Exhibit
14.1










OccuLogix,
Inc. dba TearLab





Code
of Conduct





I.
            General
      Statement of Business Philosophy





In this
code of conduct (the “Code of
Conduct”), the “Company” refers to OccuLogix,
Inc. dba TearLab and, where the context permits or requires, to OccuLogix, Inc.,
its subsidiaries and its affiliates, collectively.





The
commitment to excellence is fundamental to the philosophy of the Company. This
commitment to excellence means that employees (including officers) and directors
share a common set of objectives and benefit from the achievement of those
objectives.





One
essential objective is our conviction to uphold ethical standards in all our
corporate activities. These standards apply to all of the Company's activities
in every market that it serves. The purpose of the Code of Conduct is to
strengthen the Company's ethical climate and to provide basic guidelines for
situations in which ethical issues may arise.





We strive
to do business with customers and suppliers of sound business character and
reputation. We do not knowingly support any public or private organization which
espouses discriminatory policies or practices. We expect all of our employees to
perform their work with honesty and integrity. It is the Company’s policy to
comply with all applicable laws, including, without limitation, employment,
discrimination, health, safety, antitrust, securities and environmental laws. No
director, officer or manager of the Company has authority to violate any law or
to direct another employee or any other person to violate any law on behalf of
the Company.





Each
employee and non-employee director of the Company is, and will be held,
responsible for the observance of the Code of Conduct. If any employee has
questions about any section of the Code of Conduct, he or she should direct all
questions to the Chief Executive Officer or the Vice President, Operations. If
an employee becomes aware that another employee has violated the Code of
Conduct, he or she is obligated to report it in accordance with the procedures
set forth below. No one has authority to retaliate against an employee who
reports a possible violation. Failure to comply with any of the provisions of
the Code of Conduct will subject the employee to disciplinary measures up to and
including termination.





II.
Policies and Practices





A.
Conflicts of Interest





A
conflict of interest may arise in any situation in which an employee's loyalties
are divided between personal interests that, to some degree, are incompatible
with the interests of the Company. All such conflicts should be avoided. The
Company demands absolute integrity from all its employees and will not tolerate
any conduct that falls short of that standard. The Company expects that no
employee will knowingly place himself or herself in a situation in which his or
her personal interests would be, or would have the appearance of being, or could
be construed to be, in conflict with the interests of the Company.





Some of
the more sensitive areas of conflicts of interest and the Company's related
guidelines are discussed immediately below:





1.
Conflicts of Interest





Each
employee is required promptly to disclose to the Chief Executive Officer or the
Vice President, Operations any material transaction or relationship that
reasonably could be expected to give rise to a conflict of interest. Subject to
certain exceptions provided for in the Code of Conduct, examples of material
transactions or relationships include:





• Any
ownership interest in any subsidiary of the Company or any privately held
supplier, competitor or customer; a significant ownership interest of a
supplier, competitor or customer that is a publicly traded firm;


• Any
ownership interest in special purpose entities or other investment vehicles that
may be established by the Company (excluding investments offered to employees in
general under employee benefit plans or to investors generally by financial
services subsidiaries);


• Any
consulting or employment relationship with any customer, supplier or competitor;
or any service on a board of directors or any committee thereof of such
customer, supplier or competitor unless such relationship or service is
communicated to, and approved by, the Company’s board of
directors;





• Any
outside business activity that detracts from an individual’s ability to devote
appropriate time and attention to his or her responsibilities with the
Company;


• The
receipt of any money, non-nominal gifts or excessive entertainment from any
company or individual with which the Company has current or prospective business
dealings;


• Selling
anything to, or buying anything from, the Company, except on terms and
conditions comparable to which other directors, officers or employees are
permitted to purchase or sell; and


• Being
in a position of supervising any family member or reviewing, or having any
influence on, his or her job performance, evaluation or
remuneration.





If an
employee finds himself or herself in a conflict of interest, or is uncertain
whether a conflict of interest exists, he or she should notify immediately the
Chief Executive Officer or the Vice President, Operations.





2.
Non-Company Service and Income





An
officer or director of the Company shall not serve as an officer, director,
employee, partner, trustee or consultant of, or receive any salary, fees,
dividends or other remuneration (except dividends and interest from publicly
traded securities or other similar investments) from, any enterprise with which
the Company conducts, or proposes to conduct, any business or any enterprise in
which the Company owns any interest, unless that relationship has been fully
disclosed to, and has been approved by the Company’s board of directors.
Approval of the Company’s board of directors is not required for an officer or
director of the Company to serve as an officer or director of any not-for-profit
enterprise with which the Company does not have an existing relationship. At all
times when serving in such capacity, such officer or director of the Company
should communicate clearly and effectively that he or she is not representing
the Company in such capacity.





3.
Outside Employment





Employees
should recognize that their position with the Company must be their primary
employment. Any outside employment, investment or other source of income must be
secondary and subordinate in importance and priority to an employee’s position
with the Company and must not interfere in any way with the performance of his
or her duties as a Company employee. Subject to the following conditions,
employees may hold jobs outside the Company. All employees must meet the
performance standards applicable to their respective jobs with the Company.
Employees will be judged by the same performance standards and will be subject
to the Company’s scheduling demands regardless of any outside work
requirements.  If the Company determines that an employee’s outside
work interferes with his or her job performance or ability to meet the
requirements of the Company, as they may be modified from time to time, such
employee may be asked to terminate his or her outside employment if he or she
wishes to remain with the Company.  Outside employment that, in the
sole discretion of the Company, constitutes a conflict of interest, that may
result in the disclosure of confidential information of the Company, that has
the appearance of impropriety or that may otherwise damage the Company’s
reputation (e.g.employment with a competitor or a major vendor or supplier) is not
permitted, and the Company may require an employee to terminate such outside
employment as a condition of remaining employed by the Company.





4.
Interests in Other Businesses





Unless
approved in advance by the Chief Executive Officer or the Vice President,
Operations, neither an employee nor his or her spouse, domestic partner or any
other member of the employee's immediate family may directly or indirectly have
a financial interest (whether as an investor, lender, employee or other service
provider) in a competitor or in a customer or supplier if that employee or his
or her subordinates deal directly or indirectly with that customer or supplier
in the course of his or her job with the Company or if such financial interest
interferes, or might appear to interfere with, such employee’s independent
business judgment. However, as a general rule, to the extent the individual in
question neither has, nor is likely to have, any direct business deals with the
other company, a financial interest would not be deemed improper if (i) it is in
a company whose shares are registered on a national securities exchange, (ii) it
represents less than one-tenth of 1% of the outstanding shares of the company in
question and (iii) the investment was made without the use of material
non-public information gained during the course of employment with the Company.
Financial interests that do not meet these criteria must be disclosed to, and
approved by, the Company’s board of directors.  For purposes of the
Code of Conduct, financial interest means ownership of stock, bonds, notes,
debentures, options and any other type of securities.  Ownership of
broad-based mutual funds that may hold financial interests prohibited by the
Code of Conduct will be deemed not to be a violation of the Code of
Conduct.





5.
Entertainment and Business Meals





There is
a general prohibition on the acceptance by employees of offers of entertainment
(such as, but not limited to, tickets to shows, concerts or sporting events,
meals, non-business travel or vacations) from any of the Company’s current or
prospective business partners (whether they be vendors, landlords, competitors,
outside consultants or others), except for offers of entertainment of less than
U.S. $500 in value (total per year aggregate) and which are for typical business
development activities. If any non-excepted offer of entertainment is made to an
employee by such business partner and if such employee’s impartial judgment is
that acceptance of such offer (i) would be in the best interest of the Company
and (ii) would not interfere with his or her ability to exercise independent
judgment on behalf of the Company regarding future transactions with such
business partner, then such employee must inform his or her manager who shall
determine whether, or the limited circumstances under which, the offer may be
accepted. Notwithstanding the fact that the acceptance by an employee of any
individual offer of entertainment from a business partner would be permitted
under the Code of Conduct, the frequency of acceptance of like offers of
entertainment and the other circumstances surrounding such acceptance should not
be such that the employee’s ability to exercise independent judgment on behalf
of the Company is, or may appear to be, compromised.





