Delaware
|
000-51030
|
59-343-4771
|
||
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer
Identification No.)
|
[ ]
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
[ ]
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
[ ]
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
[ ]
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Exhibit No.
|
Description
|
||
10.1
|
Manufacturing and Development Agreement by and between TearLab Research, Inc. and MiniFAB (Aust) Pty Ltd, dated August 1, 2011.+
|
||
+
|
Portions of this exhibit have been omitted pursuant to a request for confidential treatment and the non-public information has been filed separately with the SEC.
|
TEARLAB CORPORATION
|
|||
By:
|
/s/ William G. Dumencu
|
||
William G. Dumencu
Chief Financial Officer
|
Dated August 1, 2011
Manufacturing and development agreement
Parties
MiniFAB (Aust) Pty Ltd
ACN 100 768 474
TearLab Research, Inc.
|
Contact
Bernard O’Shea
Norton Rose Australia
Level 15, RACV Tower, 485 Bourke Street, Melbourne, Victoria 3000
Tel:
+61 (0)3 8686 6573
www.nortonrose.com
Our ref:
2626784
|
1
|
Definitions and interpretation
|
1
|
2
|
Development of the First Product
|
6
|
3
|
Supply of Products
|
7
|
4
|
Price
|
12
|
5
|
Development of New Products
|
13
|
6
|
TearLab Licence
|
17
|
7
|
Obligations of MiniFAB
|
19
|
8
|
Meeting
|
20
|
9
|
Payment and invoicing
|
20
|
10
|
Amendments to Specifications
|
21
|
11
|
Registrations, safety and Product liability
|
22
|
12
|
Insurance
|
22
|
13
|
Warranties
|
23
|
14
|
Third party licensors and contractors; Technology Transfer
|
23
|
15
|
Term, breach and termination
|
25
|
16
|
Liability and indemnity
|
28
|
17
|
Goods and services tax
|
29
|
18
|
Confidentiality
|
30
|
19
|
Disputes
|
31
|
20
|
Force Majeure
|
33
|
21
|
Notices
|
33
|
22
|
General
|
34
|
Schedule 1 First Product
|
37
|
|
Schedule 2 Form of Development Order
|
38
|
|
Schedule 3 Manufacturing and Ordering Schedule for the First Product
|
39
|
|
Schedule 4 Pricing Schedule for the First Product
|
40
|
|
Annexure A Requirement Definitions of First Product
|
43
|
|
Annexure B Specifications for First Product
|
44
|
|
Annexure C Manufacturing Plan Version 1.1
|
45
|
Parties
|
MiniFAB (Aust) Pty Ltd
ACN 100 768 474
|
A
|
MiniFAB is a micro-nano-bio company that offers customised manufacturing and advanced product development services.
|
B
|
TearLab is an in-vitro diagnostics company that is developing and desires to commercialise a proprietary tear testing platform, TearLab™, capable of accurately and rapidly diagnosing various eye diseases at the point-of-care.
|
C
|
MiniFAB and TearLab were parties to a development agreement for a tear collection interface device comprised of Terms of Business and the Project Proposal for Project Tear-Sense (Stage 0), each dated 17 November 2006.
|
D
|
TearLab wishes to acquire the services of MiniFAB in the manufacture and supply of the Osmolarity Test Cards for measuring osmolarity, as well as potential development and manufacture of other Test Cards, and MiniFAB has agreed to provide such services, on the terms of this Agreement.
|
1
|
Definitions and interpretation
|
1.1
|
Definitions
|
|
(1)
|
Agreement
means this document, including any schedule or annexure to it;
|
|
(2)
|
Annual Production Capacity
means, in respect of each Product, the quantity of the Product that MiniFAB is reasonably capable of manufacturing each year, and as varied in accordance with clause 3.5. The parties intend to specify the Annual Production Capacity for the Product in the Manufacturing and Ordering Schedule for that Product as agreed between the parties pursuant to clause 5.8;
|
|
(3)
|
Business Day
means a day that is not a Saturday, Sunday or any other day which is a public holiday or a bank holiday in Melbourne, Australia;
|
|
(4)
|
cGMP
means current Good Manufacturing Practices, as established by the FDA;
|
|
(5)
|
Commencement Date
means January 1, 2010;
|
|
(6)
|
Commercially Reasonable Efforts
means the exercise of such efforts and commitment of such resources by MiniFAB as would be expended on, or committed by MiniFAB for, a comparable development or manufacturing program of a similar scope and at a similar stage in development or product lifecycle, comparable profit margin and potential, competitive landscape, and risk profile, in each case with due regard to the nature of efforts and cost required for such development or manufacturing and taking into account payments made by TearLab, or obligated to be made by TearLab, under this Agreement;
|
|
(7)
|
Confidential Information
of a party means any Information (and all tangible and intangible embodiments thereof of any kind whatsoever) provided by that party or its Representatives to the other party or its Representatives whether provided orally or in any form and is marked, identified as or otherwise acknowledged to be confidential at the time of disclosure to the other party; provided, however, that information, data and results generated by MiniFAB under the Development Agreement, or in the course of performing activities under this Agreement, that relate to TearLab’s technology or to the development of Products or prototypes thereof shall be deemed the Confidential Information of TearLab;
|
|
(8)
|
Default Rate
means ****[REDACTED]**** per annum;
|
|
(9)
|
Delivery Point
means the premises of MiniFAB located at 1 Dalmore Drive, Scoresby, Victoria, Australia;
|
|
(10)
|
Development Expenses
means all costs and expenses incurred by MiniFAB for the development of a New Product as more particularly described in clause 5.5(1)(a), but does not include the capital expenditures referred to in clause 5.5(1)(b);
|
|
(11)
|
Development Order
means a document substantially in the form set out in Schedule 2 executed by or on behalf of MiniFAB and TearLab which details a New Product to be developed by MiniFAB in accordance with clause 5;
|
|
(12)
|
Development Request
has the meaning given in clause 5.2;
|
|
(13)
|
Expected Limit
means, in respect of each Product, the quantity of the Product that is reasonably expected to be the maximum quantity of Product that will be ordered by TearLAB for delivery in a given year, and as varied in accordance with clause 3.5. The parties intend to specify the Expected Limit for the Product in the Manufacturing and Ordering Schedule for that Product as agreed between the parties pursuant to clause 5.8.
|
|
(14)
|
EXW
means “ex works”, according to the Incoterms 2000 published by the International Chamber of Commerce (ICC) as amended from time to time;
|
|
(15)
|
FDA
means the United States Food and Drug Administration;
|
|
(16)
|
First Product
means the Osmolarity Test Card, together with the capsule and applicable packaging, all as further described in Schedule 1;
|
|
(17)
|
Force Majeure
means any cause which is not within the reasonable control of the party affected by it including, but not limited to, acts of God, war declared or undeclared, civil disturbance, acts or omissions of government or other competent authority, fire, lightning, explosion or flood, but excludes any cause due to lack of demand or market success for the Products;
|
|
(18)
|
Governmental Agency
means any court, administrative agency or commission or other governmental agency, body or instrumentality, domestic or foreign;
|
|
(19)
|
Information
means any information or know-how pertaining to, or in the possession or control of, a party including, but not limited to, information concerning its business, systems, technology and affairs, such as:
|
|
(a)
|
financial, technological, strategic or business information, concepts, plans, strategies, directions or systems;
|
|
(b)
|
research, development, operational, legal, marketing or accounting information, concepts, plans, strategies, directions or systems;
|
|
(c)
|
technology, source and object codes for computer software, intellectual property rights and technical and historical information relating thereto;
|
|
(d)
|
customer and supplier information; and
|
|
(e)
|
information relating to the Products;
|
|
(20)
|
Insolvency Event
in the context of a person means:
|
|
(a)
|
a receiver, receiver and manager, official manager, trustee, administrator, other controller (as defined in the
Corporations Act 2001
(Cth)) or similar official is appointed, or steps are taken for such appointment, over any of the equipment or undertaking of the person;
|
|
(b)
|
the person is or becomes unable to pay its debts when they are due or is or becomes unable to pay its debts within the meaning of the
Corporations Act 2001
(Cth) or is presumed to be insolvent under the
Corporations Act 2001
(Cth);
|
|
(c)
|
the person ceases to carry on business; or
|
|
(d)
|
an application or order is made for the liquidation of the person or a resolution is passed or any steps are taken to liquidate or pass a resolution for the liquidation of the person otherwise than for the purpose of an amalgamation or reconstruction;
|
|
(21)
|
Intellectual Property
means any copyright, design (whether registered or unregistered), trademark (whether registered or unregistered), patent or patent application or invention, circuit layout, know-how, confidential information (whether such information is in writing or recorded in any other form) and other proprietary or personal rights arising from intellectual activity in the business, industrial, scientific or artistic fields;
|
|
(22)
|
Loss
means any loss, damage, cost, interest, expense, fee, penalty, fine, forfeiture, assessment, demand, liability or damages incurred by a person to the extent resulting from any action, suit, claim, proceeding or cause of action brought against such party by a third party.
