in any number of counterparts. A counterpart may be a facsimile. Together all counterparts make up one document.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EXECUTED as an agreement on 27 November 2006.

Signed for and behalf of
UNIVERSAL BIOSENSORS PTY LTD

/s/ Mark Morrisson
Managing Director

Signed by Salesh Balak
in the presence of:	/s/ Salesh Balak
	Salesh Balak

/s/ S. K. Balak
Witness

S. K. Balak
Name (please print)

Universal Biosensors Pty Ltd — 2006 Employment Agreement

SCHEDULE

Item 1
Commencement Date:	Monday 27th November 2006
Item 2
Effective Date	Monday 27th November 2006
Item 3
End Date:	3 years from the Effective Date or longer at the discretion of the Company.
Item 4
Title:	Chief Financial Officer
Item 5
Responsibilities:	As per Position Description to be mutually agreed.
Item 6
Salary:	$150,000 per annum
Superannuation:	9% or as required by law
Item 7
Salary Review Date:	Annually on 1st February
Item 8
Other Benefits:	No other benefits

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EX-10.9

Exhibit 10.9

Employment Agreement

Universal Biosensors Pty Ltd
ACN 098 234 309

Garry Chambers

Contents

1.	Definitions and Interpretation	3
2.	Interpretation	4
3.	Appointment	4
4.	Term	5
5.	Position and Duties	5
6.	Remuneration and Benefits	6
7.	Confidential Information	7
8.	Cessation of Employment Obligations	8
9.	Intellectual Property	8
10.	Termination	9
11.	Non Competition	11
12.	Notice	12
13.	No Assignment	12
14.	Governing Law	12
15.	Counterparts	12

Universal Biosensors Pty Ltd — 2006 Employment Agreement

Employment Agreement

Parties

1. Universal Biosensors Pty Ltd ACN 098 234 309 of 103 Ricketts Road Mount Waverley, Victoria 3149, Australia (Company).

2. Garry Chambers of 18 Nurlendi Road, Vermont Vic 3133, Australia (Employee).

Recital

A. The Employee commenced employment with the Company on the Commencement Date. The Employee was previously employed pursuant to an employment agreement which has expired.

B. This agreement sets out the terms and conditions on which the Company has agreed to continue to employ the Employee.

Operative clauses

1.	Definitions and Interpretation
	In this agreement, unless the context other wise requires:
	Business means the research and development activities of the Company;
	Business Day means any day on which trading banks are open for business in Melbourne, Australia (other than a Saturday or a Sunday);
	Confidential Information means any information obtained by the Employee in the course of the Employment whether in written, electronic or oral form and including:

a.	all commercial information about the Company and the Business and persons with whom the Company and Business deal from time to time;
b.	all commercial information about the business, financial plans and strategy of the Company including without limitation any mining or processing lease arrangements and sales and marketing information;
c.	all trade secrets, know-how and other processes of the Business; and
d.	any information marked “confidential” or which the Company inform the Employee is confidential or a trade secret;

     but excluding:

e. information in the public domain at the date of this agreement;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

f.	information which comes into the public domain after the date of this agreement otherwise than by breach of the Employee’s obligation of confidentiality contained in this agreement; and
g.	information which the Employee lawfully possessed before obtaining it in the course of the Employment;

EBIT means earnings before interest and tax;

Effective Date means the date set out in item 2 of the schedule to this agreement

Employment means the employment of the Employee by the Company commencing on the Commencement Date.

2. Interpretation

     In this agreement, unless the context otherwise requires:

2.1	headings do not affect interpretation;
2.2	singular includes plural and plural includes singular;
2.3	words of one gender include any gender;
2.4	reference to a person includes a corporation, joint venture, association, government body, firm and any other entity;
2.5	reference to a party includes that party’s personal representatives, successors and permitted assigns;
2.6	a provision must be read down to the extent necessary to be valid. If it cannot be read down to the extent, it must be severed;
2.7	another grammatical form of a defined expression has a corresponding meaning;
2.8	“$” or “dollars” is a reference to the lawful currency of Australia.

3. Appointment

3.1	Employment
	The Company continues to employ the Employee on the terms of this agreement.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

3.2	Location
	The Employee will be based in Victoria, Australia unless otherwise agreed by the Company and the Employee. The Employee may be required to travel from time to time as the business dictates.

4. Term

4.1	Start
	The Employee commenced employment with the Company on the Commencement Date. This agreement takes effect from the Effective Date.
4.2	End
	The Employment ends on the date set out in item 3 of the schedule (as extended from time to time under clause 4.3) or such earlier date the Employment ceases or is terminated under this agreement.
4.3	Extensions
	At least 3 months prior to the expiry of the term of the Employment in accordance with clause 4.2 or by prior application of this clause 4.3, the parties will meet to negotiate the terms of a replacement employment agreement. If the parties do not meet during that 3 month period or, if they fail to negotiate a replacement agreement during that period, the Employment is automatically extended for a further 12 calendar months on the same terms and conditions as this agreement.

5. Position and Duties

5.1	Title
	The Employee is to be employed in the role and with the title set out in item 4 of the schedule. The Company may from time to time change the title.
5.2	Responsibilities
	The Employee will be responsible for the matters or activities described in item 5 of the schedule. The Company may from time to time alter the duties or activities of the Employee.
5.3	Duties
	The Employee must:

5.3.1 report as directed by their supervisor or Company senior management in relation to the matters or activities for which the Employee is responsible;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

5.3.2	observe all Company policies, rules, regulations and directions;
5.3.3	perform the responsibilities for which the Employee is employed faithfully and to the best of the Employee’s ability and the parties will consult with each other where necessary to enable the Employee to properly perform his responsibilities;
5.3.4	use the Employee’s best endeavours in the furtherance of the business of the Company; and
5.3.5	work during normal business hours and other hours reasonably required by the Company.

5.4	Exclusivity
	The Employee will devote his time and attention exclusively to the Business and affairs of the Company.

6. Remuneration and Benefits

6.1 Salary

6.1.1	On and from the Effective Date, the Employee is entitled to a salary of the amount set out in item 6 of the schedule.
6.1.2	The salary is to be paid by equal monthly installments into a bank account nominated by the Employee.

6.2	Salary Review
	The annual salary in clause 6.1 is to be reviewed at the interval set out in item 7 of the schedule. Any increase is to be effective on such review date even if the determination of the amount of salary increase occurs later.
6.3	Other Benefits
	The Employee will be entitled to:

6.3.1	leave –annual leave as required by law to be taken at times to be agreed with the Company;
6.3.2	sick leave and long service leave – in accordance with the law;
6.3.3	expenses – reimbursement of expenses properly incurred in the course of the Employment subject to provision to the Company of receipts and related documentation in accordance with the policies and procedures established by the Managing Director from time to time; and

Universal Biosensors Pty Ltd — 2006 Employment Agreement

6.3.4	superannuation payments – in accordance with the law,
6.3.5	other benefits set out in item 8 of the schedule.

6.4 For the avoidance of doubt, all of the Employee’s entitlements accrue from the Commencement Date.

7. Confidential Information

7.1	Maintenance of Confidentiality
	During and after the Employment, the Employee may use or disclose Confidential Information only for the following purposes:

7.1.1	to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement;
7.1.2	if the Company has otherwise consented in writing;
7.1.3	if required by statute or law; or
7.1.4	if required to be used or disclosed by the Employee in connection with any actual, prospective or threatened legal proceedings.

7.2	Security
	The Employee must:

7.2.1	keep the Confidential Information in the Employee’s custody or control (to the extent not within the custody or control of the Company);
7.2.2	keep the Confidential Information in a reasonably secure manner;
7.2.3	immediately notify the Company of any suspected or actual unauthorised use, copying or disclosure of Confidential Information of which the Employee becomes aware;
7.2.4	at the Company’s expense, provide any assistance reasonably requested by the Company from time to time in relation to any proceedings the Company may institute to protect the Confidential Information from unauthorised use, copying or disclosure;
7.2.5	not make any unauthorised copies of the whole or any part of the Confidential Information; and
7.2.6	if required by the Company, mark copies of Confidential Information “confidential”.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

7.3	Continuing Obligations
	The obligations of the Employee under this clause 7, survive termination of the agreement.

8.	Cessation of Employment Obligations
	Upon cessation of the Employment, the Employee must:

8.1	deliver all Confidential Information in the Employee’s custody or control to the Company or at the Company’s direction.
8.2	delete all Confidential Information held in electronic or other media form in the Employee’s custody or control; and
8.3	if requested by the Company, provide a certificate confirming that the Employee has complied with its obligations under this clause.