6.
Acceptance of Gifts





(For
clarity, in this section, the terms “gift” and “gifts” do not include offers of
entertainment which are covered in the immediately preceding section.) There is
a general prohibition on the acceptance by employees of gifts from any of the
Company’s current or prospective business partners (whether they be vendors,
landlords, competitors, outside consultants or others), whether in the form of
money, merchandise, services or any other form (other than non-cash promotional
gifts of less than U.S.$500 in value (total per year aggregate) and which are
used generally for promotional purposes by such business partners). If any such
gift is offered to an employee by such a business partner and if such employee’s
impartial judgment is that acceptance of such gift (i) would be in the best
interest of the Company and (ii) would not interfere with his or her ability to
exercise independent judgment on behalf of the Company regarding future
transactions with such business partner, then such employee must inform his or
her manager who shall determine whether, or the limited circumstances under
which, the gift may be accepted. In a situation in which a gift (other than an
excepted promotional gift) has been received already by an employee, he or she
must inform his or her manager who shall determine the proper disposition of the
gift. Proper disposition of a gift may entail its equitable distribution among
all of the employees of the Company.





7.
Use of Company Property and Information





All
employees are responsible for the proper use of the Company's physical resources
and property, as well as its proprietary and other confidential information.
Subject to the Code of Conduct, reasonable incidental use by employees of the
Company’s telephones, computers or other equipment is permitted. The property,
funds, services or other assets of the Company must never be used for personal
gain or illegal or improper activities.





a.
Company Property and Facilities





The
Company’s property, facilities or physical resources may not be used for
solicitation or distribution activities which are not related to an employee's
services to the Company, except for charitable activities. Employees may not
solicit any other employee during business hours, nor may employees distribute
literature in work areas at any time. Under no circumstances, may an employee
disturb the work of others to solicit or distribute literature to them during
business hours. Persons not employed by the Company may not solicit the
Company’s employees for any purposes on the Company’s premises. Any employee
found to be engaging in, or attempting, theft of any property of the Company,
including, without limitation, documents, equipment, intellectual property,
personal property of other employees, cash or any other items of value, will be
liable to immediate summary dismissal and possible criminal proceedings. All
employees have a responsibility to report any theft or attempted theft to the
Company's management.





b.
Company Proprietary and Other Confidential Information





Every
employee is hereby informed that proprietary information and trade secrets of
the Company must be safeguarded and protected in the same way that all other
important assets of the Company are safeguarded and protected. Information
concerning pricing, products and services that are being developed, and other
trade secrets, including information pertaining to any prospective acquisition
or divestiture by the Company, must be held in the strictest confidence, and
reasonable prudence and care should be exercised in dealing with such
information in order to avoid inadvertent inappropriate disclosure. This
information must not be used in any way other than as required in performing
employment duties. Employees should avoid casual conversations concerning such
information in public areas where it may be overheard by persons, either within
or outside the Company, who do not have any need to know such information.
Without limiting the generality of the foregoing, at no time should an employee
make any type of forward-looking projection regarding the Company’s performance
in a public area.  All files, records and reports acquired or created
in the course of employment are the property of the Company. Any originals or
copies of such documents that may be removed from the Company's offices for the
sole purpose of performing the employee's duties to the Company must be returned
promptly to the Company’s offices upon request.





c.
Trademarks, Service Marks and Copyrights





Trademarks
and service marks—words, slogans, symbols, logos or other devices used to
identify a particular source of goods or services—are important business tools
and valuable assets which require care in their use and treatment. No employee
may negotiate or enter into any agreement respecting the Company's trademarks or
service marks without first consulting the Chief Executive Officer or the Vice
President, Operations. The Company also respects the intellectual property
rights of others, and any proposed name of a new product or service intended to
be sold or rendered to customers must be submitted to the Chief Executive
Officer of the Vice President, Operations for clearance prior to its adoption
and use. Similarly, using the trademarks or service marks of another company
(even one with which the Company has a business relationship) always requires
clearance or approval by the Chief Executive Officer of the Vice President,
Operations in order to ensure that the use of that other company's trademarks or
service marks would be legal and proper.





Employees
must avoid the unauthorized use of copyrighted materials of others and should
confer with the Chief Executive Officer or the Vice President, Operations if
they have any questions regarding the permissibility of photocopying,
excerpting, electronically copying or otherwise using copyrighted materials. In
addition, simply because material is available for copying, such as matter
downloaded from the Internet, does not mean that it is automatically permissible
to copy or re-circulate (by, for example, e-mail or posting to an intranet
facility). All copies of work that is authorized to be made available for
ultimate distribution to the public, including all machine readable works such
as computer software, must bear the prescribed form of copyright
notice.





The
Company is legally entitled to all rights in ideas, inventions and works of
authorship relating to its business that are made by employees during the scope
of their employment with the Company or using the resources of the Company
("Employee
Developments"). As a condition of employment, employees are required to
disclose promptly all Employee Developments to their respective supervisors
(who, in turn, shall report them promptly to the Vice President, Operations) and
to execute the necessary documentation to transfer all Employee Developments to
the Company so as to evidence their ownership by the Company or to obtain legal
protection for them.





6.
Company Political Involvement





Employees
are free to exercise the right to make political contributions within legal
limits, unless such a contribution is otherwise prohibited by other policies of
the Company. The Company will not reimburse any employee for political
contributions, and employees should not attempt to receive or facilitate such
reimbursements. Generally, no contribution may be made with the expectation of
favorable government treatment in return. In any event, all contributions,
regardless of who makes them, are subject to a series of complex and sometimes
inconsistent sets of rules governing, among other things, the amount of, and the
manner in which, contributions may be made. Any questions about compliance
should be directed to the Chief Executive Officer or the Vice President,
Operations. In addition, any political activity or contribution by an employee
which might appear to constitute an endorsement or contribution by the Company
must be approved in advance by the Board of Directors.





B.
Securities Laws





Employees
may not trade in, or recommend, Company stock based on inside information.
"Insider trading" is the purchase or sale of a publicly traded security while in
possession of material non-public information about the issuer of the security.
Such information includes, for example, non-public information on Company
earnings, significant gains or losses of business or the hiring, firing or
resignation of a director or officer of the Company. Insider trading, as well as
"tipping", which is communicating such information to anyone who might use it to
purchase or sell securities, are prohibited by securities laws. When in doubt,
any information obtained as an employee of the Company should be presumed to be
material non-public information.





Employees
are referred to, and are bound by, the Company’s disclosure policy, a copy of
which is appended to the Code of Conduct as Schedule “A” and which forms an
integral part of the Code of Conduct.  Attention is drawn particularly
to the section of the Company’s disclosure policy that is entitled “Trading
Restrictions and Blackout Periods”.





Employees
who have questions pertaining to the sale or purchase of Company stock should
consult with the Chief Executive Officer or the Vice President, Operations who,
in turn, may refer employees to their personal attorneys.





C.
Antitrust Laws





The
federal government of each of the United States and Canada, most state
governments, the European Economic Community and many foreign governments have
enacted antitrust or competition laws. These laws prohibit "restraints of
trade", which is certain conduct involving competitors, customers or suppliers
in the marketplace. Their purpose is to ensure that markets for goods and
services operate competitively and efficiently, so that customers enjoy the
benefit of open competition among their suppliers and so that sellers similarly
benefit from competition among their purchasers. In the United States and some
other jurisdictions, violations of the antitrust laws can lead to substantial
civil liability—triple the actual economic damages to a plaintiff. Moreover,
violations of the antitrust laws are often treated as criminal acts that can
result in felony convictions of both corporations and individuals.





Strict
compliance with antitrust and competition laws around the world is essential.
These laws are very complex. Some types of conduct are always illegal under the
antitrust laws of the United States and many other countries. Employees and
other representatives of the Company must be alert to avoid even the appearance
of such conduct. These are:





1.
Agreements with competitors:





* to set
prices or any other economic terms of the sale, purchase or license of goods or
services, to use a common method of setting prices or to set any conditions of
sale or purchase;


* on any
terms of a bid or whether or not to bid;


* to
allocate or limit customers, geographic territories, products or services or not
to solicit business from each other in one or more ways;


* not to
do business with (to "boycott") one or more customers, suppliers, licensors or
licensees; and


* to
limit production volume or research and development, to refrain from certain
types of selling or marketing of goods or services or to limit or standardize
the features of products or services.





2.
Agreements with customers or licensees on the minimum resale price or price
levels (e.g. discounts)
of the Company's goods or services.