|
|
(23)
|
Manufacturing and Ordering Schedule
means, in respect of each Product, the manufacturing and ordering schedule agreed by the parties. The Manufacturing and Ordering Schedule for the First Product is set out in Schedule 3;
|
|
(24)
|
Net Sales Income
means the gross amount received from any independent third person buyer, reimburser or rebater for or in respect of the sale or supply of a Product less the following items to the extent that they are paid or actually allowed whether or not such costs are invoiced separately:
|
|
(a)
|
amounts repaid or credited and allowances including cash, credit or free goods allowances, given by reason of charge-backs, retroactive price reductions or billing errors and rebates for such Product;
|
|
(b)
|
amounts refunded or credited for such Product which was rejected, spoiled, damaged, outdated or returned which occur within 6 months from the date of invoice of the Product;
|
|
(c)
|
separately itemised packing, crating or insurance charges or allowances to the extent borne by TearLab and included in such amount;
|
|
(d)
|
any tax (excluding income tax), excise or other governmental charge upon or measured by the sale, transportation, delivery or use of the Product; and
|
|
(e)
|
separately itemised transportation, delivery or use charges to the extent borne by TearLab.
|
|
(25)
|
New Products
means any Test Cards developed pursuant to this Agreement and any other goods that the parties agree are New Products. For the avoidance of doubt, New Products do not include the First Product;
|
|
(26)
|
Price
means, in respect of each Product, the price payable by TearLab to MiniFAB for the supply of that Product, inclusive of all packaging, labelling and all other handling charges (other than the freight costs), as set out in the Pricing Schedule for that Product;
|
|
(27)
|
Pricing Schedule
means, in respect of each Product, the pricing schedule agreed by the parties. The Pricing Schedule for the First Product is set out in Schedule 4;
|
|
(28)
|
Products
means the First Product and any New Products;
|
|
(29)
|
Purchase Order
has the meaning given in clause 3.4;
|
|
(30)
|
Quarter
means a period of three months commencing on 1 January, 1 April, 1 July or 1 October;
|
|
(31)
|
R&D Services
means those development services for New Products as specified in clause 5.1;
|
|
(32)
|
Registrations
means all registrations or approvals required from the relevant Regulatory Authority or Authorities for the export, import, storage, promotion, supply, sale or other distribution in the of the Products;
|
|
(33)
|
Regulatory Authority
means any Governmental Agency having responsibility for the regulation of, oversight of or whose approval is required for the manufacture, marketing, sale or supply of the Products or the facilities in which it is manufactured;
|
|
(34)
|
Regulatory Requirements
means, collectively:
|
|
(a)
|
all laws and regulations and any and all other requirements of the FDA or any other Regulatory Authority that are mandatory to the manufacture, packaging, labelling, storage, handling and shipment of the Products by MiniFAB and, subject to clause 2.1, includes cGMP; and
|
|
(b)
|
all standards set by the International Organization for Standardization (ISO) that are mandatory to the manufacture, packaging, labelling, storage, handling and shipment of the Products by MiniFAB, including without limitation ISO 13485:2003 (Medical Devices Quality Management System), ISO 10993-1 (Biocompatibility), ISO 10993-5 (Biocompatibility: Cytotoxicity), and ISO 10993-10 (Biocompatibility: Sensitization and Irritation), but excludes
|
|
(c)
|
any law, regulation, requirement or standards that apply to the design, trials, marketing, sales or supply of the Products (and which do not also apply to the manufacture of Products and/or to MiniFAB’s supply to TearLab hereunder);
|
|
(35)
|
Representative
of a party means the employees, directors, agents or advisors of that party;
|
|
(36)
|
Requirement Definitions or PRD
means, with respect to any Product, the written documentation guiding MiniFAB’s development of such Product, including detailed requirement definitions for such Product, as agreed by the parties. The Requirement Definitions may be modified from time to time by mutual agreement of TearLab and MiniFAB in the course of development work for such Product, and MiniFAB agrees to use Commercially Reasonable Efforts to accommodate changes to the Requirement Definitions as TearLab may from time to time request;
|
|
(37)
|
Second Product
means the first New Product developed pursuant to this Agreement, which the parties intend to be a Test Cards similar to the First Product, provided that such product would be designed to measure either (i) a marker other than osmolarity, or (ii) both osmolarity and one other additional marker;
|
|
(38)
|
Specifications
means, with respect to any Product, the definitive written documentation guiding MiniFAB’s manufacture, packaging, labelling, storage and handling of such Product, prepared and agreed in accordance with clause 3.1; in each case, and as modified from time to time by mutual agreement of TearLab and MiniFAB in accordance with clause 10;
|
|
(39)
|
Successful Completion
has the meaning provided in clause 5.10;
|
|
(40)
|
Supply Start Date
has the meaning given in clause 3.2(2);
|
|
(41)
|
Test Card
means any tear collection test card or any microfluidic based collection test card for use with TearLab;
|
|
(42)
|
TearLab IP
has the meaning given in clause 6.1;
|
|
(43)
|
Technical Agreement
means the technical agreement entered into between MiniFAB and TearLab with respect to each Product, as may be amended from time to time, which specifies their respective responsibilities for quality control and quality assurance and related activities and qualifications with respect to the applicable Product. Mutually agreed Technical Agreements for other Products shall be entered into prior to commercial manufacture and supply of such Products; and
|
|
(44)
|
Term
means the term of this Agreement, including any extended term under clause 15.1.
|
1.2
|
Interpretation
|
|
(1)
|
Reference to:
|
|
(a)
|
one gender includes the others;
|
|
(b)
|
a person includes a body corporate;
|
|
(c)
|
a party includes the party’s executors, administrators, successors and permitted assigns;
|
|
(d)
|
a statute, regulation, code or other law or a provision of any of them includes:
|
|
(i)
|
any amendment or replacement of it; and
|
|
(ii)
|
another regulation or other statutory instrument made under it, or made under it as amended or replaced; and
|
|
(e)
|
dollars means Australian dollars unless otherwise stated.
|
|
(2)
|
“Including” and similar expressions are not words of limitation.
|
|
(3)
|
Where a capitalized word or expression is given a particular meaning, other parts of speech and grammatical forms of that capitalized word or expression have a corresponding meaning.
|
|
(4)
|
Headings and any table of contents or index are for convenience only and do not form part of this Agreement or affect its interpretation.
|
|
(5)
|
A provision of this Agreement must not be construed to the disadvantage of a party merely because that party was responsible for the preparation of the Agreement or the inclusion of the provision in the Agreement.
|
|
(6)
|
If an act must be done on a specified day which is not a Business Day, it must be done instead on the next Business Day.
|
1.3
|
Parties
|
|
(1)
|
If a party consists of more than 1 person, this Agreement binds each of them separately and any 2 or more of them jointly.
|
|
(2)
|
An obligation, representation or warranty in favour of more than 1 person is for the benefit of them separately and jointly.
|
|
(3)
|
A party which is a trustee is bound both personally and in its capacity as a trustee.
|
2
|
Development of the First Product
|
2.1
|
Regulatory approvals and exemptions
As between the parties, TearLab shall be responsible, in its discretion, for activities in seeking Registrations and other regulatory approvals from applicable Regulatory Authorities with respect to Products (including any CLIA waiver from the FDA in respect of the FDA 510(k) application for the TearLab system which uses the Products developed under this Agreement).
|
2.2
|
Design Development completed
The parties agree that the development of the design for the First Product has been completed, and the Requirement Definitions and Specifications of the First Product have been accepted by TearLab and are as annexed to Annexure A and Annexure B.
|
3
|
Supply of Products
|
3.1
|
Development of Specifications
|
|
(1)
|
Promptly after TearLab’s Acceptance of a New Product as set forth in clause 5.9, MiniFAB shall prepare, on the basis of the most recent Requirement Definitions for such New Product, and provide to TearLab for approval, the definitive Specifications for the applicable Product, for MiniFAB’s use to manufacture, package, label, store and handle the applicable Product.
|
|
(2)
|
TearLab will review the Specifications submitted by MiniFAB under clause 3.1(1) and may request amendments or modifications to the Specifications if:
|
|
(a)
|
the Specifications are inconsistent with the Requirement Definitions;
|
|
(b)
|
the Specifications are inconsistent with the Regulatory Requirements;
|
|
(c)
|
the requirements of the Specifications are unreasonable or uncommercial having regard to the Price or proposed Price of the relevant Product; or
|
|
(d)
|
the requirements of the Specifications are unrelated to the Product.
|
|
(3)
|
MiniFAB must act reasonably and accommodate any requests for amendment to the Specifications made by TearLab under clause 3.1(2).
|
|
(4)
|
TearLab must accept the Specifications when it is satisfied that the Specifications are consistent with the Requirement Definitions and the Regulatory Requirements, and are reasonable and commercial having regard to the Price or proposed Price of the relevant Product.
|
|
(5)
|
The Specifications for any Product may be modified or amended by mutual written agreement of the Parties. In the event that TearLab requests changes to the Specifications for reasons other than those set forth in clause 3.1(2) above, MiniFAB agrees to use Commercially Reasonable Efforts to accommodate such requested changes.
|
3.2
|
Capital investments and Supply Start Date
|
|
(1)
|
MiniFAB will in respect of each New Product, in accordance with the project plan specified in the Development Order or manufacturing plan for that New Product, once they have been agreed between the parties, use Commercially Reasonable Efforts to acquire, construct or develop such plant, equipment,
raw materials, labour, utilities and capital improvements
as are necessary to manufacture the Product to meet the Manufacturing and Ordering Schedule of that Product.