9. Intellectual Property

9.1	Disclosure
	The Employee must promptly, fully and effectively disclose to the Company or its nominee in such form as the Company may reasonably require, full details of:

9.1.1	each and every invention (whether patentable or not), design (whether registerable or not), trademark or service mark;
9.1.2	any copyright material;
9.1.3	any trade secret or other Confidential Information;
9.1.4	any computer program material (including source codes, algorithms, logical ideas, concepts and processes, charts, tables and diagrams);
9.1.5	processes, know-how or improvements;
9.1.6	literary, artistic or other copyrightable works; and
9.1.7	any other intellectual property of any kind,

made, written, developed or discovered by the Employee (whether alone or with others) in the course of the Employment (whether in or out of working hours) and whether or not capable of statutory protection.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

9.2	Assignment
	In exchange for the benefits conferred on the Employee during the course of the Employment, the Employee agrees that by reason of this clause, all Intellectual Property created during the course of the Employment (whether in or out of working hours) belongs to and is the property of the Company or its nominee. Accordingly the Employee must:

9.2.1	at the request and expense of the Company; and
9.2.2	without additional compensation from the Company,

	sign all such documents or instruments (including assignment deeds) and do all such things as may be necessary to vest, confirm, perfect and record the ownership by the Company or its nominee throughout the world of its right, title and interest to any Intellectual Property and to enable the Company or its nominee to acquire and preserve such rights and to have the full enjoyment of such rights.
9.3	The Employee consents to:

9.3.1	all acts or omissions by the Company in relation to the Employee’s moral rights in all Intellectual Property; and
9.3.2	the infringement of the Employee’s moral rights in all Intellectual Property by the Company, its licensees, assignees and successors in title and any person authorised by the Company at the absolute discretion of the Company and without reference to the Employee.

9.4	Continuing Obligations
	The obligations of the Employee under this clause 9, survive termination of the agreement.

10. Termination

10.1 Resignation or Retirement

10.1.1	The Employee may resign or retire by giving not less than 3 months written notice to the Company. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.1.2	The resignation or retirement is effective on expiry of the notice period notified in accordance with clause 10.1.1.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.2 Termination for incapacity

10.2.1	The Company may terminate the Employment at anytime if the Employee is mentally or physically unfit to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement for a total of 2 months in any 12 month period.
10.2.2	The Company must give the Employee not less than 1 month’s written notice of its intention to terminate under this clause 10.2.

10.3	Termination for cause
	The Company may terminate the Employment at any time with immediate effect for cause, by giving written notice to the Employee specifying the cause of termination. For the purpose of this agreement “cause” means:

10.3.1	default by the Employee in the performance of the Employee’s responsibilities or the discharge of the Employee’s duties under this agreement;
10.3.2	fraudulent or dishonest conduct by the Employee;
10.3.3	intemperate use of alcohol or drugs by the Employee;
10.3.4	conviction of the Employee for the commission of a felony; or
10.3.5	willful or intentional injury to the Company’s Business or affairs.

10.4	Termination by Company on Notice
	The Company may terminate the Employment at any time by giving 3 months written notice to the Employee. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.5	Reasonableness
	The Employee acknowledges that the periods of notice or lack of a period of notice, as the case may be, as set out in this clause 10, are fair and reasonable.
10.6	Accrued Rights
	Termination of the Employment does not affect:

10.6.1 any accrued rights or remedies one party may have against another in connection with this agreement arising prior to termination; or

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.6.2 any accrued or future entitlement to any bonus under and in accordance with clause 6.3

10.7 Obligations on Termination or Cessation of Employment

10.7.1	Termination or cessation of the Employment does not affect the Employee’s obligations under clauses 7, 8, 9 or 11.
10.7.2	On termination or cessation of the Employment, the Employee must also deliver to the Company or its nominee:

(a)	all property belonging to or leased by the Company in the Employees control (including, without limitation, stationery, cheque books, books, documents, records, disks, access cards, keys, telephones, computers, credit cards and vehicles)
(b)	computer log-in codes and all other passwords and access codes; and
(c)	the matters required to be returned under clause 8.

10.8	Extension of Service
	This agreement can be extended as per clause 4.4.
10.9	Redundancy
	No “redundancy” or other termination payments, other than those set out in this agreement are payable.

11. Non Competition

11.1 Covenant

11.1.1 On termination of the Employment for any reason, if requested by the Company:

(a)	the provisions of clause 11.1.2 apply for up to 12 months after the Employment is terminated as well as applying during the period of the Employment; and
(b)	the provisions of clause 11.1.3 apply for up to 12 months after the Employment is terminated.

11.1.2 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person or entity carry on, be engaged in, or be associated with, a business similar to the business carried on by the Company.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

11.1.3 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person:

(a)	induce or attempt to induce any person to leave the employment of the Company; or
(b)	interfere with or seek to interfere with the relationship between the Company (on one hand) and any third party (on the other hand).

11.2.	Consideration by Company
	If the Company requests that the Employee undertake the provisions set out in clauses 11.1.1, 11.1.2 and/or 11.1.3, then the Company shall pay to the Employee the equivalent of their salary just prior to the termination of the Employment, for the period set out in clauses 11.1.1, 11.1.2 and/or 11.1.3.
11.3	Reasonableness
	The Employee acknowledges that the prohibitions and restrictions contained in this clause 11 are reasonable in the circumstances and necessary to protect the Company and the Business and its goodwill.

12.	Notice
	Notices or other communications must be given in writing in the English language to the address of the party listed at the beginning of this agreement or such other address as the party may notify to the other for the purpose of this agreement. The notice or communication may be delivered to the person’s address or facsimile.
13.	No Assignment
	Neither party may:
13.1	assign its rights under this agreement to a third party; or
13.2	cause a third party to assume its obligations under this agreement.
14.	Governing Law
	This agreement is governed by the law of Victoria.
15.	Counterparts
	This agreement may be executed in any number of counterparts. A counterpart may be a facsimile. Together all counterparts make up one document.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EXECUTED as an agreement on 1 April 2002.

Signed for and behalf of
UNIVERSAL BIOSENSORS PTY LTD

/s/ Mark Morrisson
Managing Director

Signed by Garry Chambers
in the presence of:	/s/ Garry Chambers
	Garry Chambers

/s/ T. Stamp
Witness

T. Stamp
Name (please print)

Universal Biosensors Pty Ltd — 2006 Employment Agreement

SCHEDULE

Item 1
Commencement Date:	1 April 2002
Item 2
Effective Date	1 April 2006
Item 3
End Date:	3 years from the Effective Date or longer at the discretion of the Company.
Item 4
Title:	Head of Engineering
Item 5
Responsibilities:	To oversee and assist in implementing the engineering component of the research and development activities of the Company, including supervising the engineering team, being responsible for the development and implementation of strip fabrication activities, and other duties as required by the directors.
Item 6
Salary:	$165,103 per annum
Superannuation:	9% or as required by law
Item 7
Salary Review Date:	Annually on 1st February
Item 8
Other Benefits:	Mobile Phone

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EX-10.10

Exhibit 10.10

Employment Agreement

Universal Biosensors Pty Ltd
ACN 098 234 309

Ronald Chatelier

Contents

1.	Definitions and Interpretation	3
2.	Interpretation	4
3.	Appointment	4
4.	Term	5
5.	Position and Duties	5
6.	Remuneration and Benefits	6
7.	Confidential Information	7
8.	Cessation of Employment Obligations	8
9.	Intellectual Property	8
10.	Termination	9
11.	Non Competition	11
12.	Notice	12
13.	No Assignment	12
14.	Governing Law	12
15.	Counterparts	12

Universal Biosensors Pty Ltd — 2006 Employment Agreement

Employment Agreement

Parties

1.	Universal Biosensors Pty Ltd ACN 098 234 309 of 103 Ricketts Road Mount Waverley, Victoria 3149, Australia (Company).
2.	Ronald Chatelier of 13 Apple Grove, Bayswater, Victoria 3153, Australia (Employee).