Other
activities are not absolutely illegal but will be legal in some market
situations and illegal in others. Some of these types of conduct involve
agreements with third parties such as competitors, customers, suppliers,
licensees or licensors. Others involve unilateral actions that may result in
claims that the Company has monopolized or attempted to monopolize a market.
These types of conduct are described below:





*
"Predatory" pricing, or pricing below some level of cost, with the effect of
driving at least some competition from the market;


*
Exclusive dealing arrangements that require customers or licensees not to deal
in the goods or services of the Company's competitors;


*
Reciprocal purchase agreements that condition the purchase of a product on the
seller's agreement to buy products from the other party;


* "Tying"
arrangements, in which a seller conditions its agreement to sell a product or
service that the buyer wants on the buyer's agreement to purchase a second
product that the buyer would prefer not to buy or would prefer to buy elsewhere
on better terms;


* "Price
discrimination", or selling to different purchasers of the Company's products at
different prices or on other different economic terms of the purchase, or
offering different promotional allowances or services in connection with the
customer's resale of the products, without complying with the specific
exceptions permitted under the law; and


*
Agreements with customers or licensees on the maximum resale price or price
levels of the Company's goods or services.





The Code
of Conduct is not intended as a comprehensive review of the applicable antitrust
or competition laws and is not a substitute for expert advice. If an employee
has questions concerning a specific situation, he or she should contact the
Chief Executive Officer or the Vice President, Operations before taking any
action.





D.
International Operations





Laws and
customs vary throughout the world, but all employees must uphold the integrity
of the Company in other nations as diligently as they would do so in the United
States and Canada. When conducting business in other countries, it is imperative
that employees be sensitive to foreign legal requirements and the United States
and Canadian laws that apply to foreign operations, including, without
limitation, the Foreign Corrupt Practices Act and the Corruption of Foreign Public
Officials Act(Canada). The Foreign Corrupt Practices Act generally makes
it unlawful to give anything of value to foreign government officials, foreign
political parties, party officials or candidates for public office for the
purposes of obtaining or retaining business for the Company. The Corruption of Foreign Public
Officials Act(Canada) makes it an offense to give or offer, directly or
indirectly, a loan, reward, advantage or benefit of any kind to a foreign public
official in order to obtain or retain an advantage in the course of business.
This principle applies even in jurisdictions where such practices are considered
a way of “doing business”. Employees should contact the Chief Executive Officer
or the Vice President, Operations if they have any questions concerning a
specific situation.





E.
Relationships with Public Officials





Some
employees do business with federal, state, provincial or local government
agencies. All employees engaged in business with a governmental body or agency
must know and abide by the specific rules and regulations covering relations
with public agencies. Such employees must also conduct themselves in a manner
that avoids any dealings which might be perceived as attempts to influence
public officials in the performance of their official duties.





F.
Bribery, Kickback and Fraud





No funds
or assets of the Company shall be paid, loaned or otherwise disbursed as bribes,
"kickbacks" or other payments designed to influence or compromise the conduct of
the recipient; and no employee of the Company shall accept any funds or other
assets (including those provided as preferential treatment to the employee for
fulfilling his or her responsibilities) for assisting in obtaining business or
for securing special concessions from the Company.





Employees
should conduct their business affairs in such a manner that the Company's
reputation will not be impugned if the details of their dealings should become a
matter of public discussion.





Employees
must not engage in any activity which degrades the reputation or integrity of
the Company.





To
illustrate the strict ethical standard that the Company expects every employee
to maintain, the following conduct is expressly prohibited:







1.
Payment or receipt of money, gifts, loans or other favors which may tend to
influence business decisions or compromise independent judgment;





2.
Payment or receipt of rebates or "kickbacks" for obtaining business for or from
the Company;





3.
Payment of bribes to government officials to obtain favorable rulings;
and





4. Any
other activity that would similarly degrade the reputation or integrity of the
Company.





Any
employee found to be receiving, accepting or condoning a bribe, “kickback” or
other unlawful payment, or attempting to initiate such activities, will be
liable to termination and possible criminal proceedings. Any employee found to
be attempting or engaging in fraud will be liable to termination and possible
criminal proceedings. All employees must report to the Chief Executive Officer
or the Vice President, Operations any actual or attempted bribery, “kickback” or
fraud of which they are aware.





G.
Sanctions and Trade Embargoes





The
United States and the Canadian governments use economic sanctions and trade
embargoes to further various foreign policy and national security objectives.
Employees must abide by all economic sanctions or trade embargoes that the
United States or Canada has adopted, whether they apply to foreign countries,
political organizations or particular foreign individuals and entities.
Inquiries regarding whether a transaction on behalf of the Company complies with
applicable sanction and trade embargo programs should be referred to the Chief
Executive Officer or the Vice President, Operations.





H.
Books and Records





All
employees with supervisory duties should establish and implement appropriate
internal accounting controls over all areas of their responsibility to ensure
the safeguarding of the assets of the Company and the accuracy of its financial
records and reports. The Company has adopted controls in accordance with its
internal needs and the requirements of applicable laws and regulations. These
established accounting practices and procedures must be followed to assure the
complete and accurate recording of all transactions. All employees, within their
respective areas of responsibility, are expected to adhere to these procedures,
as directed by appropriate Company officers.





Any
accounting adjustments that materially depart from Generally Accepted Accounting
Principles must be approved by the audit committee of the Company’s board of
directors and reported to the Company's independent auditors. In addition, all
material off-balance sheet transactions, arrangements and obligations,
contingent or otherwise, and other relationships of the Company with
unconsolidated entities or other persons that may have material current or
future effects on the financial condition, changes in financial condition,
results of operations, liquidity, capital expenditures, capital resources or
significant components of revenues or expenses must be disclosed to the audit
committee and the Company's independent auditors.





No
employee or non-employee director may interfere with or seek improperly to
influence, directly or indirectly, the auditing of the Company's financial
records. Violation of these provisions shall result in disciplinary action, up
to and including termination, and may also subject the violator to substantial
civil and criminal liability.





If an
employee becomes aware of any improper or questionable accounting or auditing
practice or matter concerning the Company, he or she should report the matter
immediately by following the guidelines contained in the Company’s Complaint and
Reporting Procedures, a copy of which is appended to the Code of Conduct as
Schedule “B”. The Company will not take any adverse action against anyone as a
result of his or her good faith complaint, report or concern pursuant to these
procedures.





I.
Employment Policies





The
Company is committed to fostering a work environment in which all individuals
are treated with respect and dignity. Each individual should be permitted to
work in a business-like atmosphere that promotes equal employment opportunities
and prohibits discriminatory practices, including harassment (sexual or
otherwise). Therefore, the Company expects that all relationships among persons
in the workplace will be business-like and free of unlawful bias, prejudice and
harassment. It is the Company's policy to ensure equal employment opportunity
without discrimination or harassment on the basis of race, color, national
origin, religion, sex, age, disability or any other status protected by
law.





It is the
Company's policy to comply with all applicable wage and hour laws and other
statutes regulating the employer-employee relationship and the workplace
environment. To the extent the Company deals with labor unions, it is illegal
under United States federal and state law for the Company or any of its
employees or agents to pay, or receive anything of value from, any labor
organization.





No
Company employee may interfere with, or retaliate against, another employee who
seeks to invoke his or her rights under the laws governing labor and employee
relations. If any employee has any questions about the laws or the Company’s
policies governing labor and employee relations matters, he or she should
consult the Chief Executive Officer or the Vice President,
Operations.





The
Company is committed to providing a safe workplace for all employees. In
addition, several laws and regulations impose responsibility on the Company to
safeguard against safety and health hazards. For that reason, and in order to
protect the safety of themselves and others, employees and other persons who are
present at the Company’s facilities are required to follow carefully all safety
instructions and procedures that the Company adopts. Questions about possible
health and safety hazards at any Company facility should be directed immediately
to the employee's immediate supervisor.





J.
Computer, E-mail and Internet Policies





Every
employee is responsible for using the Company's computer system, including,
without limitation, its electronic mail (e-mail) system and the Internet,
properly and in accordance with the Company’s General Network Security User
Guidelines and Policies, a copy of which is appended to the Code of Conduct as
Schedule “C” and which forms an integral part of the Code of
Conduct.