MiniFAB shall set
up the manufacturing process,
manufacture the Products,
and assemble and package the Products, all in accordance with the Specifications and all Regulatory Requirements.
MiniFAB
shall label the Products with such labels, tradenames, and trademarks as directed by TearLab.
|
|
(2)
|
MiniFAB will notify TearLab when MiniFAB reasonably believes that it has the necessary plant and equipment to manufacture a particular Product to meet the Manufacturing and Ordering Schedule of that Product. Promptly following such notification by MiniFAB, the parties shall mutually agree on and set the date (
Supply Start Date
for that Product) on which TearLab may begin placing binding Purchase Orders for that Product pursuant to clause 3.4.
|
|
(3)
|
The parties acknowledge and agree that the Supply Start Date for the First Product has already occurred.
|
3.3
|
Supply and Purchase Obligations
|
|
(1)
|
Subject to MiniFAB’s rights under clause 15.4, MiniFAB shall manufacture the Products exclusively for TearLab; and MiniFAB shall sell the Products exclusively to TearLab or its designee; and MiniFAB shall not otherwise manufacture, sell, or distribute the Products to any third party. MiniFAB acknowledges that TearLab may manufacture Products itself and/or engage one or more third parties in addition to MiniFAB to supply the Products to TearLab.
|
|
(2)
|
If the Manufacturing and Ordering Schedule for a Product provides for any exclusivity arrangement, then TearLab must exclusively order the Product from MiniFAB during the relevant exclusivity period until the exclusive volume (if any) specified in Manufacturing and Ordering Schedule is met, subject to MiniFAB meeting the conditions (if any) for the exclusivity, as set out in the Manufacturing and Ordering Schedule. For clarity, if TearLab orders sufficient units of the Product to satisfy the exclusivity obligations set forth in this clause 3.3(2), but MiniFAB does not accept such orders and/or MiniFAB does not supply such ordered quantities in accordance with this Agreement, failure by TearLab to purchase such quantities shall not be a breach of TearLab’s exclusivity obligations hereunder. This clause 3.3(2) shall not be construed to require TearLab to place orders in excess of the Annual Production Capacity.
|
|
(3)
|
MiniFAB hereby acknowledges that TearLab needs to obtain a reliable supply of the Products that meets certain quality, quantity and timing requirements, and agrees to comply with the following
Supply Requirements
:
|
|
(a)
|
ensure that the Supply Start Date for the Second Product occurs on or prior to the applicable cut-off date as specified in the Development Order for the Second Product;
|
|
(b)
|
ensure that each batch of Product are in full compliance with the Specifications (including without limitation any failure rates specified therein), the Technical Agreement, and the Regulatory Requirements; and
|
|
(c)
|
ensure that, for each 3 month period, at least 95% of shipments of Products are delivered by the delivery date required under clause 3.6.
|
|
(4)
|
If MiniFAB fails to comply with the Supply Requirements then:
|
|
(a)
|
MiniFAB must provide TearLab with the reasons for the non-compliance;
|
|
(b)
|
the parties must meet and discuss the reasons given by MiniFAB;
|
|
(c)
|
the parties must, acting reasonably, negotiate a mutually agreed remedy plan to address the reasons for the non-compliance;
|
|
(d)
|
MiniFAB must implement the agreed remedy plan; and
|
|
(e)
|
in respect of the Product in respect of which MiniFAB has failed to comply with the Supply Requirements, TearLab is not obligated for such Product ordered, but not delivered in accordance with Schedule 4, Invoicing and Reporting, Sections 1 and 2.
|
|
(5)
|
TearLab must meet the minimum ordering obligations for each Product (if any) as set out in the Manufacturing and Ordering Schedule of that Product by placing orders to purchase (and, to the extent such orders are accepted and filled in accordance with this Agreement, purchase from MiniFAB) the Product.
|
|
(6)
|
If TearLab fails to meet the minimum orders requirement set forth in clause 3.3(5) during the relevant period (other than as a result of the inability or failure of MiniFAB to timely supply conforming Products in quantities ordered by TearLab), then TearLab must pay to MiniFAB the minimum order liquidated damages (as applicable) as specified in the Manufacturing and Ordering Schedule for that Product.
|
|
(7)
|
TearLab shall have no purchase obligations under this Agreement, except as expressly set forth in this clause 3.3. For the avoidance of doubt, subject to clauses 3.3(2), 3.3(5) and 3.3(6), TearLab shall have the right to engage any third party to manufacture and supply any Products.
|
3.4
|
Forecast and ordering
|
|
(1)
|
Not less than 3 months prior to the Supply Start Date for a Product and on or before the 1
st
date of each calendar month thereafter, TearLab must submit to MiniFAB a non-binding forecast of the quantity of each of the Products that TearLab expects to purchase in each of the 4
th
through the 6
th
month following the month for which the forecast is due (e.g., the forecast due on January 1, 2010 would contain a forecast for April through June of 2010).
|
|
(2)
|
TearLab must place orders for the Products on a monthly basis 60 days prior to their requested delivery dates (as determined in accordance with clause 3.6) by sending binding written purchase orders to MiniFAB stating the Product, unit quantities and any other information reasonably required by MiniFAB from time to time (
Purchase Orders
). TearLab may begin placing Purchase Orders for any particular Product commencing with the Supply Start Date for that Product. TearLab shall use reasonable endeavours to ensure that the quantities of Products set forth in its Purchase Orders are consistent with the then-current forecast.
|
|
(3)
|
A Purchase Order constitutes an irrevocable offer made by TearLab to MiniFAB for the supply of the Products specified in the Purchase Order on the terms and conditions of this Agreement. Once received by MiniFAB, the Purchase Order is firm and may not be cancelled or modified without MiniFAB’s prior written consent.
|
|
(4)
|
Subject to clauses 3.4(5) or 3.5, MiniFAB must accept a Purchase Order if the quantity of the Product the subject of the Purchase Order is between 80% and 120% of the most recent forecast. In addition, MiniFAB agrees to use Commercially Reasonable Efforts to accept and satisfy Purchase Orders exceeding 120% of the most recent forecast. In the event that TearLab places a Purchase Order that exceeds 120% of the most recent forecast, MiniFAB shall (i) accept the Purchase Order with respect to quantities at least equal to 120% of the most recent Purchase Order, and (ii) notify TearLab in writing of those quantities (if any) exceeding 120% of the most recent forecast with respect to which MiniFAB is rejecting the Purchase Order.
|
|
(5)
|
If MiniFAB believes, on reasonable grounds, that a Purchaser Order is materially incorrect or, to the extent a Purchase Order exceeds 120% of forecast amounts, it is not capable of satisfying the Purchase Order with respect to excess amounts so ordered, then MiniFAB may reject the Purchase Order and must notify TearLab as soon as possible. If MiniFAB does not reject to a Purchaser Order within 5 Business Days of receipt of the Purchase Order, then MiniFAB is deemed to have accepted the Purchase Order. Any rejection by MiniFAB of a Purchase Order that is not provided for in this clause 3.4(5) or 3.5 is deemed to be a material breach of this Agreement for the purposes of clause 15.2(1).
|
3.5
|
Annual Production Capacity
and Expected Limit
|
|
(1)
|
Despite clause 3.4(4), MiniFAB may, in its absolute discretion, refuse to accept any Purchase Order for a particular Product if the Purchase Order would require MiniFAB to exceed the Expected Limit or Annual Production Capacity of that Product during that year.
|
|
(2)
|
The parties may, from time to time, vary the Annual Production Capacity of a particular Product by agreement in writing. If TearLab requests MiniFAB to increase the Annual Product Capacity, the parties shall promptly confer and discuss such matter in good faith, and MiniFAB shall endeavour to inform TearLab within thirty (30) days whether MiniFAB will agree to the requested increase in the Annual Production Capacity.
|
|
(3)
|
TearLab may increase the Expected Limit (to a level no greater than the Annual Production Capacity) by 6 months notice in writing to MiniFAB.
|
3.6
|
Delivery
|
3.7
|
Inspection and Nonconforming Products
|
|
(1)
|
TearLab must inspect the Products within 14 days after delivery (or such longer time as provided in the Technical Agreement) and must accept the Products if they meet the Specifications, the requirements of the Technical Agreement, and the Regulatory Requirements. If TearLab fails to object in writing within the applicable period, then TearLab must accept the delivered Products. TearLab may reject the delivered Products only if the Products fail to meet the Specifications, the requirements of the Technical Agreement, and/or the Regulatory Requirements. If TearLab rejects the delivered Products, TearLab must provide MiniFAB in writing the reasons for the rejection and the reasonably available evidence to substantiate those reasons.
|
|
(2)
|
If TearLab rejects the relevant Product, then MiniFAB shall promptly supply conforming replacement Products as soon as possible, whether or not MiniFAB agrees that TearLab properly rejected such Products. MiniFAB agrees to notify TearLab in writing if such replacement Products will not be shipped within five (5) business days.
