Commonwealth of Australia Represented by the Commonwealth Department of Agriculture, Fisheries

FUNDING AGREEMENT 2010-14

between the

Commonwealth of Australia represented by the Commonwealth Department of Agriculture, Fisheries and Forestry

ABN 24 113 085 695

and

Australian Livestock Export Corporation Limited

ABN 88 082 408 740

Funding Agreement 2010-14

Table of Contents

1.Definitions

2.Term and Operation of Agreement

3.LiveCorp Constitution and Membership

4.Board Corporate Governance

5.MOU

6.Payment of Funds

7.Management of Funds

8.Application of the Funds

9.Suspension or Termination of Fund Payments

10.Repayment of Funds

11.Access to Records and Use of Information

12.Strategic Plan and Annual Operational Plan

13.Other Plans

14.Reports, Meetings and Consultation

15.Additional Reports

16.Performance Review

17.Compliance Audit and Certification Reports

18.Conflict of Interest

19.Authorisation of Persons to Act

20.Indemnity

21.Relationship

22.Further Action

23.Resolution of Disputes

24.Assignment

25.Entire Agreement

26.Alteration

27.Waiver

28.Severability

29.Governing Law and Jurisdiction

30.Notice

31.Interpretation

Schedule 1 – Payment of Funds

Schedule 2 – Annual Reports

Schedule 3 – Cost Allocation Policy

Schedule 4 – Program Framework Guidelines

Page (1)
Funding Agreement 2010-14
Date
Parties
Commonwealth of Australia represented by the Commonwealth Department of Agriculture, Fisheries and Forestry ABN 24 113 085 695 (Commonwealth).
Australian Livestock Export Corporation Limited ABN 88 082 408 740 (LiveCorp).
Recitals
A / LiveCorp was established to undertake live-stock export industry services to, among other things, promote Australian livestock overseas, undertake industry research and provide services for the benefit of Australian livestock exporters.
B / LiveCorp has been declared to be the Live-stock Export Marketing Body and the Live-stock Research Body under Section 60(3) of the Australian Meat and Industry Livestock Act 1997 (Cth) (the Act). A Funding Agreement (Former Agreement) was entered into on 1 July 2007 under Sections 64A and 64B specifying the timing, manner and conditions relating to the payment of monies to those bodies.
C / LiveCorp agrees to provide, as part of its activities, an enhanced and dynamic facilitation role to help its members attain best practice and animal health and welfare outcomes.
D / LiveCorp will, in conjunction with Meat & Livestock Australia Limited (MLA), endeavour to determine funding priorities for joint livestock export marketing and promotion and research and development programmes.
E / LiveCorp agrees to remain a party to the Australian meat and live-stock industry Memorandum of Understanding (MOU) agreed on 27 April 1998 and as amended or replaced from time to time.
F / LiveCorp entered into a Deed of Agreement with the Commonwealth on 6 July 1998 and was subsequently declared as an approved donor for the purposes of the Act. This arrangement enables MLA to receive Commonwealth Matching Payments for amounts contributed by LiveCorp for research and development. Accordingly this Agreement only covers the payment and expenditure of Charge Funds.
G / The Former Agreement provides for the Commonwealth and LiveCorp to negotiate in good faith the renewal of the Former Agreement either on the same terms or on varied terms and conditions as agreed between the parties.
H / This Agreement replaces the Former Agreement.

It is agreed as follows.

1. Definitions
2. In this Agreement:

Act means the Australian Meat and Live-stock Industry Act 1997 (Cth), including any regulations or other instruments made under that Act.

Activities means specific tasks or projects performed as part of LiveCorp’s Program.

Note:the definitions of Activities, Outcomes, Outcome Statement, Program, Program Costs and Deliverables have been derived from the 2009-10 Portfolio Budget Statements Constructors Kit which was issued by the Department of Finance and Deregulation (DOFD) for the May 2009-10 Budget.

Agreement means this document and any schedules and annexures to it.

Agri-Political Activity means engaging in or financing any form of external or internal political campaigning, but does not include activity required or authorised under the Corporations Act 2001 (Cth) or another law. Clause 8.4 provides examples of activities which are not Agri-Political Activity.