K.
Document Retention





The space
available for the storage of the Company’s documents, both on paper and in
electronic form, is limited and expensive. Therefore, periodic discarding of
documents is necessary. However, there are legal requirements that certain
records be retained for specific periods of time. Before disposing of documents,
employees should consult with his or her immediate supervisor, so that a
judgment can be made as to the likelihood that the documents will be
needed.





Whenever
it becomes apparent that documents of any type will be required in connection
with a lawsuit or government investigation, all possibly relevant documents
should be preserved, and ordinary disposal or alteration of documents pertaining
to the subjects of the litigation or investigation should be immediately
suspended. If an employee is uncertain whether documents under his or her
control should be preserved because they might relate to a present or future
lawsuit or investigation, he or she should contact the Chief Executive Officer
or the Vice President, Operations.





L.
Former Government Employees





Many laws
restrict the hiring as an employee, or the retaining as a consultant, of a
government employee other than for secretarial, clerical or other low salary
grade positions. These restrictions also cover informal arrangements for
prospective employment under certain circumstances. Therefore, written clearance
must be obtained from the Legal Department before discussing proposed employment
with any current government employee and before hiring or retaining any former
government employee who has left the government within the past two
years.





II.
            Compliance
      with the Code of Conduct





All
employees have a responsibility to understand and follow the Code of Conduct. In
addition, all employees are expected to perform their work with honesty and
integrity in any areas not specifically addressed by the Code of Conduct. A
violation of the Code of Conduct may result in disciplinary action, including
the possible termination from employment with the Company, without additional
warning.





An
employee must not be involved indirectly (e.g.through a
spouse, domestic partner, family member or friend) in any activity which would
violate the Code of Conduct if such employee were to engage in the activity
directly.





The
Company strongly encourages dialogue among employees and their supervisors to
make everyone aware of situations that give rise to ethical questions and to
articulate acceptable ways of handling those situations. In addition, each
officer and supervisory employee of the Company has an obligation to certify
annually that he or she has read and reviewed the Code of Conduct with his or
her subordinates, and every employee must certify annually that he or she has
read the Code of Conduct and that, to the best of his or her knowledge, is in
compliance with all of its provisions.





The Code
of Conduct reflects general principles to guide employees in making ethical
decisions and cannot, and is not intended to, address every specific situation.
As such, nothing in the Code of Conduct prohibits or restricts the Company from
taking any disciplinary action on any matter pertaining to employee conduct,
whether or not it is expressly discussed in this document. The Code of Conduct
is not intended to create any expressed or implied contract with any employee or
third party. In particular, nothing in this document creates any employment
contract between the Company and any of its employees.





The
Company’s board of directors has the exclusive responsibility for the final
interpretation of the Code of Conduct. The Code of Conduct may be revised,
changed or amended at any time by the Company’s board of directors or a
committee thereof.





IV.
Reporting Actual or Suspected Non-Compliance





A.
General Policy:





As part
of the Company’s commitment to ethical and legal conduct, the Company expects
each of its employees to bring to the attention of the Company information about
actual or suspected violations of the Code of Conduct or of law by any employee
or agent of the Company, including improper or questionable accounting or
auditing practices or matters. An employee who has information about actual or
suspected violations of the Code or Conduct, including improper or questionable
accounting or auditing practices or matters, should report such information by
following the guidelines contained in the Company’s Complaint and Reporting
Procedures, a copy of which is appended to the Code of Conduct as Schedule “B”.
The Company will not take any adverse action against anyone as a result of his
or her good faith complaint, report or concern pursuant to these
procedures.





Because
failure to report criminal activity can itself be understood to condone the
crime, we emphasize the importance of reporting. Failure to report knowledge of
wrongdoing may result in disciplinary action against those who fail to
report.





B.
Protection Against Retaliation





Retaliation
in any form against an individual who reports a violation of the Code of Conduct
or of law in good faith, even if the report is mistaken, or who assists in the
investigation of a reported violation, is itself a serious violation of the Code
of Conduct. Acts of retaliation should be reported immediately and will be
disciplined appropriately.





C.
Good Faith Reporting





Employees
are required to act in good faith in connection with the making of reports under
the Code of Conduct.  Disciplinary action, up to and including the
termination of employment, will be taken against any employee who makes a report
under the Code of Conduct while not acting in good faith.





* *
*





Please
indicate that you have received, read and will abide by the Code of Conduct by
signing your name and dating the attached acknowledgment and returning it
promptly to your supervisor.









1. TearLab,
Inc. Code of Conduct Certificate of Compliance





I
acknowledge that I have received a copy of the Code of Conduct (including the
Company’s Complaint and Reporting Procedures, a copy of which is appended to the
Code of Conduct as Schedule “B”), that I have read and understand it and that I
will apply it to all business interactions.





I
acknowledge that I understand that the Code of Conduct summarizes the Company's
policy for appropriate employee behavior and conduct and does not describe every
specific act that is unacceptable or illegal.





I
acknowledge that, to the best of my knowledge and other than any exceptions
previously reported or described below, I have not violated the Code of
Conduct.





I
acknowledge that I understand the requirements of the Code of Conduct and my
duty to comply with the requirements therein.





I
acknowledge that I have no expectation of privacy with regard to any electronic
communications in which I participate utilizing the property or facilities
belonging to the Company and that the requirements of the Code of Conduct, and
my duty to comply with the requirements therein, extend to such electronic
communications.





I
acknowledge that I have acted, and will continue to act, in accordance with my
responsibilities and obligations as set forth in the Code of Conduct. I
understand that any failure to do so may result in disciplinary action, which
may include dismissal from employment with the Company.





I
acknowledge that I have a duty to notify the Company, should I become aware of
any violations or potential violations of the Code of Conduct, including
improper or questionable accounting or auditing practices or
matters.





I
acknowledge that I am aware of reporting procedures for any actual or suspected
violations of the Code of Conduct (including improper or questionable accounting
or auditing practices or matters), as outlined in the Company’s Complaint and
Reporting Procedures, a copy of which is appended to the Code of Conduct as
Schedule “B”.





I
acknowledge that any violations or potential violations of the Code of Conduct
of which I am aware have been reported in accordance with the requirements of
the Code of Conduct.





I
acknowledge that, if I supervise others, all of my direct reports understand
their responsibilities and obligations under the Code of Conduct. I further
acknowledge that, to the best of my knowledge, my direct reports have not
violated the Code of Conduct and that my direct reports are not aware of any
violations of the Code of Conduct that have not been reported.





I
acknowledge that the Code of Conduct may be revised, changed or amended, at any
time and from time to time, and that I will abide by any and all revisions,
changes or amendments to the Code of Conduct.





Please
initial the applicable statement.


__________I
have read the above Certificate of Compliance and have no exceptions to
report.


__________I
have read the above Certificate of Compliance and have the attached exceptions
to report.





SignatureName
      (Print or Type)DateLocation





SCHEDULE
“A”





DISCLOSURE
POLICY







TEARLAB
DISCLOSURE POLICY








OBJECTIVE
AND SCOPE





The
objective of this disclosure policy is to ensure that communications to the
investing public about the Company are:





• timely,
factual and accurate; and


• broadly
disseminated in accordance with all applicable legal and regulatory
requirements.





This
disclosure policy confirms in writing our existing disclosure policies and
practices. Its goal is to raise awareness of TearLab’s approach to disclosure
among the board of directors, senior management and employees.  This
disclosure policy extends to all employees of TearLab, its board of directors
and those authorized to speak on its behalf. It covers disclosures in documents
filed with the securities regulators and written statements made in TearLab’s
annual and quarterly reports, news releases, letters to shareholders,
presentations by senior management and information contained on www.TearLab.com.  It
extends to oral statements made in meetings and telephone conversations with
analysts and investors, interviews with the media as well as speeches, press
conferences and conference calls.





DISCLOSURE
POLICY COMMITTEE





The
Executive Team has established a disclosure policy committee (the "Committee")
responsible for overseeing TearLab’s disclosure practices. The Committee
consists of Eric Donsky (CEO), Ben Sullivan (CSO), Bill Dumencu (CFO) and bob
Walder, Vice President, Operations.