|
|
(3)
|
If TearLab properly rejected the original Products, then:
|
|
(a)
|
TearLab’s payment for the rejected Products shall be deemed payment for the replacement Products; and
|
|
(b)
|
TearLab shall be entitled to a ten percent (10%) discount on the Price of the rejected Products; and
|
|
(c)
|
provided that the replacement Product is delivered within 1 month after the original required delivery date, then the discount set out above is the sole and exclusive remedy of TearLab for any loss, damage or liability suffered or incurred by TearLab in connection with the reject Products.
|
|
(4)
|
If TearLab was not entitled to reject the original Products in accordance with clause 3.7(1) then TearLab shall pay for both the rejected Products and the replacement Products.
|
|
(5)
|
If the parties disagree whether TearLab properly rejected the original Products, then the parties shall refer such matter to a mutually acceptable, independent testing laboratory (the
Testing Lab
)
to determine whether such Products were properly rejected. The fees and costs of the Testing Lab shall be borne by TearLab if the Testing Lab determines that the Products were improperly rejected and by MiniFAB if the Testing Lab determines that the Products were properly rejected. If the Testing Lab is unable to determine whether the rejected Products met the Specifications, the requirements of the Technical Agreement or the Regulatory Requirements, then either party may submit the matter to the dispute resolution process in clause 19.
|
|
(6)
|
TearLab may withhold payment for any rejected Products (and only the rejected Products) until:
|
|
(a)
|
MiniFAB re-delivers conforming Products, or
|
|
(b)
|
the Testing Lab or dispute resolution process determines that the Products rejected by TearLab met the Specifications, the requirements of the Technical Agreement and the Regulatory Requirements.
|
3.8
|
Risk and title to Products
|
|
(1)
|
Risk to the Products supplied by MiniFAB to TearLab transfers immediately on delivery to TearLab or into it’s custody (whichever is the sooner).
|
|
(2)
|
Property in the Products supplied by MiniFAB to TearLab under this Agreement does not pass to TearLab until the money owing for those Products has been paid in full. TearLab in the meantime takes custody of the Products and retains them as bailee of MiniFab.
|
|
(3)
|
Until the Products have been paid for in full, TearLab:
|
|
(a)
|
must properly store, protect and insure the Products, including storing them in a manner that shows clearly that they are the property of MiniFAB;
|
|
(b)
|
may sell the Products, in the ordinary course of its business, but only as fiduciary agent of MiniFAB. TearLab has no authority to bind MiniFAB to any liability by contract or otherwise and must not purport to do so. TearLab receives all proceeds, whether tangible or intangible, direct or indirect, of any dealing with the Products (including any proceeds from insurance claims) in trust for MiniFAB; and
|
|
(c)
|
agrees not to sell, assign, charge or otherwise encumber or grant any interest over any obligations which any third party may owe to TearLab as a result of the use, manufacture or resale of the Products.
|
|
(4)
|
If the Price of the Products sold by MiniFAB to TearLab is greater than the sum of the proceeds actually received by MiniFAB in respect of dealings by TearLab with the Products and all other payments received by MiniFAB in respect of the Products, the difference remains a debt owing by TearLab to MiniFAB.
|
3.9
|
TearLab irrevocably authorises MiniFAB to enter any premises owned or controlled by it in which the Products are stored to enable MiniFAB to reclaim possession of all Products if TearLab has not paid an undisputed invoice within 120 days of invoice. MiniFab acknowledges that TearLab does not own or control its logistics center.
|
3.10
|
Technical Agreements
|
3.11
|
Quality Control
|
4
|
Price
|
4.1
|
Pricing Schedule
|
4.2
|
Provision of the Pricing Schedule
|
5
|
Development of New Products
|
5.1
|
R&D Services
|
|
(1)
|
R&D Services for New Products include:
|
|
(a)
|
project management services relating to the development of the New Product;
|
|
(b)
|
assisting TearLab in the development, validation and finalisation of the Requirement Definitions for the New Product;
|
|
(c)
|
assisting TearLab in the development, validation and finalisation of the Specifications for the New Product;
|
|
(d)
|
using Commercially Reasonable Efforts to develop processes, methodology and technology to manufacture the New Product;
|
|
(e)
|
using Commercially Reasonable Efforts to evaluate and recommend appropriate technology necessary to manufacture the New Product;
|
|
(f)
|
using Commercially Reasonable Efforts to develop and construct plant and equipment necessary to manufacture the New Product; and
|
|
(g)
|
such other services as specified in a Development Order.
|
|
(2)
|
R&D Services exclude:
|
|
(a)
|
the initial formulation of and research on the Requirement Definitions for the New Product;
|
|
(b)
|
carrying out experiments, clinical tests or other validation methodologies in relation to the New Product;
|
|
(c)
|
preparations or filings relating to obtaining Registration for the New Product;
|
|
(d)
|
sales, distribution, marketing or public release of the New Product;
|
|
(e)
|
patent review; and
|
|
(f)
|
legal or other professional advisory services.
|
5.2
|
Request for development
|
|
(1)
|
TearLab may, from time to time, request MiniFAB in writing to provide R&D Services to develop a New Product (
Development Request
).
|
|
(2)
|
Subject to clause 5.2(4), if and when TearLab elects, in its discretion, to develop a Second Product, TearLab agrees that it will provide an opportunity for MiniFAB to provide the R&D Services with respect to the Second Product, as follows:
|
|
(a)
|
TearLab shall provide a written Development Request for the Second Product pursuant to clauses 5.2(1) and 5.2(3);
|
|
(b)
|
the parties shall discuss in good faith the anticipated activities under the Development Request and capabilities required to perform such activities;
|
|
(c)
|
if MiniFAB does not wish to undertake to perform the applicable R&D Services for the Second Product, MiniFAB agrees to promptly notify TearLab in writing;
|
|
(d)
|
if MiniFAB wishes to perform the applicable R&D Activities for the Second Product, MiniFAB shall propose the financial terms under which it is willing to undertake the R&D Services specified in the Development Request; and
|
|
(e)
|
if MiniFAB has appropriate capability to perform such R&D Activities for the Second Product as set forth in the Development Request, and offers to perform such activities on financial terms that are at least as favorable to TearLab as other bids for conducting such R&D Services TearLab receives from third parties with capability of performing such R&D Services, then TearLab shall engage MiniFAB for the conduct of such R&D Services for the Second Product. In such event, the parties shall prepare and sign a mutually agreed written Development Order, which shall set forth the activities to be conducted, timelines, deliverables, financial terms, and other mutually agreed terms and conditions regarding such R&D Services. Such Development Order shall be consistent with the intellectual property provisions and other applicable terms and conditions of this Agreement.
|
|
(3)
|
A Development Request must include:
|
|
(a)
|
a detailed description of the New Product;
|
|
(b)
|
draft Requirement Definitions for the New Product; and
|
|
(c)
|
a draft project plan including a proposed timetable.
|
|
(4)
|
MiniFAB will consider a Development Request and notify TearLab in writing whether or not MiniFAB accepts the Development Request within 20 Business Days of receipt of the request. If MiniFAB fails to respond within that time period, then it is deemed to have rejected the Development Request. To avoid doubt, MiniFAB is not required to provide any reason for rejecting a Development Request. It is understood that the Development Request is intended as an opportunity for the parties to negotiate terms and conditions on which MiniFAB may conduct the applicable R&D Services for TearLab. Accordingly, (i) MiniFAB shall not be obligated to accept any Development Request, and (ii) except as expressly set forth in clause 5.2(2)(e) with respect to the Second Product, TearLab shall not be obligated to engage MiniFAB to conduct R&D Services. Without limiting the foregoing, if MiniFAB rejects (or is deemed to have rejected) the Development Request for the Second Product, then despite clause 5.2(2), TearLab may engage another service provider to provide R&D Services in respect of that Development Request. TearLab shall have no obligation to offer to MiniFAB any further opportunity, or to engage MiniFAB, to perform any R&D Services except as expressly set forth under clause 5.2(2).
|
5.3
|
Development Order
|
|
(1)
|
If MiniFAB accepts a Development Request, then:
|
|
(a)
|
MiniFAB will provide TearLab with a revised draft project plan including proposed milestones and payment milestones; and
|
|
(b)
|
the parties must meet within 20 Business Days of the acceptance to meet and discuss the Development Request with the intent to finalise a Development Order.
|
|
(2)
|
The parties will act reasonably in negotiating the terms of the Development Order.
|
|
(3)
|
To avoid doubt, neither party is bound by a Development Request, a Development Order or any obligations to develop a New Product until the relevant Development Order is signed by both parties.
|
5.4
|
Provision of R&D Services
|
|
(1)
|
MiniFAB will provide the R&D Services in accordance with the relevant Development Order in a diligent and ethical manner, with due care and skill and to a high professional standard, in accordance with this Agreement, and all applicable Regulatory Requirements.
|
|
(2)
|
MiniFAB will use Commercially Reasonable Efforts to meet any milestones agreed in the relevant Development Order. Each Development Order may specify the agreed-upon remedies that shall apply for any failure by MiniFAB to meet such milestones, or otherwise fail to perform the R&D Services in accordance with clause 5.4(1).
|
5.5
|
Responsibilities of each party
|
|
(1)
|
MiniFAB is responsible for and will bear the costs and expenses associated with:
|
|
(a)
|
the provision of the R&D Services in accordance with the relevant Development Order (
Development Expenses
); and
|
|
(b)
|
the construction and acquisition of any plant and equipment and other related capital expenditures relating to the R&D Services.