Recital

A.	The Employee commenced employment with the Company on the Commencement Date. The Employee was previously employed pursuant to an employment agreement which has expired.
B.	This agreement sets out the terms and conditions on which the Company has agreed to continue to employ the Employee.

Operative clauses

1.	Definitions and Interpretation
	In this agreement, unless the context other wise requires:
	Business means the research and development activities of the Company;
	Business Day means any day on which trading banks are open for business in Melbourne, Australia (other than a Saturday or a Sunday);
	Confidential Information means any information obtained by the Employee in the course of the Employment whether in written, electronic or oral form and including:

a.	all commercial information about the Company and the Business and persons with whom the Company and Business deal from time to time;
b.	all commercial information about the business, financial plans and strategy of the Company including without limitation any mining or processing lease arrangements and sales and marketing information;
c.	all trade secrets, know-how and other processes of the Business; and
d.	any information marked “confidential” or which the Company inform the Employee is confidential or a trade secret;

but excluding:

e. information in the public domain at the date of this agreement;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

f.	information which comes into the public domain after the date of this agreement otherwise than by breach of the Employee’s obligation of confidentiality contained in this agreement; and
g.	information which the Employee lawfully possessed before obtaining it in the course of the Employment;

EBIT means earnings before interest and tax;

Effective Date means the date set out in item 2 of the schedule to this agreement

Employment means the employment of the Employee by the Company commencing on the Commencement Date.

2. Interpretation

In this agreement, unless the context otherwise requires:

2.1	headings do not affect interpretation;
2.2	singular includes plural and plural includes singular;
2.3	words of one gender include any gender;
2.4	reference to a person includes a corporation, joint venture, association, government body, firm and any other entity;
2.5	reference to a party includes that party’s personal representatives, successors and permitted assigns;
2.6	a provision must be read down to the extent necessary to be valid. If it cannot be read down to the extent, it must be severed;
2.7	another grammatical form of a defined expression has a corresponding meaning;
2.8	“$” or “dollars” is a reference to the lawful currency of Australia.

3. Appointment

3.1	Employment
	The Company continues to employ the Employee on the terms of this agreement.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

3.2	Location
	The Employee will be based in Victoria, Australia unless otherwise agreed by the Company and the Employee. The Employee may be required to travel from time to time as the business dictates.

4. Term

4.1	Start
	The Employee commenced employment with the Company on the Commencement Date. This agreement takes effect from the Effective Date.
4.2	End
	The Employment ends on the date set out in item 3 of the schedule (as extended from time to time under clause 4.3) or such earlier date the Employment ceases or is terminated under this agreement.
4.3	Extensions
	At least 3 months prior to the expiry of the term of the Employment in accordance with clause 4.2 or by prior application of this clause 4.3, the parties will meet to negotiate the terms of a replacement employment agreement. If the parties do not meet during that 3 month period or, if they fail to negotiate a replacement agreement during that period, the Employment is automatically extended for a further 12 calendar months on the same terms and conditions as this agreement.

5. Position and Duties

5.1	Title
	The Employee is to be employed in the role and with the title set out in item 4 of the schedule. The Company may from time to time change the title.
5.2	Responsibilities
	The Employee will be responsible for the matters or activities described in item 5 of the schedule. The Company may from time to time alter the duties or activities of the Employee.
5.3	Duties
	The Employee must:

5.3.1 report as directed by their supervisor or Company senior management in relation to the matters or activities for which the Employee is responsible;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

5.3.2	observe all Company policies, rules, regulations and directions;
5.3.3	perform the responsibilities for which the Employee is employed faithfully and to the best of the Employee’s ability and the parties will consult with each other where necessary to enable the Employee to properly perform his responsibilities;
5.3.4	use the Employee’s best endeavours in the furtherance of the business of the Company; and
5.3.5	work during normal business hours and other hours reasonably required by the Company.

5.4	Exclusivity
	The Employee will devote his time and attention exclusively to the Business and affairs of the Company.

6. Remuneration and Benefits

6.1 Salary

6.1.1	On and from the Effective Date, the Employee is entitled to a salary of the amount set out in item 6 of the schedule.
6.1.2	The salary is to be paid by equal monthly installments into a bank account nominated by the Employee.

6.2	Salary Review
	The annual salary in clause 6.1 is to be reviewed at the interval set out in item 7 of the schedule. Any increase is to be effective on such review date even if the determination of the amount of salary increase occurs later.
6.3	Other Benefits
	The Employee will be entitled to:

6.3.1	leave -annual leave as required by law to be taken at times to be agreed with the Company;
6.3.2	sick leave and long service leave — in accordance with the law;
6.3.3	expenses — reimbursement of expenses properly incurred in the course of the Employment subject to provision to the Company of receipts and related documentation in accordance with the policies and procedures established by the Managing Director from time to time; and

Universal Biosensors Pty Ltd — 2006 Employment Agreement

6.3.4	superannuation payments — in accordance with the law,
6.3.5	other benefits set out in item 8 of the schedule.

6.4 For the avoidance of doubt, all of the Employee’s entitlements accrue from the Commencement Date.

7. Confidential Information

7.1	Maintenance of Confidentiality
	During and after the Employment, the Employee may use or disclose Confidential Information only for the following purposes:

7.1.1	to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement;
7.1.2	if the Company has otherwise consented in writing;
7.1.3	if required by statute or law; or
7.1.4	if required to be used or disclosed by the Employee in connection with any actual, prospective or threatened legal proceedings.

7.2	Security
	The Employee must:

7.2.1	keep the Confidential Information in the Employee’s custody or control (to the extent not within the custody or control of the Company);
7.2.2	keep the Confidential Information in a reasonably secure manner;
7.2.3	immediately notify the Company of any suspected or actual unauthorised use, copying or disclosure of Confidential Information of which the Employee becomes aware;
7.2.4	at the Company’s expense, provide any assistance reasonably requested by the Company from time to time in relation to any proceedings the Company may institute to protect the Confidential Information from unauthorised use, copying or disclosure;
7.2.5	not make any unauthorised copies of the whole or any part of the Confidential Information; and
7.2.6	if required by the Company, mark copies of Confidential Information “confidential”.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

7.3	Continuing Obligations
	The obligations of the Employee under this clause 7, survive termination of the agreement.

8.	Cessation of Employment Obligations
	Upon cessation of the Employment, the Employee must:

8.1	deliver all Confidential Information in the Employee’s custody or control to the Company or at the Company’s direction.
8.2	delete all Confidential Information held in electronic or other media form in the Employee’s custody or control; and
8.3	if requested by the Company, provide a certificate confirming that the Employee has complied with its obligations under this clause.

9. Intellectual Property

9.1	Disclosure
	The Employee must promptly, fully and effectively disclose to the Company or its nominee in such form as the Company may reasonably require, full details of:

9.1.1	each and every invention (whether patentable or not), design (whether registerable or not), trademark or service mark;
9.1.2	any copyright material;
9.1.3	any trade secret or other Confidential Information;
9.1.4	any computer program material (including source codes, algorithms, logical ideas, concepts and processes, charts, tables and diagrams);
9.1.5	processes, know-how or improvements;
9.1.6	literary, artistic or other copyrightable works; and
9.1.7	any other intellectual property of any kind,

made, written, developed or discovered by the Employee (whether alone or with others) in the course of the Employment (whether in or out of working hours) and whether or not capable of statutory protection.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

9.2	Assignment
	In exchange for the benefits conferred on the Employee during the course of the Employment, the Employee agrees that by reason of this clause, all Intellectual Property created during the course of the Employment (whether in or out of working hours) belongs to and is the property of the Company or its nominee. Accordingly the Employee must:

9.2.1	at the request and expense of the Company; and
9.2.2	without additional compensation from the Company,

sign all such documents or instruments (including assignment deeds) and do all such things as may be necessary to vest, confirm, perfect and record the ownership by the Company or its nominee throughout the world of its right, title and interest to any Intellectual Property and to enable the Company or its nominee to acquire and preserve such rights and to have the full enjoyment of such rights.