The
Committee will set benchmarks for a preliminary assessment of materiality and
will determine when developments justify public disclosure. The Committee will
meet as conditions dictate.  It is essential that the Committee be
kept fully apprised of all pending material TearLab developments in order to
evaluate and discuss those events and to determine the appropriateness and
timing for public release of information. If it is deemed that the information
should remain confidential, the Committee will determine how that inside
information will be controlled.





The
Committee will review and update, if necessary, this disclosure policy on an
annual basis or as needed to ensure compliance with changing regulatory
requirements. The Committee will report to the board of directors on an annual
basis.





PRINCIPLES
OF DISCLOSURE OF MATERIAL INFORMATION





Material
information is any information relating to the business and affairs of OccuLogix
that results in, or would reasonably be expected to result in, a significant
change in the market price or value of the Company’s securities or that would
reasonably be expected to have a significant influence on a reasonable
investor’s investment decisions. In complying with the requirement to disclose
forthwith all material information under applicable laws and stock exchange
rules, the Company will adhere to the following basic disclosure
principles:





1.
Material information will be publicly disclosed immediately via news release and
the filing of an 8K with the SEC.


2. In
certain circumstances, the Committee may determine that such disclosure would be
unduly detrimental to the Company (for example, if release of the information
would prejudice negotiations in a corporate transaction), in which case the
information will be kept confidential until the Committee determines it is
appropriate to publicly disclose. In such circumstances, the Committee will
cause a confidential material change report to be filed with the applicable
securities regulators and will periodically (at least every 10 days) review its
decision to keep the information confidential (also see 'Rumors').


3.
Disclosure must include any information the omission of which would make the
rest of the disclosure misleading (half truths are misleading).


4.
Unfavorable material information must be disclosed as promptly and completely as
favorable information.


5. No
selective disclosure. Previously undisclosed material information must not be
disclosed to selected individuals (for example, in an interview with an analyst
or in a telephone conversation with an investor). If previously undisclosed
material information has been inadvertently disclosed to an analyst or any other
person not bound by an express confidentiality obligation, such information must
be broadly disclosed immediately via news release.


6.
Disclosure on www.TearLab.com
alone does not constitute adequate disclosure of material
information.


7.
Disclosure must be corrected immediately if OccuLogix subsequently learns that
earlier disclosure by the Company contained a material error at the time it was
given.





TRADING
RESTRICTIONS AND BLACKOUT PERIODS





In the
course of employment with the Company, directors, officers and employees may
come into possession of confidential and highly sensitive information concerning
the Company, its suppliers or other companies with which the Company has had
contractual relationships or may be negotiating transactions.  Much of
this information has a potential for affecting the market price of securities
issued by the Company or the other companies involved.  Under some
circumstances, securities laws impose considerable civil and criminal penalties
on persons who improperly obtain or use material, non-public information in
connection with a purchase or sale of securities (i.e., "insider
trading").  We are subject to U.S. securities laws as well as Canadian
securities laws on insider trading.  Recent federal legislation in the
U.S. has given the U.S. Securities and Exchange Commission (the "SEC") and
courts even greater powers in imposing penalties for violations of the insider
trading provisions of the U.S. securities laws, and the SEC and governmental
prosecutors have been vigorously enforcing these insider trading laws against
both institutions and
individuals.





TearLab
has 3 primary policies with respect to employee trading
restrictions:





1. No Trading on Material,
Non-Public Information.





Any
director, officer, or employee who has material, non-public information relating
to the Company or to
any other public entity, including the Company’s major suppliers, may not
(i) buy or sell the securities of the Company (or the other public entity),
including trading in options as well as stock;  (ii) pass along the
information to others (so-called “tipping”) or (iii) permit any member of his or
her immediate family or anyone acting on his or her behalf, or anyone to whom he
or she has disclosed the information, to purchase or sell such securities or
options.





To allow
for public dissemination and evaluation of the information after public
disclosure through appropriate channels, a reasonable time should be allowed to
elapse (at least two business days) before trading in the
security.  During the 60-day period beginning two business days after
the release of quarterly or annual financial results, it is expected that you
will be less likely to be in possession of material, non-public
information.  However, even during these periods, you are subject to
the above prohibitions if you possess material, non-public
information.





2.  Trading
Restrictions.





It is the
Company’s policy that officers, directors, and employees should not engage in
any of the following activities with respect to the Company’s
securities:





A.
            Trading
      in the Company’s stock at any time other than a "window period" which is
      the 60-day period beginning two business days after the release of
      quarterly or annual financial results.   The Company may
      also announce other "window periods" from time to time in its discretion
      in the event the Company files or publicly reports certain information,
      such as a prospectus for a stock offering.  The Company may also
      announce "blackout periods" during which officers, directors and employees
      should not trade in the Company's stock, even within sixty days after the
      two business-day period following the release of quarterly or annual
      financial results.





B.
            The
      Company’s directors and certain executive officers who are subject to the
      rules under Section 16 of the U.S. Securities Exchange Act (“Section 16
      officers”) are prohibited from trading in the Company’s stock on a
      short-term basis at any time.  Any stock purchases by directors
      or Section 16 officers must be held for a minimum of six months before
      sale, unless the stock is subject to forced sale (e.g., as a consequence
      of a merger or acquisition or a forced exercise of options upon
      termination of employment).   This prohibition shall not
      prevent officers or directors from selling stock shortly after exercising
      options to purchase stock.  If an officer needs clarification as
      to whether he/she is a “Section 16 officer” for this purpose, please
      contact the Chief Executive Officer or the Vice President,
      Operations.





C.
            Short
      sales on the Company’s securities.





All
officers, directors and employees should keep in mind that they are subject to
the restrictions set forth in Section 1 above, even if there is an open "window
period" pursuant to Section 2 above.  This means that even if there is
an open window period, you may not trade in the Company’s securities, including
options, if you are in possession of material non-public
information.  Also, as a matter of clarification, the exercise of a
stock option is
considered to be "trading" in the Company's stock and is generally subject to
the above restrictions.  However, in the event you exercise an option
to buy the Company's stock and then sell such stock, it will not be considered to
be a trade of the Company's stock on a short-term basis for purposes of the
restriction in subsection "2.B" above.  Further, the Company may grant
exceptions to the restrictions set forth in Section 2 above on an individual
case-by-case basis so long as the restrictions set forth in Section 1 above are
not violated and provided, further, that such exceptions are in compliance with
all applicable laws and the rules and regulations and requirements of any stock
exchange or market system on which the Company’s stock is listed or quoted at
the relevant time.   All requests for an exception to such
restrictions or general questions about the above restrictions should be
directed to the Chief Executive Officer or the Vice President,
Operations.





3.  Restrictions on
Participation in Internet Stock “Chat Rooms”.





In order
to avoid inadvertent disclosure of non-public information, it is the Company’s
policy that no officers, directors, or employees of the Company or any of its
subsidiaries participate, or provide any entries in, any internet stock or
investor “chat rooms” discussing the Company or its subsidiaries, or participate
in any similar public electronic communications systems whereby material
information about the Company or its subsidiaries is discussed.





Permission
to participate in Internet stock “Chat Rooms” may be granted in extraordinary
circumstances, but such permission must come only from the Company’s Disclosure
Committee.





DESIGNATED
SPOKESPERSONS





The
Company designates a limited number of spokespersons responsible for
communication with the investment community, regulators or the
financial/business media. The CEO and the CFO shall be the official
spokespersons for the Company.





Individuals
holding these offices may, from time to time, designate others within the
Company to speak on behalf of the Company as back-ups or to respond to specific
questions of scientific or clinical nature.  Employees who are not
authorized spokespersons must not respond under any circumstances to inquiries
from the investment community, the media or others, unless specifically asked to
do so by an authorized spokesperson. All such inquiries shall be referred to the
CEO or the CFO.





NEWS
RELEASES





Once the
Committee determines that a development is material, it will authorize the
issuance of a news release, unless the Committee determines that such
developments must remain confidential for the time being, appropriate
confidential filings are made and control of that inside information is
instituted. Should a material statement inadvertently be made in a selective
forum, the Company will immediately issue a news release in order to fully
disclose that information.





If the
stock exchange(s) upon which shares of the Company are listed is open for
trading at the time of a proposed announcement, prior notice of a news release
announcing material information must be provided to the market surveillance
department to enable a trading halt, if deemed necessary by the stock
exchange(s). If a news release announcing material information is issued outside
of trading hours, market surveillance must be notified before the market
opens.