|
|
(2)
|
TearLab will develop, validate and finalise the Requirement Definitions and the Specifications of the New Product in consultation with MiniFAB. MiniFAB will assist TearLab in accordance with the R&D Services.
|
|
(3)
|
TearLab is solely responsible for and will bear all costs and expenses associated with all activities relating to the research and development of the New Product that are not expressly included as part of R&D Services or that are expressly excluded from the R&D Services.
|
5.6
|
Ownership of Requirement Definitions and Specifications
|
5.7
|
Payment for R&D Services
|
5.8
|
Other matters relating to Development Order
|
|
(1)
|
the Pricing Schedule for the New Product;
|
|
(2)
|
the Manufacturing and Ordering Schedule (including the Annual Production Capacity) for the New Product, if any; and
|
|
(3)
|
if the New Product is a replacement or successor of an existing Product, variations to the Manufacturing and Ordering Schedule of the existing product (including the Annual Production Capacity and Expected Limit) for that existing Product.
|
5.9
|
Prototype Acceptance Testing
|
|
(1)
|
If required under the relevant Development Order, the parties will conduct acceptance testing of the New Product in accordance with this clause 5.9.
|
|
(2)
|
Promptly upon completion of the development of the New Product, MiniFAB shall manufacture and supply to TearLab a reasonable number of prototype units for the purposes of TearLab’s testing and evaluation, together with such documentation (including without limitation the QA test report), materials and equipment reasonably necessary for TearLab to perform testing and evaluation of the prototype. It is understood that the mutually agreed Development Order may provide for the supply and testing of multiple sets of prototype units for the New Product at different stages of development (such as, for example, alpha prototypes and beta prototypes).
|
|
(3)
|
TearLab may reject the prototype of the New Product only if it does not conform to the Requirement Definitions. TearLab must accept the prototype of the New Product if it conforms to the Requirement Definitions.
|
|
(4)
|
If TearLab rejects the prototype then TearLab must notify MiniFAB of the reasons for such rejection and MiniFAB will have thirty (30) days to cure such defect or non-conformance or dispute TearLab’s rejection pursuant to the dispute resolution process under clause 19. TearLab may require MiniFAB to resubmit revised prototype units to TearLab for testing and evaluation until the prototype fully conforms to the Requirement Definitions of the Product.
|
|
(5)
|
Upon TearLab’s acceptance of the New Product (“
Acceptance
”), TearLab shall promptly inform MiniFAB in writing.
|
5.10
|
Successful Completion
|
|
(1)
|
if the relevant Development Order provides a definition – the meaning ascribed to that term in the Development Order; or
|
|
(2)
|
the Acceptance of a New Product by TearLab, as such term is defined in clause 5.9.
|
5.11
|
Discontinuance – Unable to finalise Requirement Definitions
|
5.12
|
Discontinuance – TearLab
|
6
|
TearLab Licence
|
6.1
|
Limited licence
|
|
(1)
|
Subject to the terms and conditions of this Agreement, TearLab grants to MiniFAB during the Term a limited, royalty free, non-exclusive licence (without the right to sublicense) under any Intellectual Property, know-how and technical information owned (or licensed with the right to sublicense) by TearLab relating to the development or manufacture of the Products (
TearLab IP
) to use TearLab IP to perform MiniFAB’s obligations under this Agreement (
TearLab Licence
).
|
|
(2)
|
MiniFAB may only use TearLab IP to the extent necessary or desirable to develop and manufacture the Products and New Products or otherwise necessary for the purposes of this Agreement.
|
6.2
|
Provision of TearLab IP materials
|
6.3
|
Ownership of TearLab IP and Improvements to TearLab IP
|
6.4
|
IP Warranties and indemnity
|
|
(1)
|
TearLab warrants that TearLab has the right and authority to grant MiniFAB the TearLab Licence.
|
|
(2)
|
TearLab shall indemnify and at all times holds harmless MiniFAB against any Losses resulting from a third person’s claim against MiniFAB alleging that the use of TearLab IP by MiniFAB constitutes an infringement of any Intellectual Property of that third person; provided, however, that TearLab shall not be obligated to indemnify MiniFAB, and MiniFAB shall indemnify and at all times hold harmless TearLab against any such Losses (i.e., Loses arising from third party claims of infringement), to the extent the alleged infringement results from any modifications and developments made to TearLab IP by MiniFAB other than in accordance with instructions contained in any Specifications.
|
6.5
|
Termination of licence
|
6.6
|
Conversion of TearLab Licence
|
|
(1)
|
If clause 15.4 applies, the TearLab license shall apply by the rules stipulated by the UCSD licensure referred to in section 6.6(2). MiniFab may apply for the license through the UCSD licensing process and TearLab will assist in the licensure process to the best of its ability.
|
|
(2)
|
MiniFAB acknowledges that certain parts of the TearLab IP may incorporate or exploit Intellectual Property that is licensed from University of California, San Diego (
UCSD IP
). If clause 15.4 applies, on request from MiniFAB, TearLab will (providing MiniFAB remains within the licensure requirements):
|
|
(a)
|
provide MiniFAB with all information and materials relating to the UCSD IP, including explanations on which parts of the TearLab IP incorporate or exploit the UCSD IP;
|
|
(b)
|
use its best endeavours to obtain a licence from the University of California, San Diego as necessary to grant MiniFAB the rights in accordance with clause 6.6(1); and
|
|
(c)
|
facilitate, and provide all reasonable assistance to MiniFAB in relation to, any negotiations for a direct licence between MiniFAB and the University of California, San Diego in respect of the UCSD IP.
|
|
(3)
|
Except in respect of the UCSD IP
, as defined in clause
6.6(2), if clause 15.4
applies, then in consideration of MiniFAB entering into this Agreement on these terms, the TearLab Licence will automatically convert (on the effective date of termination of this Agreement) into an irrevocable, non-exclusive licence (with a right to sublicense) to reproduce, use and modify the TearLab IP solely for the purposes of manufacturing, marketing, distributing and selling the Products in accordance with clause
15.4.
The converted TearLab Licence will have a fixed term period, based upon the termination date and length of remaining term of the agreement, commencing from the effective date of termination of this Agreement
in recognition of MiniFab's investment into the development and production of the TearLab Osmolarity Test Card. This license and the term for which it is granted as described below, is designed to afford MiniFab the ability to recoup such investment
.
|
|
(a)
|
If clause 15.4 applies and this Agreement is terminated during months one (1)
through
thirty-six (36) after the Commencement Date, then the term of this license shall be for a period of seven (7) years.
|
|
(b)
|
If clause 15.4 applies and this Agreement is terminated during months thirty-seven (37) through sixty (60) after the Commencement Date, then the term of this license shall be for a period of five (5) years.
|
|
(c)
|
If clause 15.4 applies, and this Agreement is terminates during months sixty-one (61) through one hundred and twenty (120) after the Commencement Date, then the term of this license shall be for a period of three (3) years.
|
6.7
|
Infringement and protection of TearLab IP
|
7
|
Obligations of MiniFAB
|
7.1
|
Cooperation with TearLab
|
7.2
|
Regulatory licences
|
7.3
|
Lot records
|
|
(1)
|
samples of each lot of Products manufactured under this Agreement; and
|
|
(2)
|
quality control records,
|
7.4
|
Facility Audits
|
8
|
Meeting
|
8.1
|
During the Term, the parties will endeavour to meet at least every 6 months to discuss and review the state of the relationship between them. Each party must ensure that at least one of its senior representatives attend each meeting. Any such meeting may be teleconferenced.
|
8.2
|
Each party will alternate to organise the meeting. The party responsible for organising the meeting must prepare a formal agenda prior to the meeting and organise formal minutes to be taken and distributed to all attendees after the meeting takes place. Each party may provide its suggest agenda items. The compulsory topics for the agenda are as follows:
|
|
(1)
|
review of previous minutes; and
|
|
(2)
|
progress of any development and registration.
|
8.3
|
The parties acknowledge that the Pricing Schedule for a particular Product is based on various assumptions relating to demands, pricing and profitability of the Product. If either party reasonably considers that these assumptions are not valid, then the parties will, on request from either party, discuss the impact of these invalid assumptions on the Pricing Schedule. The parties may (but are not obliged to) agree to amend the affected Pricing Schedule in accordance with the process set out in clause 22.3, inclusive of the minimum order amount.
|
9
|
Payment and invoicing
|
9.1
|
Invoice
|
|
(1)
|
In relation to the supply of Products, MiniFAB will invoice TearLab in accordance with the Pricing Schedule. If the Pricing Schedule does not include any invoicing terms, MiniFAB will invoice on the delivery of the Products (as defined in clause 3.6).
|
|
(2)
|
In relation to the provision of R&D Services, MiniFAB will invoice TearLab in accordance with the Development Agreement for the First Product and the payment milestone specified in the relevant Development Order for New Products.