9.3 The Employee consents to:

9.3.1	all acts or omissions by the Company in relation to the Employee’s moral rights in all Intellectual Property; and
9.3.2	the infringement of the Employee’s moral rights in all Intellectual Property by the Company, its licensees, assignees and successors in title and any person authorised by the Company at the absolute discretion of the Company and without reference to the Employee.

9.4	Continuing Obligations
	The obligations of the Employee under this clause 9, survive termination of the agreement.

10. Termination

10.1 Resignation or Retirement

10.1.1	The Employee may resign or retire by giving not less than 3 months written notice to the Company. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.1.2	The resignation or retirement is effective on expiry of the notice period notified in accordance with clause 10.1.1.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.2 Termination for incapacity

10.2.1	The Company may terminate the Employment at anytime if the Employee is mentally or physically unfit to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement for a total of 2 months in any 12 month period.
10.2.2	The Company must give the Employee not less than 1 month’s written notice of its intention to terminate under this clause 10.2.

10.3	Termination for cause
	The Company may terminate the Employment at any time with immediate effect for cause, by giving written notice to the Employee specifying the cause of termination. For the purpose of this agreement “cause” means:

10.3.1	default by the Employee in the performance of the Employee’s responsibilities or the discharge of the Employee’s duties under this agreement;
10.3.2	fraudulent or dishonest conduct by the Employee;
10.3.3	intemperate use of alcohol or drugs by the Employee;
10.3.4	conviction of the Employee for the commission of a felony; or
10.3.5	willful or intentional injury to the Company’s Business or affairs.

10.4	Termination by Company on Notice
	The Company may terminate the Employment at any time by giving 3 months written notice to the Employee. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.5	Reasonableness
	The Employee acknowledges that the periods of notice or lack of a period of notice, as the case may be, as set out in this clause 10, are fair and reasonable.
10.6	Accrued Rights
	Termination of the Employment does not affect:

10.6.1 any accrued rights or remedies one party may have against another in connection with this agreement arising prior to termination; or

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.6.2 any accrued or future entitlement to any bonus under and in accordance with clause 6.3

10.7 Obligations on Termination or Cessation of Employment

10.7.1	Termination or cessation of the Employment does not affect the Employee’s obligations under clauses 7, 8, 9 or 11.
10.7.2	On termination or cessation of the Employment, the Employee must also deliver to the Company or its nominee:

(a)	all property belonging to or leased by the Company in the Employees control (including, without limitation, stationery, cheque books, books, documents, records, disks, access cards, keys, telephones, computers, credit cards and vehicles)
(b)	computer log-in codes and all other passwords and access codes; and
(c)	the matters required to be returned under clause 8.

10.8	Extension of Service
	This agreement can be extended as per clause 4.4.
10.9	Redundancy
	No “redundancy” or other termination payments, other than those set out in this agreement are payable.

11. Non Competition

11.1 Covenant

11.1.1 On termination of the Employment for any reason, if requested by the Company:

(a)	the provisions of clause 11.1.2 apply for up to 12 months after the Employment is terminated as well as applying during the period of the Employment; and
(b)	the provisions of clause 11.1.3 apply for up to 12 months after the Employment is terminated.

11.1.2 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person or entity carry on, be engaged in, or be associated with, a business similar to the business carried on by the Company.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

11.1.3 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person:

(a)	induce or attempt to induce any person to leave the employment of the Company; or
(b)	interfere with or seek to interfere with the relationship between the Company (on one hand) and any third party (on the other hand).

11.2.	Consideration by Company
	If the Company requests that the Employee undertake the provisions set out in clauses 11.1.1, 11.1.2 and/or 11.1.3, then the Company shall pay to the Employee the equivalent of their salary just prior to the termination of the Employment, for the period set out in clauses 11.1.1, 11.1.2 and/or 11.1.3.
11.3	Reasonableness
	The Employee acknowledges that the prohibitions and restrictions contained in this clause 11 are reasonable in the circumstances and necessary to protect the Company and the Business and its goodwill.

12.	Notice
	Notices or other communications must be given in writing in the English language to the address of the party listed at the beginning of this agreement or such other address as the party may notify to the other for the purpose of this agreement. The notice or communication may be delivered to the person’s address or facsimile.
13.	No Assignment
	Neither party may:
13.1	assign its rights under this agreement to a third party; or
13.2	cause a third party to assume its obligations under this agreement.
14.	Governing Law
	This agreement is governed by the law of Victoria.
15.	Counterparts
	This agreement may be executed in any number of counterparts. A counterpart may be a facsimile. Together all counterparts make up one document.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EXECUTED as an agreement on 1 April 2002.

Signed for and behalf of
UNIVERSAL BIOSENSORS PTY LTD

/s/ Mark Morrisson
Managing Director

Signed by Ronald Chatelier in the presence of:	/s/ Ronald Chatelier
	Ronald Chatelier

/s/ I. Bennett
Witness

I. Bennett
Name (please print)

Universal Biosensors Pty Ltd — 2006 Employment Agreement

SCHEDULE

Item 1
Commencement Date:	1 April 2002
Item 2
Effective Date	1 April 2006
Item 3
End Date:	3 years from the Effective Date or longer at the discretion of the Company.
Item 4
Title:	Chief Research Scientist
Item 5
Responsibilities:	Conducting research into applications of the UBS technology and the development technology along with supervising research assistants as required. Supporting product development activities as well as assisting in the formulation of new intellectual property and other duties as required.
Item 6
Salary:	$127,680 per annum
Superannuation:	9% or as required by law
Item 7
Salary Review Date:	Annually on 1st February
Item 8
Other Benefits:	Mobile Phone

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EX-10.11

Exhibit 10.11

Employment Agreement

Universal Biosensors Pty Ltd
ACN 098 234 309

Alastair Hodges

Contents

1.	Definitions and Interpretation	3
2.	Interpretation	4
3.	Appointment	4
4.	Term	5
5.	Position and Duties	5
6.	Remuneration and Benefits	6
7.	Confidential Information	7
8.	Cessation of Employment Obligations	8
9.	Intellectual Property	8
10.	Termination	9
11.	Non Competition	11
12.	Notice	12
13.	No Assignment	12
14.	Governing Law	12
15.	Counterparts	12

Universal Biosensors Pty Ltd — 2006 Employment Agreement

Employment Agreement

Parties

1.	Universal Biosensors Pty Ltd ACN 098 234 309 of 103 Ricketts Road Mount Waverley, Victoria 3149, Australia (Company).
2.	Alastair Hodges of 15 Jasmine Court, Blackburn South, Victoria 3130, Australia (Employee).

Recital

A.	The Employee commenced employment with the Company on the Commencement Date. The Employee was previously employed pursuant to an employment agreement which has expired.
B.	This agreement sets out the terms and conditions on which the Company has agreed to continue to employ the Employee.

Operative clauses

1.	Definitions and Interpretation
	In this agreement, unless the context other wise requires:
	Business means the research and development activities of the Company;
	Business Day means any day on which trading banks are open for business in Melbourne, Australia (other than a Saturday or a Sunday);
	Confidential Information means any information obtained by the Employee in the course of the Employment whether in written, electronic or oral form and including:

a.	all commercial information about the Company and the Business and persons with whom the Company and Business deal from time to time;
b.	all commercial information about the business, financial plans and strategy of the Company including without limitation any mining or processing lease arrangements and sales and marketing information;
c.	all trade secrets, know-how and other processes of the Business; and
d.	any information marked “confidential” or which the Company inform the Employee is confidential or a trade secret;

but excluding:

e. information in the public domain at the date of this agreement;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

f.	information which comes into the public domain after the date of this agreement otherwise than by breach of the Employee’s obligation of confidentiality contained in this agreement; and
g.	information which the Employee lawfully possessed before obtaining it in the course of the Employment;

EBIT means earnings before interest and tax;

Effective Date means the date set out in item 2 of the schedule to this agreement

Employment means the employment of the Employee by the Company commencing on the Commencement Date.