Annual
and interim financial results will be publicly released as soon as possible
following Audit Committee approval of the financial results press releases and
statements. News releases will be disseminated through an approved news wire
service that provides simultaneous national and/or international distribution.
News releases will be transmitted to all stock exchange members, relevant
regulatory bodies, major business wires, national financial media and the local
media in areas where the Company has its headquarters and operations. News
releases will be posted on www.TearLab.com simultaneously
with their dissemination over the news wire.





CONFERENCE
CALLS





Conference
calls will be held for quarterly earnings and major corporate developments,
whereby discussion of key aspects is accessible simultaneously to all interested
parties, some as participants by telephone and others electing to be in a
listen-only mode by telephone or via a webcast over the Internet. The call will
be preceded by a news release containing all relevant material information. At
the beginning of the call, a Company spokesperson will provide appropriate
cautionary language with respect to any forward-looking information and direct
participants to publicly available documents containing the assumptions,
sensitivities and a full discussion of the risks and uncertainties.





The
Company will provide advance notice of the conference call and webcast by
issuing a news release announcing the date and time and providing information on
how interested parties may access the call and webcast. In addition, the Company
may send invitations to analysts, institutional investors, the media and others
invited to participate. Any non-material supplemental information provided to
participants will also be posted to the Web site for others to view. A tape
recording of the conference call and/or an archived audio webcast on the
Internet will be made available following the call for a minimum of 7 days, for
anyone interested in listening to a replay.





The
Committee will hold a debriefing meeting immediately after the conference call
and if such debriefing uncovers selective disclosure of previously undisclosed
material information, the Company will immediately disclose such information
broadly via news release.





RUMORS





The
Company does not comment, affirmatively or negatively, on rumors. This also
applies to rumors on the Internet. The Company’s spokespersons will respond
consistently to those rumors, saying, “It is our policy not to comment on market
rumors or speculation.” Should the stock exchange request that TearLab make a
definitive statement in response to a market rumor that is causing significant
volatility in the stock, the Committee will consider the matter and decide
whether to make a policy exception. If the rumor is true in whole or in part,
the Company will immediately issue a news release disclosing the relevant
material information.





CONTACTS
WITH ANALYSTS, INVESTORS AND THE MEDIA





Disclosure
in individual or group meetings does not constitute adequate disclosure of
information that is considered material non-public information. If the Company
intends to announce material information at an analyst or shareholder meeting or
a press conference or conference call, the announcement must be preceded by a
news release.





The
Company recognizes that meetings with analysts and significant investors are an
important element of the Company’s investor relations program. The Company will
meet with analysts and investors on an individual or small group basis as needed
and will initiate contacts or respond to analyst and investor calls in a timely,
consistent and accurate fashion in accordance with this disclosure
policy.





The
Company will provide only non-material information through individual and group
meetings, in addition to regular publicly disclosed information, recognizing
that an analyst or investor may construct this information into a mosaic that
could result in material information. The Company cannot alter the materiality
of information by breaking down the information into smaller, non-material
components.





If a
spokesperson inadvertently provides selective disclosure of previously
undisclosed material information, the Company will immediately disclose such
information broadly via news release.





REVIEWING
ANALYST DRAFT REPORTS AND MODELS





It is the
Company’s policy to review, upon request, analysts’ draft research reports or
models. The Company will review the report or model for the purpose of pointing
out errors in fact based on publicly disclosed information. It is TearLab’s
policy, when an analyst inquires with respect to his/her estimates, to question
an analyst’s assumptions if the estimate is a significant outlier among the
range of estimates and/or the Company’s published earnings guidance. The Company
will limit its comments in responding to such inquiries to non material
information. The Company will not confirm, or attempt to influence, an analyst’s
opinions or conclusions and will not express comfort with the analyst’s model
and earnings estimates.





In order
to avoid appearing to “endorse” an analyst’s report or model, the Company will
provide its comments orally or will attach a disclaimer to written comments to
indicate the report was reviewed only for factual accuracy.





FORWARD-LOOKING
INFORMATION





Should
the Company elect to disclose forward-looking information (FLI) in continuous
disclosure documents, speeches, conference calls, etc., the following guidelines
will be observed:





1. The
information, if deemed material, will be broadly disseminated via news release,
in accordance with this disclosure policy.


2. The
information will be clearly identified as forward looking.


3. The
Company will identify all material assumptions used in the preparation of the
forward-looking information.


4. The
information will be accompanied by a statement that identifies, in very specific
terms, the risks and uncertainties that may cause the actual results to differ
materially from those projected in the statement.


5. The
information will be accompanied by a statement that disclaims the Company’s
intention or obligation to update or revise the FLI, whether as a result of new
information, future events or otherwise. Notwithstanding this disclaimer, should
subsequent events prove past statements about current trends to be materially
off target, the Company will issue a news release explaining the reasons for the
difference or explain them in the Company’s next succeeding Management
Discussion and Analysis, as appropriate. In such cases, the Company will update
its guidance on the anticipated impact on revenue and earnings (or other key
metrics).  In all circumstances, the Company shall abide by the
requirements of National Instrument 51-102—Continuous Disclosure Obligations and
other applicable laws, rules and regulations.





MANAGING
EXPECTATIONS





The
Company will try to ensure, through its regular public dissemination of
quantitative and qualitative information, that analysts’ estimates are in line
with the Company’s own expectations. The Company will not confirm, or attempt to
influence, an analyst’s opinions or conclusions and will not express comfort
with analysts' models and earnings estimates. If the Company has determined that
it will be reporting results materially below or above publicly held
expectations, it will disclose this information in a news release in order to
enable discussion without risk of selective disclosure.





DISCLOSURE
RECORD





The CFO
will maintain a two-year file containing all public information about the
Company, including continuous disclosure documents, news releases, analysts’
reports, transcripts or tape recordings of conference calls, debriefing notes,
notes from meetings and telephone conversations with analysts and investors, and
newspaper articles.





RESPONSIBILITY
FOR ELECTRONIC COMMUNICATIONS





This
disclosure policy also applies to electronic communications. Accordingly,
officers and personnel responsible for written and oral public disclosures shall
also be responsible for electronic communications. The CFO is responsible for
updating the investor relations section of www.TearLab.com and is
responsible for monitoring all Company information placed on the Web site to
ensure that it is accurate, complete, up-to-date and in compliance with relevant
securities laws.





Investor
relations material shall be contained within a separate section of www.TearLab.com  and
shall include a notice that advises the reader that the information posted was
accurate at the time of posting, but may be superseded by subsequent
disclosures. All data posted to the Web site, including text and audiovisual
material, shall show the date such material was issued. Any material changes in
information must be updated immediately. The minimum retention period for
material corporate information on the Web site shall be two years.





Disclosure
on www.TearLab.com alone does not constitute adequate disclosure of information
that is considered material non-public information. Any disclosures of material
information on TearLab’s web site will be preceded by the issuance of a news
release.





The CFO
shall also be responsible for responses to electronic inquiries. Only public
information or information which could otherwise be disclosed in accordance with
this disclosure policy shall be utilized in responding to electronic
inquiries.





COMMUNICATION
AND ENFORCEMENT





This
disclosure policy extends to all employees of the Company, its board of
directors and authorized spokespersons. New directors, officers and employees
will be provided with a copy of this disclosure policy and will be educated
about its importance. Whenever significant changes are made to this disclosure
policy, a new copy and accompanying explanation of the changes will be sent to
all employees.  Any employee who violates this disclosure policy may
face disciplinary action up to and including termination of his or her
employment with the Company without notice. The violation of this disclosure
policy may also violate certain securities laws. If it appears that an employee
may have violated such securities laws, the Company may refer the matter to the
appropriate regulatory authorities, which could lead to penalties, fines or
imprisonment.





SCHEDULE
“B”





COMPLAINT
AND REPORTING PROCEDURES








TEARLAB,
INC.


COMPLAINT
AND REPORTING PROCEDURES


Effective
July, 2005





Summary


The
Complaint and Reporting Procedures adopted by the Company’s Audit Committee
provides an avenue for all Company employees to report suspected improper
financial or management activity.