|
9.2
|
Payment
|
9.3
|
Interest
|
10
|
Amendments to Specifications
|
10.1
|
Compliance with Regulatory Requirements
|
10.2
|
Voluntary changes
|
10.3
|
Cost of amendments to Specifications
or changes in Regulatory Requirements
|
11
|
Registrations, safety and Product liability
|
11.1
|
Registrations of Products
|
|
(1)
|
obtaining all necessary Registrations for the Products; and
|
|
(2)
|
maintaining records of all sales of Product sufficient to adequately administer a recall, market withdrawal or correction for such period as is required under applicable regulations.
|
11.2
|
Adverse events
|
11.3
|
Notification of defects
|
11.4
|
Recalls
|
|
(1)
|
The parties each must notify the other promptly and in writing if any Product is requested or required to be the subject of a recall, market withdrawal or correction (
Recall
).
|
|
(2)
|
TearLab is solely responsible for the handling and disposition of any Recall and will assume all regulatory responsibility for such matters, including responsibility for all communications with the relevant Governmental Agencies. MiniFAB shall diligently cooperate with TearLab in the administration of any recall.
|
|
(3)
|
If a Recall is due to a non compliance with the Specifications or the Regulatory Requirements of the Product that is caused by the fault MiniFAB then MiniFAB will bear the reasonable cost of the Recall. In all other cases TearLab is solely responsible for the cost of the Recall.
|
12
|
Insurance
|
12.1
|
Required Insurance
from MiniFAB
|
|
(1)
|
all insurances required by law, including workers compensation insurance in accordance with relevant law; and
|
|
(2)
|
public liability insurance for an amount of not less than A$2 Million per claim and in the aggregate.
|
12.2
|
Required Insurance from TearLab
|
|
(1)
|
all insurances required by law, including workers compensation insurance in accordance with relevant law; and
|
|
(2)
|
product liability insurance for an amount of not less than US$2 Million per claim in the aggregate.
|
12.3
|
Evidence of insurance
|
13
|
Warranties
|
13.1
|
Product warranties
|
14
|
Third party licensors and contractors; Technology Transfer
|
14.1
|
Sub-Contractors
|
14.2
|
Cooperation with Sensortec
|
14.3
|
Non exclusive arrangement
|
14.4
|
Evaluation and licensing of other third party technology
|
14.5
|
Technology Ownership and Licensing
; Technology Transfer
|
|
(1)
|
TearLab shall retain ownership of any pre-existing intellectual property rights in materials and information provided by TearLab to MiniFAB for use by MiniFAB for the purposes of undertaking activities under this Agreement. MiniFAB shall retain ownership of any pre-existing intellectual property rights in materials, information, tools and methodologies provided by MiniFAB for the purposes of undertaking activities under this Agreement (and any improvements to them
,
except to the extent that those improvements comprise
patented or unpatented intellectual property owned or controlled by TearLab or that have application in the field of measuring osmolarity or osmolality of, or other characteristic of or any biomarker in, human tear fluid) (collectively, “
MiniFAB Background IP
”) and MiniFAB hereby grants
TearLab a
worldwide,
non-exclusive
, royalty-free license (with the right to grant and authorize sublicenses) to make, have made, use, offer for sale, sell and otherwise exploit MiniFAB Background IP
as may be required to make, have made, use, offer for sale, sell and otherwise exploit Licensed Products or incorporated into processes or procedures for manufacturing or testing Licensed Products. As used herein, “
Licensed Product
” means any article, item, product, equipment, process
, data, report
or other deliverable designed or developed in whole or part for TearLab by MiniFAB under the Development Agreement or this Agreement, whether or not such development or design is completed or successfully meets intended criteria
, including without limitation the First Product, Second Product and any other New Products developed in whole or part under the Development Agreement or in R&D Services performed by MiniFAB under this Agreement.
|
|
(2)
|
Subject to clause
14.5(1)
and the requirement for TearLab to pay MiniFAB all outstanding fees and charges due to MiniFAB, MiniFAB agrees to assign and hereby assigns to TearLab all
right, title and interest in and to any trade dress
, trademarks and design registrations
or design patents, and any inventions, whether patentable or not, and any other discoveries, trade secrets or know-how
which:
|
|
(a)
|
are embodied in a Licensed Product; and
|
|
(b)
|
were
made, developed, conceived or first reduced to practice by or for
MiniFAB
as a
direct result of MiniFAB undertaking activities under the Development Agreement or this Agreement
|
|
(3)
|
At any time during the term of this Agreement, or in the event of any termination of this Agreement, TearLab shall have the right to require MiniFAB:
|
|
(a)
|
to provide all reasonable assistance as requested by TearLab, including without limitation transfer of technology, materials, information and documentation, to enable TearLab to manufacture the Products internally or to secure the production and supply of the Products by a third party contractor (whether or not all or part of such technology, materials, information and documentation falls within the MiniFAB Background IP owned by MiniFAB); and
|
|
(b)
|
to provide TearLab with the consultancy services of all key engineering personnel of MiniFAB to effect or support such transfer of technology and/or the license to MiniFAB Background IP.
|
|
(4)
|
All MiniFAB Background IP shall be treated by TearLab and its sublicensees and their third party manufacturers as Confidential Information of MiniFAB; provided, however, that (i) TearLab may disclose the MiniFAB Background IP to actual and potential investors, sublicensees, advisors and/or contract manufacturers of Licensed Products, in each case under reasonable and customary terms of confidentiality; and (ii) TearLab and its sublicensees and contract manufacturers may disclose such information as is reasonably necessary in seeking regulatory approvals in connection with the manufacture, clinical development, use or commercialization of Licensed Products. For clarity, this clause 14.5(4) shall not be construed to prevent the use of MiniFAB Background IP in under authority of the license set forth in clause 14.5(1) above.
|
|
(5)
|
This clause 14.5 will survive termination of this Agreement.
|
15
|
Term, breach and termination
|
15.1
|
Term
|
|
(1)
|
This Agreement commences on the Commencement Date and continues for an initial period of ten (10) years after the Commencement Date.
|
|
(2)
|
This Agreement shall automatically renew for additional terms of three (3) years each, unless either party provides the other party with a written notice of non-renewal at least 120 days prior to the scheduled expiration of the then-current term.
|
15.2
|
Termination for cause
|
|
(1)
|
the Defaulting Party commits a material breach of this Agreement and fails to correct the breach within 30 days after written notice to do so;
|
|
(2)
|
the Defaulting Party fails to carry out any material provision of this Agreement and the failure is not capable of remedy; and/or
|
|
(3)
|
an Insolvency Event occurs in relation to the Defaulting Party.
|
15.3
|
Effect of termination
|
|
(1)
|
Upon termination or expiry of this Agreement for any reason other than for material breach by MiniFAB or due to an Insolvency Event in relation to TearLab, MiniFAB will complete the delivery of all outstanding Purchase Orders.
|
|
(2)
|
Upon termination of this Agreement for material breach by MiniFAB, TearLab may elect to cause MiniFAB to complete the delivery of all outstanding Purchase Orders or to cancel any or all outstanding Purchase Orders (in whole or in part).
|
|
(3)
|
Upon termination or expiry of this Agreement for any reason
|
|
(a)
|
TearLab must pay all outstanding undisputed invoices for all completed Purchase Orders;
|
|
(b)
|
all Development Orders are deemed to be discontinued and:
|
|
(i)
|
if this Agreement is terminated under clause 15.2 and MiniFAB is the Defaulting Party, then MiniFAB will be responsible for all Development Expenses incurred; and
|
|
(ii)
|
if this Agreement is terminated for any other reason, then TearLab must pay MiniFAB all Development Expenses incurred and any other unavoidable costs, specific to the development Order incurred by MiniFAB in connection with the termination, as set forth in clause 5.12; and
|
|
(c)
|
each party must immediately return the Confidential Information of the other party to the other party.
|
|
(4)
|
Except as provided in clause 15.5, termination is without prejudice to the rights of either party for any prior breach.
|
15.4
|
Exclusive distributorship in certain circumstances
|
|
(1)
|
MiniFAB’s obligation under clause 3.3(1) to manufacture the Products exclusively for TearLab and to sell the Products exclusively to TearLab or its designee, and not otherwise to manufacture, sell, or distribute the Products to any third party shall terminate;
|
|
(2)
|
TearLab appoints MiniFAB as its worldwide, non-exclusive distributor to market, distribute and sell the Products, for the applicable period determined in accordance with clause 6.6(3), commencing from the effective date of termination of this Agreement;
|
|
(3)
|
unless otherwise agreed by MiniFAB, TearLab must maintain the regulatory approvals for the Products, and MiniFAB will reimburse TearLab for the costs and expenses reasonably incurred by TearLab in maintaining the regulatory approvals;
|
|
(4)
|
MiniFAB will manufacture the Products on behalf of TearLab in accordance with the Regulatory Requirements, and may market, distribute and sell the Products anywhere in the world, subject to regulatory approvals; and
|
|
(5)
|
MiniFAB will pay TearLab a distributorship fee equal to 5% of the Net Sales Income received by MiniFAB in relation to the Products, or as agreed by the Administrator of the Receivership, such fee to be calculated and paid on a monthly in arrears basis.