2. Interpretation

In this agreement, unless the context otherwise requires:

2.1	headings do not affect interpretation;
2.2	singular includes plural and plural includes singular;
2.3	words of one gender include any gender;
2.4	reference to a person includes a corporation, joint venture, association, government body, firm and any other entity;
2.5	reference to a party includes that party’s personal representatives, successors and permitted assigns;
2.6	a provision must be read down to the extent necessary to be valid. If it cannot be read down to the extent, it must be severed;
2.7	another grammatical form of a defined expression has a corresponding meaning;
2.8	“$” or “dollars” is a reference to the lawful currency of Australia.

3. Appointment

3.1	Employment
	The Company continues to employ the Employee on the terms of this agreement.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

3.2	Location
	The Employee will be based in Victoria, Australia unless otherwise agreed by the Company and the Employee. The Employee may be required to travel from time to time as the business dictates.

4. Term

4.1	Start
	The Employee commenced employment with the Company on the Commencement Date. This agreement takes effect from the Effective Date.
4.2	End
	The Employment ends on the date set out in item 3 of the schedule (as extended from time to time under clause 4.3) or such earlier date the Employment ceases or is terminated under this agreement.
4.3	Extensions
	At least 3 months prior to the expiry of the term of the Employment in accordance with clause 4.2 or by prior application of this clause 4.3, the parties will meet to negotiate the terms of a replacement employment agreement. If the parties do not meet during that 3 month period or, if they fail to negotiate a replacement agreement during that period, the Employment is automatically extended for a further 12 calendar months on the same terms and conditions as this agreement.

5. Position and Duties

5.1	Title
	The Employee is to be employed in the role and with the title set out in item 4 of the schedule. The Company may from time to time change the title.
5.2	Responsibilities
	The Employee will be responsible for the matters or activities described in item 5 of the schedule. The Company may from time to time alter the duties or activities of the Employee.
5.3	Duties
	The Employee must:

5.3.1 report as directed by their supervisor or Company senior management in relation to the matters or activities for which the Employee is responsible;

Universal Biosensors Pty Ltd — 2006 Employment Agreement

5.3.2	observe all Company policies, rules, regulations and directions;
5.3.3	perform the responsibilities for which the Employee is employed faithfully and to the best of the Employee’s ability and the parties will consult with each other where necessary to enable the Employee to properly perform his responsibilities;
5.3.4	use the Employee’s best endeavours in the furtherance of the business of the Company; and
5.3.5	work during normal business hours and other hours reasonably required by the Company.

5.4	Exclusivity
	The Employee will devote his time and attention exclusively to the Business and affairs of the Company.

6. Remuneration and Benefits

6.1 Salary

6.1.1	On and from the Effective Date, the Employee is entitled to a salary of the amount set out in item 6 of the schedule.
6.1.2	The salary is to be paid by equal monthly installments into a bank account nominated by the Employee.

6.2	Salary Review
	The annual salary in clause 6.1 is to be reviewed at the interval set out in item 7 of the schedule. Any increase is to be effective on such review date even if the determination of the amount of salary increase occurs later.
6.3	Other Benefits
	The Employee will be entitled to:

6.3.1	leave –annual leave as required by law to be taken at times to be agreed with the Company;
6.3.2	sick leave and long service leave – in accordance with the law;
6.3.3	expenses – reimbursement of expenses properly incurred in the course of the Employment subject to provision to the Company of receipts and related documentation in accordance with the policies and procedures established by the Managing Director from time to time; and

Universal Biosensors Pty Ltd — 2006 Employment Agreement

6.3.4	superannuation payments – in accordance with the law,
6.3.5	other benefits set out in item 8 of the schedule.

6.4 For the avoidance of doubt, all of the Employee’s entitlements accrue from the Commencement Date.

7. Confidential Information

7.1	Maintenance of Confidentiality
	During and after the Employment, the Employee may use or disclose Confidential Information only for the following purposes:

7.1.1	to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement;
7.1.2	if the Company has otherwise consented in writing;
7.1.3	if required by statute or law; or
7.1.4	if required to be used or disclosed by the Employee in connection with any actual, prospective or threatened legal proceedings.

7.2	Security
	The Employee must:

7.2.1	keep the Confidential Information in the Employee’s custody or control (to the extent not within the custody or control of the Company);
7.2.2	keep the Confidential Information in a reasonably secure manner;
7.2.3	immediately notify the Company of any suspected or actual unauthorised use, copying or disclosure of Confidential Information of which the Employee becomes aware;
7.2.4	at the Company’s expense, provide any assistance reasonably requested by the Company from time to time in relation to any proceedings the Company may institute to protect the Confidential Information from unauthorised use, copying or disclosure;
7.2.5	not make any unauthorised copies of the whole or any part of the Confidential Information; and
7.2.6	if required by the Company, mark copies of Confidential Information “confidential”.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

7.3	Continuing Obligations
	The obligations of the Employee under this clause 7, survive termination of the agreement.

8.	Cessation of Employment Obligations
	Upon cessation of the Employment, the Employee must:

8.1	deliver all Confidential Information in the Employee’s custody or control to the Company or at the Company’s direction.
8.2	delete all Confidential Information held in electronic or other media form in the Employee’s custody or control; and
8.3	if requested by the Company, provide a certificate confirming that the Employee has complied with its obligations under this clause.

9. Intellectual Property

9.1	Disclosure
	The Employee must promptly, fully and effectively disclose to the Company or its nominee in such form as the Company may reasonably require, full details of:

9.1.1	each and every invention (whether patentable or not), design (whether registerable or not), trademark or service mark;
9.1.2	any copyright material;
9.1.3	any trade secret or other Confidential Information;
9.1.4	any computer program material (including source codes, algorithms, logical ideas, concepts and processes, charts, tables and diagrams);
9.1.5	processes, know-how or improvements;
9.1.6	literary, artistic or other copyrightable works; and
9.1.7	any other intellectual property of any kind,

made, written, developed or discovered by the Employee (whether alone or with others) in the course of the Employment (whether in or out of working hours) and whether or not capable of statutory protection.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

9.2	Assignment
	In exchange for the benefits conferred on the Employee during the course of the Employment, the Employee agrees that by reason of this clause, all Intellectual Property created during the course of the Employment (whether in or out of working hours) belongs to and is the property of the Company or its nominee. Accordingly the Employee must:

9.2.1	at the request and expense of the Company; and
9.2.2	without additional compensation from the Company,

	sign all such documents or instruments (including assignment deeds) and do all such things as may be necessary to vest, confirm, perfect and record the ownership by the Company or its nominee throughout the world of its right, title and interest to any Intellectual Property and to enable the Company or its nominee to acquire and preserve such rights and to have the full enjoyment of such rights.
9.3	The Employee consents to:

9.3.1	all acts or omissions by the Company in relation to the Employee’s moral rights in all Intellectual Property; and
9.3.2	the infringement of the Employee’s moral rights in all Intellectual Property by the Company, its licensees, assignees and successors in title and any person authorised by the Company at the absolute discretion of the Company and without reference to the Employee.

9.4	Continuing Obligations
	The obligations of the Employee under this clause 9, survive termination of the agreement.

10. Termination

10.1 Resignation or Retirement

10.1.1	The Employee may resign or retire by giving not less than 3 months written notice to the Company. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.1.2	The resignation or retirement is effective on expiry of the notice period notified in accordance with clause 10.1.1.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.2 Termination for incapacity

10.2.1	The Company may terminate the Employment at anytime if the Employee is mentally or physically unfit to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement for a total of 2 months in any 12 month period.
10.2.2	The Company must give the Employee not less than 1 month’s written notice of its intention to terminate under this clause 10.2.

10.3	Termination for cause
	The Company may terminate the Employment at any time with immediate effect for cause, by giving written notice to the Employee specifying the cause of termination. For the purpose of this agreement “cause” means:

10.3.1	default by the Employee in the performance of the Employee’s responsibilities or the discharge of the Employee’s duties under this agreement;
10.3.2	fraudulent or dishonest conduct by the Employee;
10.3.3	intemperate use of alcohol or drugs by the Employee;
10.3.4	conviction of the Employee for the commission of a felony; or
10.3.5	willful or intentional injury to the Company’s Business or affairs.

