Life Diagnostics Agreement





[ * ] INDICATES CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED




MANUFACTURING AND SUPPLY AGREEMENT

Stellar Biotechnologies, Inc. and Life Diagnostics, Inc.







Life Diagnostics, Inc., a Pennsylvania corporation with administrative offices at 906 Old Fern Hill Road, West Chester, PA 19380 (“LIFE DX”) and Stellar Biotechnologies, Inc., a Canadian corporation  having a place of business at 332 E. Scott Street, Port Hueneme, CA 93041 (”STELLAR”), together “The Parties”, agree as follows:




Recitals




Whereas, LIFE DX develops, manufactures and sells diagnostic tests and related products for research and clinical markets;




Whereas, STELLAR manufactures and commercializes keyhole limpet hemocyanin (KLH); 




Whereas, STELLAR desires to engage LIFE DX to develop, manufacture, assemble, test, label, package, and ship certain Commercial Products (as defined below); 




Whereas, LIFE DX wishes to provide such services;




Now therefore, in consideration of the mutual covenants and conditions contained in this Agreement, the parties agree as follows.







(1)

Definitions




a.

“Agreement” shall mean this agreement, together with any Exhibits referenced herein.




b.

“Confidential Information” shall have the meaning as set forth in the Confidential Disclosure Agreement entered into as of August 1, 2011 by and between LIFE DX and STELLAR (“Confidential Disclosure Agreement”) and including certain business relationships and Intellectual Property as set forth herein.




c.

“Effective Date” shall be the latest date on which the Agreement is fully executed by LIFE DX and STELLAR.




d.

“STELLAR Intellectual Property” means copyrights, patents, trade secrets and mask works, whether or not registered, filed, applied for or the like, and all related rights and all tangible and intangible works, manifestations and aspects of same existing as of the Effective Date and created or coming into existence during the term of this Agreement. As used herein, “patents” includes all inventions, invention disclosures, provisional applications, applications, letters patents and all foreign counterparts and foreign equivalents of same, and any and all divisions, continuations, continuations-in-part, revisions, renewals, reissues, extensions and like of the foregoing.




e.

“LIFE DX Intellectual Property” means copyrights, patents, trade secrets and mask works, whether or not registered, filed, applied for or the like, and all related rights and all tangible and intangible works, manifestations and aspects of same existing as of the Effective Date and created or coming into existence during the term of this Agreement. As used herein, “patents” includes all inventions, invention disclosures, provisional applications, applications, letters patents and all foreign counterparts and foreign equivalents of same, and any and all divisions, continuations, continuations-in-part, revisions, renewals, reissues, extensions and like of the foregoing.




f.

“Project Period” shall be for a period of four (4) years beginning October 18, 2011 and shall be automatically extended for twenty-four (24) month periods unless terminated according the terms and conditions set forth herein.




g.

“Project” shall mean any and all activities including any of Product Development, Product Manufacture and/or supply of Commercial Product paid for by STELLAR.




h.

“Product Development” shall mean any activity required to design, formulate, set-up conditions for, establish reagents for, produce, verify or validate a Commercial Product including, but not limited to, evaluating, inspecting, testing or analyzing diagnostic products or samples, prototypes, components, reagents and the like for purposes of e.g. determining performance, quality, range of reactivity and the like during the Project, as further illustrated in Exhibit A.




i.

“Product Manufacture” shall mean production, assembly and final packaging of Enzyme-Linked Immuno-Sorbent Assay Test Kits (ELISA) as finished Commercial Products for transfer to STELLAR. For purposes of clarity, ELISA test kit shall have the meaning as; an immunoassay that uses a signal generating compound, e.g. an enzyme or fluorophore, linked to an antibody or antigen as a marker for the detection of a specific protein, especially an antigen or antibody and shall include the necessary components and reagents to perform said immunoassay. The scope of Commercial Products may be extended periodically by mutual agreement of The Parties. 




j.

“Commercial Products” shall mean, individually or together, six (6) STELLAR branded ELISA Test Kits for mouse (IgG and IgM), rat (IgG and IgM) and non-human primate (IgG and IgM), manufactured by LIFE DX under the Project, with product specifications as defined in Exhibit B (“Specifications”) which may be modified from time to time by written consent of both parties.  




k.

“Project Director” shall mean Chris Chadwick, Ph.D., President and CEO of LIFE DX.




l.

“STELLAR Liaison” shall be STELLAR employee Herb Chow, Ph.D., Vice President of Product Development, or a STELLAR representative appointed by President and CEO of STELLAR as primary contact to the Project Director.




m.

“Results” shall mean any and all work products, data and output produced in the course of the Project including, without limitation, laboratory notebook information, written or electronically recorded notes and descriptions; biological materials; procedures; assay conditions, antigens, antibodies and other purified reagent preparations; and assay reagents. 


n.