|
15.5
|
Termination Fee
|
|
(1)
|
If this Agreement is terminated for any reason, other than where MiniFAB is the Defaulting Party, and the minimum orders requirements set forth in clause 3.3(5) for the whole of the initial expected term as provided by clause 15.1(1) have not been satisfied on or before the effective date of termination (other than as a result of the inability or failure of MiniFAB to timely supply conforming Products in quantities ordered by TearLab), then TearLab shall be deemed to have failed to meet the minimum orders requirement, and shall pay MiniFAB a Termination Fee made up of the following:
|
|
(a)
|
the direct cost of Products manufactured (in whole or in part) but not invoiced;
|
|
(b)
|
the repayment of capital invested by MiniFAB in equipment in order to manufacture the Products, including capital invested in anticipation of expected future supply, less depreciation calculated in accordance with Australian Accounting Standards; and
|
|
(c)
|
the expected profit of MiniFAB in respect of the remaining quantities of Product in Schedule 3, assuming TearLab ordered and MiniFAB supplied the balance of the minimum orders.
|
|
(d)
|
The above amount is not to include any capital expenses related to manufacturing expenses in respect of Product not actually supplied. The above Termination Fee will be negotiated in good faith at the time of Termination. The Termination Fee shall not include any amounts with respect to minimum orders requirements for Second Products as imposed under clause 3.3(5) unless such termination is effective after the date MiniFAB notifies TearLab pursuant to clause 3.2(2) that MiniFAB has put in place the necessary plant and equipment to manufacture the Second Product to meet the minimum orders of that Product.
|
|
(2)
|
The parties acknowledge and agree that (i) the Termination Fee is a genuine pre-estimate of the anticipated loss or damage which would be suffered by MiniFAB as a result of the early termination of this Agreement, (ii) the agreed upon Termination Fee shall be in lieu of any actual or alleged damages, losses or harm to MiniFAB resulting from such Termination and/or from any failure of TearLab to order or purchase Products from MiniFAB under this Agreement (
Termination Losses
), and (iii) MiniFAB waives its right to seek recovery or reimbursement of all Termination Losses other than the Termination Fee. However, the payment of the Termination Fee does not affect MiniFAB’s rights under clauses 6.6 and 15.4.
|
15.6
|
Survival
|
16
|
Liability and indemnity
|
16.1
|
Indemnity by TearLab
|
|
(1)
|
any grossly negligent, unlawful, fraudulent or wilful misconduct committed by TearLab or its Representatives in the performance of this Agreement;
|
|
(2)
|
the marketing, promotion, sale or supply of the Product by TearLab; or
|
|
(3)
|
TearLab’s failure to obtain, maintain or comply in any respect with any Registrations,
|
16.2
|
Indemnity by MiniFAB
|
|
(1)
|
any grossly negligent, unlawful, fraudulent or wilful misconduct committed by MiniFAB or its Representatives in the performance of this Agreement;
|
|
(2)
|
any manufacturing defect in any Product supplied by MiniFAB to TearLab, or any failure of any such Product to conform to the Specifications or the Regulatory Requirements therefor; or
|
|
(3)
|
MiniFAB’s failure to obtain and maintain all necessary governmental permits for the development and manufacture of Products hereunder.
|
16.3
|
General provisions applicable to indemnities
|
16.4
|
No consequential damages
|
17
|
Goods and services tax
|
17.1
|
In this clause 17:
|
|
(1)
|
GST
means GST as defined in
A New Tax System (Goods and Services Tax) Act 1999
as amended (
GST Act
) or any replacement or other relevant legislation and regulations;
|
|
(2)
|
words or expressions used in this clause which have a particular meaning in the
GST law
(as defined in the GST Act, and also including any applicable legislative determinations and Australian Taxation Office public rulings) have the same meaning, unless the context otherwise requires;
|
|
(3)
|
any reference to GST payable by a party includes any corresponding GST payable by the representative member of any GST group of which that party is a member;
|
|
(4)
|
any reference to an input tax credit entitlement by a party includes any corresponding input tax credit entitlement by the representative member of any GST group of which that party is a member; and
|
|
(5)
|
if the GST law treats part of a supply as a separate supply for the purpose of determining whether GST is payable on that part of the supply or for the purpose of determining the tax period to which that part of the supply is attributable, such part of the supply is to be treated as a separate supply.
|
17.2
|
Unless GST is expressly included, the consideration to be paid or provided under any other clause of this Agreement for any supply made under or in connection with this Agreement does not include GST.
|
17.3
|
To the extent that any supply made under or in connection with this Agreement is a taxable supply, the GST exclusive consideration otherwise to be paid or provided for that taxable supply is increased by the amount of any GST payable in respect of that taxable supply and that amount must be paid at the same time and in the same manner as the GST exclusive consideration is otherwise to be paid or provided. A party’s right to payment under this clause is subject to a valid tax invoice being delivered to the recipient of the taxable supply.
|
17.4
|
To the extent that one party is required to reimburse or indemnify another party for a loss, cost or expense incurred by that other party, that loss, cost or expense does not include any amount in respect of GST for which that other party is entitled to claim an input tax credit.
|
18
|
Confidentiality
|
18.1
|
Prohibited acts
|
|
(1)
|
to the party's sub-contractors, employees, legal advisers, auditors, investors or other consultants in order for this Agreement to be performed, provided that the recipients of the information undertake in writing to the party to keep that information strictly confidential; or
|
|
(2)
|
to Regulatory Authorities as required to obtain or maintain any regulatory approvals.
|
18.2
|
Permitted uses
|
18.3
|
Excluded information
|
|
(1)
|
was in the public domain when it was disclosed to the receiving party;
|
|
(2)
|
becomes, after being disclosed to the receiving party, part of the public domain, except through disclosure contrary to this Agreement;
|
|
(3)
|
was already in the receiving party's possession when it was disclosed to the receiving party and was not otherwise acquired from the other party directly or indirectly; or
|
|
(4)
|
was lawfully disclosed to the receiving party by a third party having the unrestricted legal right to disclose that information without requiring the maintenance of confidentiality.
|
18.4
|
Compulsory disclosures
|
18.5
|
Protection of information
|
18.6
|
Confidentiality of agreement
|
|
(1)
|
by either party to its sub-contractors, employees, auditors, consultants, professional advisers, bankers, financial advisers, financiers, investors and potential investors upon those persons undertaking to keep confidential any information so disclosed; or
|
|
(2)
|
to comply with any applicable law or requirement of any Governmental Agency or of any public stock exchange on which shares of the disclosing party are listed.
|
18.7
|
Return of Confidential Information
|
19
|
Disputes
|
19.1
|
Attempt to Settle
|
19.2
|
Limitations on Court Proceedings
|
19.3
|
Disputes relating to Product
|
19.4
|
Other disputes
|
19.5
|
Arbitration
|
|
(1)
|
If any dispute arises under, or in connection with, this Agreement and/or any Development Order, or in connection with any breach or alleged breach of this Agreement or any Development Order, and such matter is not resolved pursuant to clause 19.1 or 19.3 or by other agreement of the parties, such matter shall be finally resolved through binding arbitration as set forth in this clause 19.5. Either party may initiate arbitration of such a matter, and the party initiating arbitration of such dispute must give to the other party or parties to the dispute notice specifying the dispute and requiring its resolution under this clause 19.5 (
Notice of Dispute
). Such Notice of Dispute shall be given in accordance with the arbitration rules specified under this clause 19.5.
|
|
(2)
|
Each such dispute is by this clause 19.5 referred to binding arbitration for final resolution. The arbitration must be conducted in:
|
|
(a)
|
Melbourne, Australia if the Notice of Dispute is given by TearLab; and
|
|
(b)
|
San Diego California, USA, if the Notice of Dispute is given by MiniFAB.
|
|
(3)
|
If the parties have not agreed upon the arbitrator within 7 days after the Notice of Dispute is given, the arbitrator will be appointed in accordance with the then-current rules of the International Centre for Dispute Resolution.
|
|
(4)
|
The arbitrator must not be a present or former member, officer, employee or agent of a party to the dispute or a person who has acted as a mediator or advised any party in connection with the dispute.
|
|
(5)
|
The arbitration shall be conducted in accordance with the then-current rules of the International Centre for Dispute Resolution by one (1) arbitrator appointed in accordance with such rules. The arbitrator shall determine what discovery will be permitted, consistent with the goal of limiting the cost and time which the parties must expend for discovery; provided the arbitrator shall permit such discovery as the arbitrator deems necessary to permit an equitable resolution of the dispute. The arbitrator shall not order or require discovery against either party of a type or scope that is not permitted against the other party. The costs of the arbitration, including administrative and arbitrators’ fees, shall be shared equally by the parties, and each party shall bear its own costs and attorneys’ and witness’ fees incurred in connection with the arbitration. Any arbitration subject to this Article shall be completed within one (1) year from the filing of notice of a request for such arbitration. No punitive damages may be granted by the arbitrator. The arbitration proceedings and the decision shall not be made public without the joint consent of the parties, and each party shall maintain the confidentiality of such proceedings and decision unless otherwise permitted by the other party, except to the extent (and solely to the extent) either party is required to disclose such information by applicable securities or other laws. The parties agree that the decision shall be the sole, exclusive and binding remedy between them regarding any and all disputes, controversies, claims and counterclaims presented to the arbitrator. Any award may be entered in a court of competent jurisdiction for a judicial recognition of the decision and applicable orders of enforcement, and either party may apply to any court of competent jurisdiction for appropriate temporary injunctive relief pending resolution of any arbitration proceeding. The arbitrator shall provide a written arbitration award setting forth the arbitrator’s findings on material questions of law and of fact, including references to the evidence on which the findings of fact were based. Each party may be represented by a qualified legal practitioner or other representative.