10.4	Termination by Company on Notice
	The Company may terminate the Employment at any time by giving 3 months written notice to the Employee. The Company may pay the Employee for the notice period in lieu of notice, or require the Employee to work some of the notice period and pay the Employee in lieu for the balance of the period.
10.5	Reasonableness
	The Employee acknowledges that the periods of notice or lack of a period of notice, as the case may be, as set out in this clause 10, are fair and reasonable.
10.6	Accrued Rights
	Termination of the Employment does not affect:

10.6.1 any accrued rights or remedies one party may have against another in connection with this agreement arising prior to termination; or

Universal Biosensors Pty Ltd — 2006 Employment Agreement

10.6.2 any accrued or future entitlement to any bonus under and in accordance with clause 6.3

10.7 Obligations on Termination or Cessation of Employment

10.7.1	Termination or cessation of the Employment does not affect the Employee’s obligations under clauses 7, 8, 9 or 11.
10.7.2	On termination or cessation of the Employment, the Employee must also deliver to the Company or its nominee:

(a)	all property belonging to or leased by the Company in the Employees control (including, without limitation, stationery, cheque books, books, documents, records, disks, access cards, keys, telephones, computers, credit cards and vehicles)
(b)	computer log-in codes and all other passwords and access codes; and
(c)	the matters required to be returned under clause 8.

10.8	Extension of Service
	This agreement can be extended as per clause 4.4.
10.9	Redundancy
	No “redundancy” or other termination payments, other than those set out in this agreement are payable.

11. Non Competition

11.1 Covenant

11.1.1 On termination of the Employment for any reason, if requested by the Company:

(a)	the provisions of clause 11.1.2 apply for up to 12 months after the Employment is terminated as well as applying during the period of the Employment; and
(b)	the provisions of clause 11.1.3 apply for up to 12 months after the Employment is terminated.

11.1.2 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person or entity carry on, be engaged in, or be associated with, a business similar to the business carried on by the Company.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

11.1.3 The Employee, if requested by the Company, must not, whether directly or indirectly and whether on his own account or on behalf of any other person:

(a)	induce or attempt to induce any person to leave the employment of the Company; or
(b)	interfere with or seek to interfere with the relationship between the Company (on one hand) and any third party (on the other hand).

11.2.	Consideration by Company
	If the Company requests that the Employee undertake the provisions set out in clauses 11.1.1, 11.1.2 and/or 11.1.3, then the Company shall pay to the Employee the equivalent of their salary just prior to the termination of the Employment, for the period set out in clauses 11.1.1, 11.1.2 and/or 11.1.3.
11.3	Reasonableness
	The Employee acknowledges that the prohibitions and restrictions contained in this clause 11 are reasonable in the circumstances and necessary to protect the Company and the Business and its goodwill.

12.	Notice
	Notices or other communications must be given in writing in the English language to the address of the party listed at the beginning of this agreement or such other address as the party may notify to the other for the purpose of this agreement. The notice or communication may be delivered to the person’s address or facsimile.
13.	No Assignment
	Neither party may:

13.1	assign its rights under this agreement to a third party; or
13.2	cause a third party to assume its obligations under this agreement.

14.	Governing Law
	This agreement is governed by the law of Victoria.
15.	Counterparts
	This agreement may be executed in any number of counterparts. A counterpart may be a facsimile. Together all counterparts make up one document.

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EXECUTED as an agreement with effect from 1 April 2002.

Signed for and behalf of
UNIVERSAL BIOSENSORS PTY LTD

/s/ Mark Morrisson
Managing Director

Signed by Alastair Hodges in the presence of:	/s/ Alastair Hodges
	Alastair Hodges

/s/ B. Verity
Witness

B. Verity
Name (please print)

Universal Biosensors Pty Ltd — 2006 Employment Agreement

SCHEDULE

Item 1
Commencement Date:	1 April 2002
Item 2
Effective Date	1 April 2006
Item 3
End Date:	3 years from the Effective Date or longer at the discretion of the Company.
Item 4
Title:	Chief Scientist
Item 5
Responsibilities:	To oversee and assist in implementing the research and development activities of the Company. Supervise the senior research and engineering staff. Formulate new research directions. Prepare patent applications and assist in prosecution of patents and patent applications as necessary. Other duties as required by the directors from time to time.
Item 6
Salary:	$220,138 per annum
Superannuation:	9% or as required by law
Item 7
Salary Review Date:	Annually on 1st February
Item 8
Other Benefits:	Mobile Phone

Universal Biosensors Pty Ltd — 2006 Employment Agreement

EX-10.12

Exhibit 10.12

Employment Agreement

Parties

1. Universal Biosensors Pty Ltd ACN 098 234 309 of 103 Ricketts Road, Mt Waverley Victoria 3149 Facsimile: (02) 4365 5872 (Company)

2. Mark Morrison of 100 McKean Street, Clifton Hill, Victoria, 3068 (Employee)

Recital

This agreement sets out the terms and conditions on which the Company has agreed to employ the Employee.

Operative clauses

1.	Definitions and Interpretation
	In this agreement, unless the context otherwise requires:
	Business means the business and activities of the Group;
	Business Day means any day on which trading banks are open for business in Melbourne, Australia (other than a Saturday or a Sunday);
	Confidential Information means any information obtained by the Employee in the course of the Employment whether in written, electronic or oral form and including:

(a)	all commercial information about the Group and the Business and persons with whom the Group and Business deal from time to time;
(b)	all commercial information about the business, financial plans and strategy of the Group including without strategic, sales and marketing information;
(c)	all trade secrets, know-how and other processes of the Business; and
(d)	any information marked ‘confidential’ or which the Group inform the Employee is confidential or a trade secret;

but excluding:

(e)	information in the public domain at the date of this agreement;
(f)	information which comes into the public domain after the date of this agreement otherwise than by breach of the Employee’s obligation of confidentiality contained in this agreement or a breach of confidence by any other person; and
(g)	information which the Employee lawfully possessed before obtaining it in the course of the Employment;

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	Employment means the employment of the Employee by the Company under this agreement;
	Group means the Company and Universal Biosensors Inc., and any of their subsidiaries or parent companies; and
	Intellectual Property means any intellectual property of any kind and includes the intellectual property detailed in clause 9.1 of this agreement.
2.	Interpretation
	In this agreement, unless the context otherwise requires:

2.1	headings do not affect interpretation;
2.2	singular includes plural and plural includes singular;
2.3	words of one gender include any gender;
2.4	reference to a person includes a corporation, joint venture, association, government body, firm and any other entity;
2.5	reference to a party includes that party’s personal representatives, successors and permitted assigns;
2.6	a provision must be read down to the extent necessary to be valid. If it cannot be read down to the extent, it must be severed;
2.7	another grammatical form of a defined expression has a corresponding meaning;
2.8	“$” or “dollars” is a reference to the lawful currency of Australia.

3. Appointment

3.1	Employment
	The Company employs the Employee on the terms of this agreement.
3.2	Location
	The Employee will be based in 103 Ricketts Road Mount Waverley, Victoria unless otherwise agreed by the Company and the Employee. The Employee may be required to travel from time to time as the business dictates.

4. Term

4.1	Start
	The Employment starts on the date set out in item 1 of the schedule or any other date the parties agree.

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4.2	End
	The Employment ends on the date set out in item 2 of the schedule (as extended from time to time under clause 4.3) or any earlier date the Employment is terminated in accordance with this agreement.
4.3	Extensions
	At least 3 months prior to the expiry of the term of the Employment in accordance with clause 4.2 or by prior application of this clause 4.3, the parties will meet to negotiate the terms of a replacement employment agreement. If the parties do not meet during that 3 month period or if they fail to negotiate a replacement agreement during that period, the Employment is automatically extended for a further 12 calendar months on the same terms and conditions as this agreement.