Complaint
and Reporting Procedures


Any
person may submit a good faith complaint, report or concern regarding accounting
or auditing matters relating to TEARLAB, Inc. and its subsidiaries (the
“Company”) or violations of the Company’s policies to the Audit Committee without fear of dismissal or
retaliation of any kind. The Company’s Board of Directors and its
management are committed to achieving compliance with all applicable securities
laws and regulations, accounting standards, accounting controls and audit
practices.




In order
to facilitate the reporting, the Company’s Audit Committee has established the
following procedures for: (a) the receipt, retention and treatment of
complaints, reports and concerns regarding accounting, internal accounting
controls or auditing matters (“Accounting Matters”) and regarding potential
violations of applicable laws, rules and regulations or of the Company’s codes,
policies and procedures (“Compliance Matters”); and (b) the confidential,
anonymous submission of complaints, reports and concerns regarding Accounting
Matters or Compliance Matters.




Receipt
of Calls


Any
person with concerns regarding Accounting Matters or Compliance Matters may
report their concerns on a confidential or anonymous basis to the Audit
Committee of the Company by calling the independent, toll-free Values Line
established by the Audit Committee for that purpose. The toll-free ValuesLine
number is 1-888-475-8376and it is available 24 hours a day, 7 days a week.




Direct
Correspondence with Non-Management Directors


The
Values Line will allow interested persons to make their concerns regarding the
Company and its management known to the non-management directors of the Company
on a direct, anonymous and confidential basis.




Scope
of Matters Covered by Procedures


These
procedures relate to complaints, reports and concerns about questionable
accounting, internal accounting controls or auditing matters,
including:


·
            the
      circumvention or attempted circumvention of internal accounting
      controls;


·
            fraud
      or error in the preparation, evaluation, review or audit of any financial
      statement of the Company;


·
            fraud
      or error in the recording and maintaining of financial records of the
      Company;


·
            deficiencies
      in or noncompliance with the Company’s internal accounting
      controls;


·
            misrepresentation
      or false statement to or by a senior officer or accountant regarding a
      matter contained in the financial records, financial reports (including
      discussions in quarterly and annual reports filed with the Securities and
      Exchange Commission) or audit reports of the Company;
  and


·
            deviation
      from full and fair reporting of the Company’s financial
      condition.







These
procedures also relate to reports of violations, including violations
of:




·
            applicable
      laws, rules and regulations;


·
            listing
      standards of the Financial Industry Regulatory Authority
      (FINRA);


·
            the
      Company’s Corporate Code of Business Conduct and
  Ethics;


·
            the
      Company’s Policy on Insider Trading (See Disclosure Policy);
      and


·
            any
      other code, policy or procedure established by the
  Company.




Treatment
of Complaints and Reports




The Audit
Committee has retained a third party provider to accept, verify and log all
calls, complaints, reports and concerns received. Upon receipt of a call,
complaint, report or concern, the third party provider will notify the Audit
Committee. The Audit Committee will then (a) determine whether it pertains to
Accounting Matters or Compliance Matters or is a concern addressed to the
non-management directors of the Company and (b) when possible, acknowledge
receipt to the sender (if so requested by the sender).




1.
            Calls,
      complaints, reports and concerns relating to Accounting Matters will be
      reviewed, under Audit Committee direction and oversight, by the Internal
      Audit department or such other persons as the Audit Committee determines
      to be appropriate.


2.
            Calls,
      complaints, reports and concerns relating to Compliance Matters will be
      reviewed, under Audit Committee direction and oversight, by the Chief
      Executive Officer or the Vice President, Operations, as
      appropriate.


3.
            If
      a call, complaint, report or concern is intended for the non-management
      directors of the Company, the Audit Committee will inform the remaining
      non-management directors. The Audit Committee will also make the
      transcript/report of the call available to
them.




Prompt
and appropriate corrective action will be taken when and as warranted in the
judgment of the Audit Committee, the Board of Directors or the non-management
directors, as applicable.




Protection
of Employees from Reprisal and Confidentiality




The
Company will not take any adverse action against anyone as a result of his or
her good faith complaint, report or concern pursuant to these procedures.
Furthermore, the Company will not discharge, demote, suspend, threaten, harass
or in any manner discriminate against any employee in the terms and conditions
of employment based upon any lawful actions taken by the employee with respect
to a good faith reporting of complaints, concerns or other matters regarding the
Company or otherwise as specified in Section 806 of the Sarbanes-Oxley Act of
2002.




It is the
policy of the Audit Committee to address written complaints that allege acts or
attempted acts of interference, reprisal, retaliation, threats, coercion, or
intimidation against employees who disclose improper management activities
pursuant to the procedures outlined above.




The Audit
Committee and its representatives shall not reveal the identity of any person
who makes or expresses a good faith complaint, report or concern regarding
Accounting or Compliance Matters and who asks that his or her identity, as the
person who made such call remain confidential. Furthermore, the Audit Committee
will not make any effort, or tolerate any effort made by any other person or
group, to ascertain the identity of any person who makes or expresses a good
faith complaint, report or concern anonymously regarding Accounting or
Compliance Matters.





Reporting
and Retention of Complaints and Investigations


The third
party provider will maintain a log of all calls, complaints, reports and
concerns, tracking their receipt and reporting to the Audit Committee. The
Chairman of the Audit Committee will maintain a log tracking the investigation
and resolution of all calls, complaints, reports and concerns and will prepare a
periodic summary report for the Audit Committee regarding its investigations of
Accounting Matters. The Chief Executive Officer and the Vice President,
Operations will prepare a periodic summary report for the Audit Committee
regarding their investigation of Compliance Matters.




Amendments


The Audit
Committee of the Board of Directors of the Company may amend these procedures at
any time, consistent with requirements of applicable laws, rules and
regulations. All amendments to this policy will be posted on the Company’s
website.




Adopted
and Approved by


The Audit
Committee of the Board of Directors of TEARLAB, Inc.


Tom
Davidson, Audit Committee Chairman


Adrienne
Graves, Audit Committee Member


Don
Rindell, Audit Committee Member


Dr.
Richard Lindstrom, Audit Committee Member





SCHEDULE
“C”





TearLab,
Inc. (“TearLab” or the “Company”)





General
Network Security


User
Guidelines and Policies





Objectives:


TearLab’s
General Network Security User Guidelines and Policies (the “Policy”) establishes the core
rules for safeguarding the Company’s electronic information from accidents or
deliberate misuse. The computers with which employees are provided or to which
they have access for work, and the e-mail system to which employees are provided
access for work, are all the property of the Company, to be used exclusively for
the conduct of Company business.  All communications and information
transmitted by, received from or created or stored in the computer system
(whether through word processing programs, e-mail, the Internet or otherwise)
belong to the Company and are the Company’s records and property.





The
principal objectives of the Policy are the following:





·
            To
      protect TearLab's business information and any information of third
      parties within TearLab’s custody by maintaining the confidentiality,
      integrity and availability of such
information.


·
            To
      establish safeguards to protect TearLab's information resources from
      theft, abuse, misuse and damage.


·
            To
      establish responsibility and accountability for information security
      within TearLab.


·
            To
      encourage employees of TearLab to maintain an appropriate level of
      awareness and knowledge in order to minimize the occurrence and severity
      of information security incidents.


·
            To
      ensure that TearLab is able to continue its commercial activities even in
      the event of significant information security
  incidents.


·
            To
      ensure that TearLab has suitable policies in place to meet applicable
      regulatory requirements, including the Sarbanes-Oxley Act of 2002, the
      Health Insurance Portability and Accountability Act and the Personal
      Information Protection and Electronic Documents Act, and International
      Standards ISO 17799 and BS 7799.





Employees’
Responsibility to Protect Data Confidentiality:


A key
element of any information security process is the maintenance of
confidentiality of information and data. TearLab is committed to doing its part
to guarantee the security of all Company files through backups, encryption
software, virus protection procedures, accurate and timely communication and
proper maintenance practices. However, each employee of TearLab also bears a
certain amount of responsibility in this regard.





The
Policy sets out what is expected of every member of the TearLab team to minimize
data exposure and to ensure the integrity, confidentiality and availability of
all information stored on the Company’s network.





Using
the Internet in an Acceptable Way:


Employees
may not use TearLab’s systems to access or download material from the Internet
which is inappropriate, offensive or illegal or which jeopardizes
security.