Note: Clause 8.6 provides that LiveCorp may seek consultations with the Secretary about whether a proposed activity would amount to engaging in Agri-Political Activity.

Annual Operational Plan means a plan to be prepared by LiveCorp in accordance with clause 12.

Annual Report means a report to be prepared by LiveCorp in accordance with Schedule 2.

Business Daymeans a day on which Australian banks are open for general banking business in the Australian Capital Territory, excluding Saturdays and Sundays.

Business Hours means the hours between 9.00am and 5.00pm on a Business Day.

Certification Report means a report to be prepared in accordance with clause 17.3.

Chargehas the meaning given to ‘charge’ in the Charge Legislation.

Charge Funds means Marketing Funds and Research and Development Funds.

Charge Legislationmeans the Primary Industries (Customs) Charges Act 1999 (Cth) and the Primary Industries Levies and Charges Collection Act 1991(Cth).

Charge Payersmeans the persons who are required to pay charge amounts as defined under the Charge Legislation.

Charge Regulationsmeans any subordinate legislation operating or issued under the Charge Legislation.

Commonwealth Matching Paymentsare payments referred to in Section 66 of the Act made to MLA for research and development expenditures sourced from LiveCorp under the Donor Arrangement.

Compliance Audit Report means a report to be prepared in accordance with clause 17.1.

Confidential Informationmeans information for which all the following requirements are satisfied and including but not limited to Charge Payer information:

(a)the information is given by one party (the disclosing party) to the other (the receiving party) for or in connection with this Agreement;

(b)the information is by its nature confidential; or

(c)before or when the disclosing party gives the information to the receiving party, the disclosing party informs the receiving party that the information is confidential (which may be by marking a document including the information that is given by the disclosing party to the receiving party as mentioned in paragraph (a) of this definition to the effect that the information is confidential);

but does not include information that:

(d)is or becomes public knowledge other than by breach of this Agreement or by any other unlawful means;

(e)is in the possession of the receiving party without restriction in relation to disclosure before being given by the disclosing party; or

(f)has been independently developed or acquired by the receiving party.

Cost Allocation Policymeans the policy for allocating LiveCorp’s direct and indirect costs across its Research and Development Program and Marketing Program set out in Schedule 3.

Department means:

(g)the Department of Agriculture, Fisheries and Forestry; or

(h)if the Act is administered by a Minister of State other than the Minister—the Department of State administered by that Minister.

Directormeans a person who is for the time being a member of the board of directors of LiveCorp.

Donor Arrangement means the arrangement under the Act which is the subject of the Deed between the Commonwealth and LiveCorp dated 6 July 1998 and which enables MLA to obtain Commonwealth Matching Payments for research and development expenditures sourced from funds contributed to MLA by LiveCorp.

Financial Year means a period of 12 months starting on 1 July.

Former Agreement has the meaning given in Recital B.

Fraud Control Plan means a plan to be prepared and maintained by LiveCorp specifying measures to minimise the risk of fraud within LiveCorp in accordance with clause 13.1(b).

Funds mean any or each of the following:

(i)Marketing Funds;

(j)Research and Development Funds;

(k)income derived or earned from the Funds;

(l)proceeds of the sale or other disposition of assets acquired with the Funds referred to in paragraphs (a), (b) or (c) of this definition.

Guidelines means each of the following:

(m)the National and Rural Research and Development Priorities;

(n)other priorities or directions communicated to LiveCorp from time to time by the Minister in writing;

(o)the Levy Principles and Guidelines relating to the introduction of new levies or changes to existing levies; and

(p)any other guidelines relating to the Funds agreed between the parties including those included in Schedules 3 and 4.

Industry means the Australian Livestock Export Industry.

Industry Representative Body means a peak industry body or a body with similar advocacy or agri-political objectives.

Insolvency Event means any of the following:

(q)LiveCorp disposes of the whole or part of itsassets, operations or business, other than in the ordinary course of business;

(r)LiveCorp ceases to carry on business;

(s)LiveCorp ceases to be able to pay its debts as they become due;

(t)any step is taken by a mortgagee to take possession or dispose of the whole or part of LiveCorp’s assets, operations or business;

(u)any step is taken to enter into any compromise or arrangement between LiveCorp and its creditors or a class of them; or

(v)any step is taken to appoint a receiver, a receiver and manager, a trustee in bankruptcy, a provisional liquidator, a liquidator, an administrator or other like person to the whole or part of LiveCorp’s operations or business.