5. Position and Duties

5.1	Title
	The Employee is to be employed by the Company as Managing Director of the Company with the title set out in item 3 of the schedule and reporting to the board of directors of the Company. The Company also employs the Employee to provide the services of Managing Director to other companies in the Group in the manner contemplated by this agreement reporting to the board of directors of Universal Biosensors Inc.
	Responsibilities
	The Employee will be responsible for the matters or activities described in item 4 of the schedule. The Company may from time to time alter the duties or activities of the Employee.
5.2	Duties
	The Employee must:

5.2.1	report as directed by the directors of the Company and the directors of Universal Biosensors Inc in relation to the matters or activities for which the Employee is responsible;
5.2.2	observe all Group policies, rules, regulations and directions;
5.2.3	perform the responsibilities for which the Employee is employed faithfully and to the best of the Employee’s ability and the parties will consult with each other where necessary to enable the Employee to properly perform his responsibilities;
5.2.4	use the Employee’s best endeavours in the furtherance of the business of the Company and the Group; and
5.2.5	work during normal business hours and other hours reasonably required by the Company and the Group.

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5.3	Exclusivity
	The Employee will devote his time and attention exclusively to the Business and affairs of the Group unless approved by the board of directors of the Company or Universal Biosensors Inc., to do other work.

6. Remuneration and Benefits

6.1 Salary

6.1.1	On and from the start date, the Employee is entitled to a salary of the amount set out in item 5 of the schedule per annum.
6.1.2	The salary is to be paid by equal monthly installments into a bank account nominated by the Employee.
6.1.3	The salary covers payment for the performance of all the Employee’s responsibilities with the Group and no overtime, leave loading or other allowances will be payable (unless expressly provided for under this agreement).

6.2	Salary Review
	The annual salary referred to in clause 6.1 is to be reviewed at the intervals set out in item 6 of the schedule. Any increase is to be effective on such review date even if the determination of the amount of an increase occurs later.
6.3	Other Benefits
	The Employee will also be entitled to:

6.3.1	superannuation — as required by law;
6.3.2	leave — annual leave of four weeks per year at times to be agreed with the Chairman of directors of the Company;
6.3.3	sick leave and long service leave — as required by law;
6.3.4	expenses — reimbursement of expenses properly incurred in the course of the Employment subject to provision to the Company of receipts and related documentation in accordance with the policies and procedures established by the Group from time to time; and
6.3.5	other benefits set out in item 7 of the schedule.

7. Confidential Information

7.1	Maintenance of Confidentiality
	During and after the Employment, the Employee may use or disclose Confidential Information only for the following purposes:

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7.1.1	to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement;
7.1.2	if the Company has otherwise consented;
7.1.3	if required by statute or law; or
7.1.4	if required to be used or disclosed by the Employee in connection with any actual, prospective, apprehended or threatened legal proceedings.

7.2	Security
	The Employee must:

7.2.1	keep the Confidential Information in the Employee’s custody or control (to the extent not within the custody or control of the Company);
7.2.2	keep the Confidential Information in a reasonably secure manner;
7.2.3	immediately notify the Company of any suspected or actual unauthorised use, copying or disclosure of Confidential Information of which the Employee becomes aware;
7.2.4	at the Company’s expense provide any assistance reasonably requested by the Company from time to time in relation to any proceedings the Company may institute to protect the Confidential Information from unauthorised use, copying or disclosure;
7.2.5	not make any unauthorised copies of the whole or any part of the Confidential Information; and
7.2.6	if required by the Company, mark all copies of Confidential Information ‘confidential’.

7.3	Continuing Obligations
	The obligations of the Employee under this clause 7, survive termination of this agreement.

8.	Obligations of Employee in relation to Confidential Information on Cessation of Employment
	On the Employment ceasing, the Employee must:

8.1	deliver all Confidential Information in the Employee’s custody or control to the Company or at the Company’s direction;
8.2	delete all Confidential Information held in electronic or other media form in the Employee’s custody or control; and
8.3	if requested by the Company, provide a certificate confirming that the Employee has complied with its obligations under this clause.

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9. Intellectual Property

9.1	Disclosure
	The Employee must promptly, fully and effectively disclose to the Company or its nominee in such form as the Company may reasonably require, full details of:

9.1.1	each and every invention (whether patentable or not), design (whether registerable or not), trademark or service mark;
9.1.2	any copyright material;
9.1.3	any trade secret or other Confidential Information;
9.1.4	any computer program material (including source codes, algorithms, logical ideas, concepts and processes, charts, tables and diagrams);
9.1.5	processes, know-how or improvements;
9.1.6	literary, artistic or other copyrightable works; and
9.1.7	any other intellectual property of any kind,

	made, written, developed or discovered by the Employee (whether alone or with others) in the course of the Employment (whether in or out of working hours and in connection with all companies in the Group) and whether or not capable of statutory protection (“Intellectual Property”).
9.2	Assignment
	In exchange for the benefits conferred on the Employee by the Employment, the Employee agrees that by reason of this clause all Intellectual Property created in the course of the Employment (whether in or out of working hours and in connection with all companies in the Group) belongs to and is the property of Company or its nominee. Accordingly, the Employee must:

9.2.1	at the request and expense of the Company; and
9.2.2	without additional compensation from the Company,

sign all such documents or instruments (including assignment deeds) and do all such things as may be necessary to vest, confirm, perfect and record the ownership by the Company or its nominee throughout the world of its right, title and interest to any Intellectual Property and to enable the Company or its nominee to acquire and preserve such rights and to have the full enjoyment of such rights.

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10. Termination

10.1 Resignation or Retirement

10.1.1	The Employee may resign or retire by giving not less than 3 months notice to the Company.
10.1.2	The resignation or retirement is effective on expiry of the notice period notified in accordance with clause 10.1.1.

10.2 Termination for incapacity

10.2.1	The Company may terminate the Employment at any time if the Employee is mentally or physically unfit to perform the Employee’s responsibilities and discharge the Employee’s duties under this agreement for a total of 2 months in any 12 month period.
10.2.2	The Company must give the Employee not less than 1 months notice of its intention to terminate under this clause 10.2.

10.3	Termination for cause
	The Company may terminate the Employment at any time with immediate effect for cause, by notice given to the Employee specifying the cause. For the purpose of this agreement ‘cause’ means:

10.3.1	default by the Employee in the performance of the Employee’s responsibilities or the discharge of the Employee’s duties under this agreement;
10.3.2	fraudulent or dishonest conduct by the Employee;
10.3.3	intemperate use of alcohol or drugs by the Employee;
10.3.4	conviction of the Employee for the commission of a felony; or
10.3.5	willful or intentional injury to the Group’s business or affairs.

10.4	Termination on Notice
	The Company may terminate the Employment at any time by giving 3 months notice to the Employee or making payment in lieu of notice.
10.5	Reasonableness
	The Employee acknowledges that the periods of notice or lack of a period of notice set out in this clause 10, are reasonable.
10.6	Accrued Rights
	Termination of the Employment does not affect any accrued rights or remedies one party may have against the other in connection with this agreement arising prior to termination.

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10.7 Obligations on Termination

10.7.1	Termination of the Employment does not affect the Employee’s obligations under clauses 7, 8, 9 or clause 11.
10.7.2	On termination of the Employment, the Employee must also deliver to the Company or its nominee:

(a)	all property belonging to or leased by the Group in the Employee’s control (including, without limitation, stationery, cheque books, books, documents, records, disks, access cards, keys, telephones, computers, credit cards and vehicles);
(b)	computer log-in codes and all other passwords and access codes; and
(c)	the matters required to be returned under clause 8.

10.8	Extension of Service
	This agreement can be extended as per clause 4.3
10.9	Redundancy
	No “redundancy” or other termination payments, other than those expressly set out in this agreement are payable.
10.10	Other Group Companies
	For the avoidance of doubt, the Employee’s role with all Group companies terminates on termination of the Employment under this agreement.

11. Non Competition

11.1 Covenant

11.1.1 On termination of the Employee’s employment for any reason, if requested by the employer:

(a)	the provisions of clause 11.1.2 apply for up to 12 months after the Employment is terminated as well as applying during the period of the Employment; and
(b)	the provisions of clause 11.1.3 apply for up to 12 months after the Employment is terminated.

11.1.2 The Employee, if requested by the employer, must not, whether directly or indirectly and whether on his own account or on behalf of any other person or entity carry on, be engaged in, or be associated with, a business similar to the business carried on by the Company or the Group.

8

11.1.3 The Employee, if requested by the employer, must not, whether directly or indirectly and whether on his own account or on behalf of any other person:

(a)	induce or attempt to induce any person to leave the employment of the Company or the Group; or
(b)	interfere with or seek to interfere with the relationship between the Company and the Group (on the one hand) and any third party (on the other hand).