|
|
(6)
|
This clause 19.5 applies even where the Agreement is otherwise void or voidable.
|
19.6
|
Continuing Obligations
|
20
|
Force Majeure
|
20.1
|
Party not liable
|
20.2
|
Notice of Force Majeure
|
|
(1)
|
give the other party prompt notice of the Force Majeure with reasonably full particulars and an estimate of the extent and duration of its delay in performance, or inability to perform; and
|
|
(2)
|
use all possible diligence to resume normal performance of the delayed obligations as quickly as possible.
|
20.3
|
Termination in case of Force Majeure
|
21
|
Notices
|
21.1
|
A notice or other communication connected with this Agreement (
Notice
) has no legal effect unless it is in writing.
|
21.2
|
In addition to any other method of service provided by law, the Notice may be:
|
|
(1)
|
sent by prepaid post to the address of the addressee set out in this Agreement or subsequently notified;
|
|
(2)
|
sent by facsimile to the facsimile number of the addressee;
|
|
(3)
|
sent via email to the email address of the addressee; or
|
|
(4)
|
delivered at the address of the addressee set out in this Agreement or subsequently notified.
|
21.3
|
If the Notice is sent or delivered in a manner provided by clause 21.2, it must be treated as given to and received by the party to which it is addressed:
|
|
(1)
|
if sent by facsimile or email, on the next Business Day at the place of receipt, unless a transmission failure notice is received by the sender; or
|
|
(2)
|
if sent by post or otherwise, upon receipt by the addressee.
|
21.4
|
Despite clause 21.3(1):
|
|
(1)
|
a facsimile is not treated as given or received unless at the end of the transmission the sender’s facsimile machine issues a report confirming the transmission of the number of pages in the Notice;
|
|
(2)
|
a facsimile is not treated as given or received if it is not received in full and in legible form and the addressee notifies the sender of that fact by the close of the Business Day on which it would otherwise be treated as given and received.
|
22
|
General
|
22.1
|
Further assurance
|
22.2
|
Entire understanding
|
22.3
|
Variation
|
22.4
|
Waiver
|
22.5
|
Costs and outlays
|
22.6
|
Governing law and jurisdiction
|
Executed by
MiniFAB (Aust) Pty Ltd
ACN 100 768 474 in accordance with section 127 of the
Corporations Act 2001:
|
||
/s/ Michael Wilkinson
|
/s/ Erol Harvey
|
|
Director/company secretary
|
Director
|
|
Michael Wilkinson
|
Erol Harvey
|
|
Name of director/company secretary
(BLOCK LETTERS)
|
Name of director
(BLOCK LETTERS)
|
1
|
Name
Osmolarity Test Cards (TCI cards)
|
2
|
Description
A Test Card for measuring osmolarity, as more particularly described in the applicable Requirements Definitions and Specifications.
Osmolarity Test Card means the tear collection device developed by MiniFAB and TearLab to measure osmolarity. The osmolarity test card (tci card interface) is described in PRD0001 (A copy of which is annexed to this Agreement).
All price and cost information is based on a tested and packaged osmolarity test card, packaged and configured as mutually agreed.
|
1
|
Description of New Product
###
|
2
|
Draft New Product Development Requirements
#Insert draft#
|
3
|
Estimated Development Expenses
###
|
4
|
Project Plan
#Please insert a project plan for carrying out the development.#
|
5
|
Development Milestones and Payments (if not included in the Project Plan)
#Each payment milestone should specify the amount payable and when it is payable. Other payment terms (if any) should be specified.#
|
6
|
Successful Completion
#Please insert criteria for Successful Completion. If this is left blank, then the default provisions in clause 5.10 will apply.#
|
7
|
Other terms
#Insert any other applicable terms relevant to the development of the new product.#
|
Year
|
Minimum Order
Requirements
|
Expected Limit
|
Consequences for failure to meet Minimum Order Requirements (Minimum Order Liquidated Damages)
|
Annual Production
Capacity
|
2010
|
****[REDACTED]****
|
An amount equal the Fixed Price Amount of the Product (as set out in the Pricing Schedule) payable multiplied by the difference between the Minimum Orders Requirement and the actual quantity of the Product ordered by TearLab from MiniFAB during the year. To be calculated on an annual basis.
|
****[REDACTED]****
|
|
2011
|
****[REDACTED]****
|
****[REDACTED]****
|
||
2012
|
****[REDACTED]****
|
****[REDACTED]****
|
||
2013
|
****[REDACTED]****
|
****[REDACTED]****
|
||
2014
|
****[REDACTED]****
|
****[REDACTED]****
|
||
2015
|
****[REDACTED]****
|
****[REDACTED]****
|
(1)
|
the Fixed Price Amount per card, in AUD, (which will be paid on delivery of the Product); OR
|
(2)
|
the Net Sales Amount per card, in USD, (which will be calculated on a quarterly basis),
|
(3)
|
the Fixed Price Amount per card is the amount set out in the table below, determined by reference to the date on which the Product was ordered from MiniFAB; and
|
(4)
|
the Net Sales Amount per card is the Selling Price of the Product (as defined below) multiplied by the Net Sales Component Percentage set out in the table below, determined by reference to the date on which the Product is sold by TearLab.
|
(5)
|
The aggregate Net Sales Amount is the Net Sales Amount per card multiplied by the total number of cards sold.
|
(1)
|
A card will be deemed sold at the earlier of the date it is invoiced, payment is received for it or it is shipped to the buyer.
|
(2)
|
Cards supplied as free samples will not be included in the quantity of cards sold or supplied.
|
(3)
|
If cards are supplied on other than an arms length basis, other than by way of free sample, then for the purpose of the calculation of the Net Sales Income, such cards will be deemed to be sold for an amount equal to the Net Sales Amount per card calculated ignoring any amount received for such cards and the quantity of cards so supplied.
|
(1)
|
MiniFAB will invoice the Fixed Price Amount of the Products the subject of a delivery, when the full and entire lot, from that delivery are shipped from MiniFAB to the TearLab logistics center specified. MiniFAB will ship the full and complete lot of test cards 10 Business Days after MiniFAB ships the samples to TearLab, or sooner if TearLab notifies it that the samples are accepted. MiniFAB will not ship the full and complete lot if within the 10 Business Days TearLab notifies it that the samples are not accepted for the reasons provided in clause 3.7(1).
|
(2)
|
TearLab shall pay for product received in acceptable condition at the logistics center specified by TearLab in accordance with clause 3.6, according to product specifications (as defined in clause 3.6)
|
(3)
|
Within 20 Business Days after the end of each quarter, TearLab must provide MiniFAB a written report detailing:
|
|
(a)
|
the number of units of Products held in stock at the start of each month of that quarter;
|
|
(b)
|
the number of units of Products delivered by MiniFAB to TearLab during each month of that quarter;
|
|
(c)
|
the number of units of Products sold by TearLab in each month of that quarter;
|
|
(d)
|
the gross amount invoiced for the Products sold by TearLab in each month of that quarter;
|
|
(e)
|
the Selling Price of the Products, per card, sold in that Quarter by TearLab (in USD) and details of the calculation. If the Products were invoiced or paid for in a currency other than USD, then the Selling Price will be converted to USD at the exchange rate published on the day of the sale. TearLab must include the exchange rate used for the conversion in its report; and
|
|
(f)
|
the aggregate Net Sales Amount for the Products sold by TearLab in that quarter.
|
(4)
|
Within 10 Business Days after receiving the report of TearLab in relation to a particular quarter, MiniFAB will invoice TearLab an amount equal to the difference between
|
|
(a)
|
the aggregate Net Sales Amount reported by TearLab for that month; and
|
|
(b)
|
the number of units of Products sold and shipped by TearLab in that quarter multiplied by the Fixed Price Amount (on the basis that if different Fixed Price Amounts applied that Product sold by TearLab, is sold on a first-in first out basis),
|
(1)
|
TearLab must keep and retain true and particular accounts and records of all sales of Products sufficient to verify TearLab’s calculation and reports provided under the provisions set out above. TearLab must retain records for a minimum of 7 years after the transaction to which they relate occurred.
|
(2)
|
During the term of this Agreement and for a period of 2 years thereafter, MiniFAB may appoint an independent qualified accountant to inspect and audit from time to time the accounts and records of TearLab referred to in paragraph (1) above and such other matters as are directly relevant to the calculation of the Selling Price or Net Sales Amount.
|
(3)
|
If any discrepancy is found by the accountant pursuant to an audit conducted in accordance with paragraph (2), then the amount determined due and payable will be adjusted in the report and payment shall be adjusted for the next quarter together with any applicable interest payable under clause 9.3.
|
(4)
|
No findings of the audit are considered final until both parties acting in good faith agree. An ongoing disagreement will be a dispute, and subject to resolution in accordance with clause 19 of the Agreement.
|
(5)
|
MiniFAB will bear the cost of any such audit unless a discrepancy of 10% or more in the amount of the aggregate Net Sales Amount is detected in which event TearLab must bear the cost of the audit
|