Although
not comprehensively illustrative of all prohibited activities, the following
examples of Internet access and use are prohibited. Not only would they detract
from business efficiency, some of the following activities can even result in
legal and criminal proceedings, which will almost certainly damage
TearLab:





1.
            Downloading
      of pornographic material from web
sites.


2.
            Playing
      games, gambling and participating in 'chat’ sessions (see “Online ‘Chat
      Rooms’”).


3.
            Subscribing
      and contributing to news groups using the corporate Internet address and
      signature.


4.
            Sending
      and receiving personal correspondence by e-mail, the volume and content of
      which reasonably can be deemed excessive and/or
    inappropriate.


5.
            Excessive
      'surfing' of web sites during business hours for personal
      reasons.


6.
            Retrieval
      and distribution of offensive 'joke'
e-mails.


7.
            The
      use and abuse of office equipment for the storage and printing of
      inappropriate material (e.g. large pictures or
      images).





Excessive
use of the Company's Internet connection produces bandwidth strain, which causes
the system’s performance to deteriorate for all members of the TearLab
community.





As with
e-mail, all Internet activity is logged and is traceable. Users are not
monitored as a rule, but TearLab responds as necessary to inappropriate online
conduct in a manner consistent with existing guidelines governing abuse of
Company property.  The Company has the right, but not the duty, for
any reason and without the permission of any employee, to monitor any and all
aspects of the Company’s computer system, including, without limitation,
reviewing documents created and stored on the computer system, deleting any
matter stored in the computer system, monitoring web sites visited, monitoring
“chat” sessions and news groups, reviewing material downloaded or uploaded by
users from the Internet and reviewing e-mail communication.  Employees
should not have an expectation of privacy in anything they create, store, send
or receive on the Company’s computer system.





Online
‘Chat Rooms’:


Employee
participation in Internet “chat” sessions, whether the employee is at the
workplace or elsewhere, on any
business or investment matter concerningTearLabor its competitors,is
completely forbidden. TearLab, which is occasionally the subject of rumors
originating in online forums, has a legal obligation to distribute news and
information only through the proper and legal simultaneous disclosure
networks.





Use
of E-mail:


E-mail is
an extremely useful communication instrument. It is fast, uncomplicated,
flexible and economical. Employees are urged to make e-mail their communication
medium of choice to the greatest extent possible. However, there are limitations
to this technology that employees must understand.





Employees are never to assume that
electronic communication is confidential. Unbeknownst to the sender and
the receiver, the message may be routed through any number of public servers,
making interception a constant possibility. In light of this risk, employees are
required to exercise good judgment in their use of e-mail and, in the case of
any uncertainty regarding the appropriateness of the use of e-mail in a given
circumstance, are encouraged to consult their immediate supervisors for
guidance.





At
TearLab, casual use of e-mail is not forbidden; however, non-business messaging
is acceptable only inside certain parameters. The following practices are not
tolerated to any degree:





·
            chain letters-
      Obnoxious and tiresome, chain letters annoy people and exhaust space.
      Virus hoaxes are often chain letters by a kinder name. If an employee
      receives any advisory concerning a computer virus from any source other
      than the Information System Group (“ISG”), he or she must
      notify the TearLab Helpdesk immediately and nobody else. The TearLab
      Helpdesk will broadcast the warning accordingly, should it prove to be
      legitimate.





·
            solicitations– The
      computer system may not be used to solicit for religious or political
      causes, commercial enterprises or outside organizations or for any other
      activities that are unrelated to an employee’s service with the
      Company.





·
            use of superfluous attachments- Non-business messages and other diversions are permitted in text
      format only. Whereas text messages are technically harmless and,
      generally, of manageable size, pictures, animations, sound files, videos,
      executable files, and the like are a common source of viruses (since their
      origins are rarely known); too often, such objects are also unwieldy,
      compromising the performance of system resources. Non-business file
      attachments are not acceptable at
TearLab.





·
            subscriptions to e-mail servers
      for non-business purposes- The volume of messages that e-mail
      servers generate can lead to inordinate consumption of systems resources.
      These subscriptions are a form of abuse of Internet
      privileges.





·
            immoderation- Employees
      are cautioned against excessive use of e-mail for non-business purposes.
      Abuse of e-mail is treated as seriously by management as abuse of any
      other Company resource or service.





Finally,
employees are advised that e-mail messages (both internal and external) are
Company property and, consequently, not private.  Any message that a person sends or
receives using anTearLabaccount is ultimately retrievable,
and there is no reasonable expectation of privacy in this regard.Because
TearLab does not wish to foster an atmosphere of suspicion and solemnity, the
substance of electronic traffic is not scrutinized on a regular basis. However,
employee communication through e-mail is subject to all Company policies, as
they exist from time to time, on harassment, defamation and other forms of
antisocial or offensive behavior. It is prohibited to send or receive messages
or files that are illegal, sexually explicit, abusive, harassing, offensive or
profane.





E-mail
Confidentiality Warning:


All
e-mail messages sent by employees should contain the form of confidentiality
warning prescribed by the Company from time to time which, on the date of
original adoption of the Policy, reads as follows:





This
e-mail message and attachments, if any, are for the sole viewing and use of the
intended recipients and may be privileged and/or confidential.  Any
distribution, printing or other use by anyone other than the intended recipients
is strictly prohibited.  If you are not an intended recipient, please
contact the sender immediately and permanently destroy this e-mail message and
all attachments, if any.





Keeping
Passwords Confidential:


Each
employee is assigned a User ID and a Password for access to the Company’s
network, for which there are different levels of access. Privileges usually
include permission to open certain files and applications but not others, and
the actions that individuals are allowed to perform in specific areas of the
network vary.





All
employees must treat their User IDs and Passwords as private and highly
confidential.  Disclosure of User IDs and Passwords
to anyone, other than to members of the ISG, is strictly
prohibited.  Employees are accountable for an action performed
on the network during their login sessions, regardless of who performs those
actions.Failure to
comply with this policy could result in disciplinary action.





Securing
Attended and Unattended Workstations:


Employees
are required to refrain from leaving their workstations logged into the network
at night or during any other significant period when their terminal is
unattended. Display screens should be safeguarded via screen passwords when a
workstation owner leaves his or her workstation for a significant period of
time. To the extent possible, workstations should be placed on a desktop in such
a manner so as to ensure that protected data cannot be seen, inadvertently or
not, by unauthorized individuals.





Sharing
(Access to) Confidential Information with Non-TearLab Employees:


All data
and information not in the public domain, relating to TearLab’s business and its
employees, must remain confidential at all times. Company information must not
be divulged to acquaintances, friends or family members who do not have
clearance to receive such information. TearLab has a legal obligation to
distribute Company news and information only through the proper and legal
simultaneous disclosure networks.





Software
Use:


Each
employee's computer system is pre-loaded with certain, ISG-approved software
which is configured in a specific way. This software and its constituent
files must never be modified or deleted, other than by a member of the
ISG.





Unapproved
software can produce compatibility problems, making troubleshooting of network
software and other components of any employee's system more difficult because it
prevents the ISG from dealing with a standard operating environment.
Uncontrolled software use also puts TearLab at greater risk of virus
infection.





Complying
with Copyright and Software Licensing Legislation:


Copying
and distributing software is illegal, unless the owner of the software expressly
grants permission. Software installations are strictly forbidden without express
approval and direction from the ISG. In order to maintain the integrity of its
system and to safeguard data, TearLab takes precautions to prevent unauthorized
software installations.





Reporting
Loss, Theft or Damage:


TearLab
expects all employees to report promptly to the TearLab Helpdesk any loss or
theft of, or damage to, computer hardware, software or peripherals in their
custody, including, without limitation, laptop computers, desktop computers,
Blackberry units, printers, mice and hardware accessories.  Any such
loss, theft or damage must be reported to the TearLab Helpdesk without
delay.





Reporting
Information Security Incidents, Breaches & Weaknesses:


TearLab
expects all employees to report security incidents, breaches and weaknesses
promptly.  Security incidents, breaches and weaknesses include, but
are not limited to, any occurrence or state of affairs which, although, in
itself, may not compromise information security, could result in it becoming
compromised.





Any
information security incidents, breaches and weaknesses must be reported without
delay to the TearLab Helpdesk to speed up the identification of any damage
caused and any restoration or repair and to facilitate the gathering of any
associated evidence.





Questions
and concerns regarding the Policy should be directed to the Chief Executive
Officer or the Vice President, Operations.