11.2	Consideration by Employer
	If the Employer requests that the Employee undertake the provisions set out in clauses 11.1.1, 11.1.2 and/or 11.1.3 then the Employer shall pay the Employee the equivalent of their salary just prior to the termination of Employee’s employment, for the period clauses 11.1.1, 11.1.2 and/or 11.1.3 are operable.
11.3	Reasonableness
	The Employee acknowledges that the prohibitions and restrictions contained in this clause 11 are reasonable in the circumstances and necessary to protect the Company and its business and goodwill.

12.	Indemnification
	The Company agrees to enter into a deed of indemnity in form and substance the same as the Company has entered into with other officers of the Company.
13.	Notice
	Notices or other communications must be given in writing in the English language to the address of the party listed at the beginning of this agreement or such other address as the party may notify to the other for the purpose of this agreement. The notice or communication may be delivered to the person’s address or by facsimile.
14.	No Assignment
	Neither party may:

14.1	assign its rights under this agreement to a third party; or
14.2	cause a third party to assume its obligations under this agreement.

15.	Governing law
	This agreement is governed by the law of Victoria.
16.	Counterparts
	This agreement may be executed in any number of counterparts. A counterpart may be a facsimile. Together all counterparts make up one document.

9

EXECUTED as an agreement with effect from 1 July 2005.

Signed for and behalf of
UNIVERSAL BIOSENSORS PTY LTD

/s/ Denis Hanley	/s/ Ian Bennett
Director	Company Secretary
Denis Hanley	Ian Bennett
Name (please print)	Name (please print)
Signed by Mark Morrisson in the presence of:
/s/ D. Rylatt
Witness	/s/ Mark Morrisson
D. Rylatt	Mark Morrisson
Name (please print)

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SCHEDULE

Item 1
Start Date:	1 July 2005.
Item 2
End Date:	3 years from the start date of the Employment or such longer period as
	determined in accordance with this agreement.
Item 3
Title:	Managing Director of the Company reporting to the board of directors of the Company.
	At the direction of the Company, the Employee will also act as Managing Director of other companies in the Group, reporting to the board of directors of Universal Biosensors Inc.
Item 4
Responsibilities:	Planning for the development of the Business, development of budgets for the Group for approval by the relevant boards of directors, day to day management of the business of the Company and Group in accordance with approved budgets and business plans, supervision and development of the staff and employees, and ensuring a safe working environment. Other duties as required by the board of directors of the Company or Universal Biosensors Inc.
	The Company may require that the Employee act as a director of companies in the Group from time to time. The Employee will cease to be a director of all Group companies (as applicable) if the Employment ceases.
Item 5
Salary:	A$250,000 per annum
Item 6
Salary Review Date:	Annually on the anniversary of the start date of the Employment.
Item 7

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Other Benefits:	Mobile phone for use in connection with the Business.
	Salary is exclusive of the superannuation
	contributions required by law. The Company will
	make superannuation contributions to a complying
	superannuation fund nominated by the Employee, as
	required by law.
	If desired by the Employee, and as permitted by
	Australian Tax Law, part of the Employee's salary
	(as may be determined by the Company on the advice
	of the Company's taxation advisors) shall be paid
	as a LAFHA (Living Away From Home Allowance).
	The Employee shall participate in the Company's
	annual Bonus Program for senior Executives. Under
	the Bonus Program, the Employee will be eligible
	for a cash bonus payment of up to A$60,000 (unless
	a non-cash payment is otherwise agreed in writing
	by the Company and the Employee). If payable, a
	bonus will only be payable as soon as practicable
	after the Salary Review Date. A bonus is only
	payable if the Employee continues to be employed by
	the Company at the applicable Salary Review Date.
	50% of the bonus will be subject to direct reports
	to the Managing Director achieving their formal
	objectives. 50% will be subject to the achievement
	by the Employee of Employee's applicable formal
	objectives. Bonus amounts and the formal
	objectives required to be achieved in order to
	qualify for applicable bonus amounts will be set
	annually by the Board of the Company or a
	remuneration committee established by the Board of
	the Company. The initial bonus amounts and initial
	formal objectives for the Employee will be set
	within 60 days of the signing of this contract.
	The Company will grant options to the Employee over
	stock in Universal Biosensors Inc under the terms
	of the Group's employee incentive plan. The
	options will be granted as soon as reasonably
	practicable after the date of this agreement and
	will be subject to usual terms (including vesting
	requirements) determined by the Group. The
	Employee will be granted options to purchase
	A$500,000

12

worth of stock in Universal Biosensors Inc based on

an assumed valuation of Universal Biosensors Inc of

A$28 million at the date of this agreement. The

Company will adjust the number of options granted

and the exercise price of the options at the next

capital raising of Universal Biosensors Inc.

(intended at the date of this agreement to be an

initial public offering) with the intent that the

Employee hold options to purchase A$500,000 worth

of stock in Universal Biosensors Inc., calculated

at the valuation of Universal Biosensors Inc at the

date of the capital raising and with an exercise

price equal to the issue price of stock in the next

capital raising.

On signing of this agreement, the Company will pay

to the Employee a one time relocation payment of

A$10,000 for unspecified and undocumented expenses

associated with the relocation of the Employee to

Melbourne.

Within the first two years of employment, the

Company will reimburse the Employee for reasonable

costs directly associated with the relocation of

the Employee and his family from the United States

to Melbourne. Prior to the relocation of the

Employee, the Company and the Employee must agree

on a budget of likely expenses. For any expenses

over A$1,000, the Company must first authorise

those expenses in writing. The Company's

obligation to reimburse reasonable relocation

expenses is subject to the Employee delivering to

the Company a tax invoice and documentation

necessary to substantiate the expenses. The

Company will not pay in excess of an aggregate

total of the abovementioned agreed budget for

relocation expenses.

The Company will pay for the reasonable air travel

expenses of the Employee to enable the Employee to

return to the United States on a quarterly basis up

until Christmas 2005 by which time it is expected

your family will be relocated to be with you.

13

Contents	Page
1. Definitions and Interpretation		1
2. Interpretation		2
3. Appointment		2
4. Term		2
5. Position and Duties		3
6. Remuneration and Benefits		4
7. Confidential Information		4
8. Obligations of Employee in relation to Confidential Information on Cessation of Employment		5
9. Intellectual Property		6
10. Termination		7
11. Non Competition		8
12. Notice		9
13. No Assignment		9
14. Governing law		9
15. Counterparts		9
SCHEDULE		11

Employment Agreement

Universal Biosensors Pty Ltd
ACN 098 234 309
(Company)

Mark Morrisson
(Employee)

EX-16.0

Exhibit 16

147 Collins Street	ABN: 61 194 860 183
Melbourne Vic 3000	Telephone: +61 3 9288 5555
	Facsimile: + 61 3 9288 6666
GPO Box 2291U	DX: 30624 Melbourne
Melbourne Vic 3001	www.kpmg.com.au
Australia

April 27, 2007

Securities and Exchange Commission
Washington, D.C. 20549

Ladies and Gentlemen:

We were previously principal accountants for Universal Biosensors, Inc. and, under the date of March 16, 2006, we reported on the consolidated financial statements of Universal Biosensors, Inc. as of and for the years ended December 31, 2005 and 2004. On 7 July, 2006, we were requested by Universal Biosensors, Inc. to resign as auditors and on 14 August, 2006, we notified Universal Biosensors, Inc. that we were resigning as auditors. We have read Universal Biosensors, Inc.’s statements included under Item 14 of its Form 10 dated April 30, 2007, and we agree with such statements, except that we are not in a position to agree or disagree with Universal Biosensors, Inc.’s statement that the change was approved by the board of directors and we are not in a position to agree or disagree with Universal Biosensors, Inc.’s statement regarding Item 304(a)(2) that the newly engaged Universal Biosensors, Inc. accountants were not engaged regarding the application of accounting principles to a specified transaction or the type of audit opinion that might be rendered on Universal Biosensors, Inc.’s consolidated financial statements

Very truly yours,

KPMG

EX-21.0

Exhibit 21

List of Subsidiaries

Universal Biosensors Pty, Ltd.