Intellectual Property means all copyright and neighbouring rights, and all rights in relation to inventions (including patents), plant varieties, registered and unregistered trade marks, registered designs, Confidential Information (including trade secrets and know how) and circuit layout rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.

Intellectual Property Management Plan means a plan to be prepared and maintained by LiveCorp specifying the procedures for management, adoption and commercialisation of Intellectual Property owned or licensed by LiveCorp in accordance with clause 13.1(c).

Marketing or Promotionmeans activities intended to encourage preference in export markets for Australian live-stock to the benefit of the live-stock export industry, including quality assurance and capability, but not including Research and Development.

Marketing Fundsmeans the amount paid to LiveCorp under section 64A of the Act.

Ministermeans the Minister having responsibility for the Act and includes a delegate of the Minister.

MLA has the meaning given in Recital D.

National and Rural Research and Development Priorities mean the priorities for R&D as communicated to LiveCorp by the Minister from time to time in writing.

Nomination Committee means a committee established by the board as set out in Recommendation 2.4 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, Second Edition, August 2007which shall be comprised of a majority of members who are not Directors of LiveCorp.

Outcome means the result, consequence or impact of LiveCorp’s actions.

Outcome Statement means a statement which articulates the planned results, activities and target group of LiveCorp’s investment of the Funds and serves three main purposes within the Program Framework:

(w)to specify the purposes for which the Funds are being invested by LiveCorp;

(x)to provide the basis for the development of Strategic and Annual Operational Plans; and

(y)to measure and assess to measure and assess the performance of the programs in contributing to LiveCorp’s planned outcomes.

Performance Review means a review conducted in accordance with clause 16 of LiveCorp’s performance against its plans that takes into account:

(z)the performance of LiveCorp in meeting its obligations under this Agreement; and

(aa)the implementation of Annual Operational Plans and Strategic Plan and the effectiveness of LiveCorp in meeting the targets and budgets set out in those plans; and

(bb)the efficiency with which LiveCorp carried out those plans; and

(cc)the delivery of the benefits to the Industry foreshadowed by those plans; and

(dd)other matters required to be covered by the Minister.

Performance Review Report means a report to be prepared in accordance with clause 16.1.

Programmeans a group of activities that collectively deliver services or benefits to industry or the community in general with the aim of achieving a planned outcome.

Program Costsmeans the total cost of all activities attributable to a Program, comprising both direct costs and indirect costs in accordance with the Cost Allocation Policy.

Program Deliverablesmeans the services or benefits derived from activities funded within a Program.

Program Frameworkmeans the Framework set out in Schedule 4 to this Agreement based on the Department of Finance and Deregulation (DOFD) “Outcomes and Programs Framework”.

RDCsmeans the statutory research and development corporations which operate under the Primary Industries and Energy Research and Development Act 1989 (Cth) and the declared agricultural industry owned companies, including LiveCorp, operating under statutory funding agreements with the Commonwealth.

Research and Developmentmeans systematic experimentation or analysis in any field of science, technology, economics or business (including the study of the social or environmental consequences of the adoption of new technology) carried out with the object of:

(ee)acquiring knowledge that may be of use in achieving or furthering an objective of the Industry, including knowledge that may be used for the purpose of improving any aspect of the live-stock export industry; or

(ff)applying such knowledge for the purpose referred to in paragraph (a).

Research and Development Funds means amounts paid to LiveCorp under section 64 (B) of the Act.

Risk Management Plan means a plan to be prepared by LiveCorp specifying the measures to be implemented to manage its material, commercial, legal and administrative risks in accordance with clause 13.1 (a).

Secretary means the Secretary of the Department.

Skills Based Board means a board of directors which can demonstrate collective expertise against each of the following:

(gg)corporate governance;

(hh)livestock management and welfare;

(ii)transportation of livestock;

(jj)international market development, international trade or the World Trade Organisation;

(kk)R&D, technology, technology transfer, commercialisation and adoption;

(ll)product promotion; and

(mm)finance and business management.

Note:Under the ASX Corporate Governance Principles and Recommendations, Second Edition, August 2007, it is contemplated that the skills required would be kept under review by the Nomination Committee.

Strategic Plan means a plan prepared by LiveCorp in accordance with clause 12.

1. Term and Operation of Agreement
2. This Agreement commences on 1 July 2010.
3. The parties agree that the Former Agreement terminates at midnight on 30 June 2010.
4. The termination effected by clause 2.2 does not affect a right of a party accrued on or before the termination.
5. The parties must, by 30 June 2014, negotiate in good faith with a view to renewing this Agreement.
6. In negotiating the renewal of this Agreement, the outcomes of the most recent Performance Review will be taken into account.

Note: under clause 9.1(h) the Minister may suspend or terminate Fund payments if there is a change in Government policy relating to the raising or spending of levies or payment.

1. LiveCorp Constitution and Membership
2. LiveCorp must:

(a)consult with the Commonwealth on changes to its Constitution to ensure that it will remain appropriate to a body performing the functions of the declared Live-stock Export Marketing Body and the Live-stock Research Body;

(b)give the Commonwealth a copy of each notice of a motion to modify the LiveCorp Constitution, at the same time as it gives notice of the motion to members of LiveCorp; and

(c)as soon as practicable after any modification of the LiveCorp Constitution is made, give the Commonwealth notice setting out the modification and explaining its effect.

3.2LiveCorp must do all things necessary to remain representative of the Industry’s marketing, promotion and research and development interests.

3.3Without limiting clause 3.2, LiveCorp must use its reasonable endeavours to ensure that:

(a)Charge Payers who are not members of LiveCorp are advised of their entitlement to become, and how they may become, members of LiveCorp; and

(b)members of LiveCorp comprise a substantial proportion of all Charge Payers.

1. Board Corporate Governance
2. LiveCorp should implement a framework of good corporate governance practice in managing and investing the Funds drawing on the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, Second Edition, August 2007 as appropriate. In particular, LiveCorp should aim:

(a)to structure its board to add value as outlined in Principle 2 of the abovementioned ASX Corporate Principles and Recommendations;

(b)for the establishment of a Skills Based Board recommended by a Nomination Committee (subject to retirement, election and other requirements under LiveCorp’s Constitution); and

(c)to set in place processes for evaluating the performance of the board and its committees.

4.2LiveCorp must report to the Minister in the meetings held under clause 14.2 of steps taken to improve Board corporate governance in accordance with clause 4.1.

1. MOU
2. LiveCorp must do all things necessary to remain a party to the MoU and must comply with its roles, responsibilities and other obligations under the MoU.
3. Payment of Funds
4. For the purposes of Sections 64(A) and 64(B) of the Act, the parties agree the time and the manner in which the amounts payable to LiveCorp under those sections are to be paid are as set out in Schedule 1.
5. LiveCorp agrees that the Commonwealth may either invoice LiveCorp, or deduct from relevant payments to be made to LiveCorp:

(a)amounts referred to in section 67 (3A) and 67 (3B) of the Act; and

(b)any reasonable expenses incurred by the Commonwealth in connection with any changes to the Act, the Charge Regulations or this Agreement initiated by LiveCorp or the Industry, subject to any budget that may be agreed between the Commonwealth and LiveCorp.

LiveCorp must pay any amount so invoiced to the Commonwealth within 30 days after receipt of the invoice.

6.3The Commonwealth must provide to LiveCorp, prior to the commencement of each financial year, an indicative, non-binding, budget and plan for the financial year in relation to the Commonwealth’s collection and recovery of levies.

1. Management of Funds
2. LiveCorp must establish such accounting systems, processes and controls as are necessary to ensure:

(a)the Funds are used only in accordance with the Act and this Agreement;

(b)all dealings with the Funds are properly authorised, conducted and accounted for; and

(c)an auditor is able to verify readily that the Funds have been used only in accordance with the Act and this Agreement.

7.2The accounting systems, processes and controls to manage the Funds established in accordance with clause 7.1 are required to take into account the Risk Management and Fraud Control plans developed under clauses 13.1(a) and (b).