“Exclusive Basis” shall mean that LIFE DX shall not provide the services of the Project to any other commercial entity and STELLAR shall not for the period of the Agreement engage any other commercial entity to perform the services of the Project, as set forth further below. 


o.

“Product Milestone Activities” are set forth in Exhibit A.


p.

“STELLAR Customer(s)” shall mean an entity placing an order with STELLAR.




(2)

Engagement of LIFE DX




a.

STELLAR hereby engages LIFE DX, on an Exclusive Basis, for the Project, e.g. to manufacture, assemble, inspect, test, label, package and ship the Commercial Products, in accordance with the terms of this Agreement, exclusively for sale to STELLAR. 




b.

STELLAR shall transfer certain Confidential Information to LIFE DX to perform the Project.  LIFE DX will maintain the security of the Confidential Information in accordance with the terms of the Confidential Disclosure Agreement.




c.

STELLAR shall supply Keyhole Limpet Hemocyanin (KLH) and other reagents for use in the Project.  LIFE DX shall not use, , the STELLAR-supplied KLH or reagents in any manner other than in the Project without prior written consent of STELLAR.




d.

LIFE DX hereby warrants that it will use its best efforts to undertake the Project e.g. to conduct Product Development activities and supply Commercial Products to STELLAR and will allocate sufficient use of its facilities, resources, capital equipment, materials, tools and labor to enable it to deliver the Commercial Products in the quantities as required by STELLAR and as mutually agreed upon by The Parties. 




e.

LIFE DX will apply its best efforts to undertake and complete the Project using accepted professional standards of workmanship and effort, in accordance with the timeline in Exhibit A.




f.

Any new intellectual property, discovered by STELLAR or LIFE DX, pertaining to STELLAR Intellectual Property in the course of the project shall be assigned to STELLAR.  Any new intellectual property discovered by LIFE DX or STELLAR, pertaining to LIFE DX Intellectual Property in the course of the Project shall be assigned to LIFE DX.  LIFE DX hereby grants STELLAR a worldwide, non-exclusive license to the LIFE DX Intellectual Property developed during the course of the Project, solely as it pertains to the manufacture of Commercial Product.  For purposes of clarity, the worldwide, non-exclusive license does not extend to other LIFE DX Intellectual Property.




g.

LIFE DX will manufacture the Commercial Products exclusively for STELLAR.  LIFE DX will also have the right to list the Commercial Products on the LIFE DX website.  If Commercial Products are directly sold by and through LIFE DX, STELLAR will receive a royalty equivalent to 50% of the Commercial Product retail sales price less production costs per kit, production costs not to exceed $[ * ] per ELISA test kit.  In addition, both parties will agree on discounts, rebates and other price modifications to the Commercial Product retail sales price.  For purposes of clarity, Commercial Product sold by and through LIFE DX will have a retail sales price no less than Commercial Product as sold by and through STELLAR, of which the retail sales price at no less than $[ * ] per ELISA test kit.  STELLAR will notify LIFE DX of any change to the retail sales price of Commercial Product and these changes will be reflected at LIFE DX within thirty (30) days of such notification. 




h.

Control of the Project shall rest with LIFE DX and the Project Director.  STELLAR shall have opportunities to advise LIFE DX and the Project Director regarding conduct of the Project.  Project Director may substitute technical staff involved in Project with the prior approval of STELLAR.




i.

Final Results of the Project will be delivered in the form of a written report, which shall identify the methods used and the results obtained, including a listing of all antibodies or reagents produced in the course of Project.




(3)

Payment for Product Development Activities




a.

LIFE DX and STELLAR agree that payment for the Project shall be made to LIFE DX from STELLAR (i) upon mutual agreement of the successful execution and completion of the specific Product (Exhibit A) and (ii) upon receipt of a written expense invoice.  STELLAR shall use reasonable steps to mitigate out of pocket expenses by LIFE DX.




b.

LIFE DX shall provide an accounting of Project costs. STELLAR shall pay LIFE DX in US dollars by means of a check, money order or wire transfer payable to LIFE DX, or in other mutually agreed upon manner as defined above.  Checks shall be sent to Project Director or wired to a mutually agreed upon bank account.




(4)

Forecasts and Purchase Orders




a.

At the beginning of each calendar month, STELLAR will submit to LIFE DX a non-binding, written forecast of STELLAR’s expected requirements for Commercial Product for that month.  From time to time, STELLAR will submit written or electronic Purchase Orders to LIFE DX for Commercial Products to be delivered to STELLAR or to STELLAR Customer(s).  Any such Purchase Order shall contain those details upon which the parties mutually agree.




b.

LIFE DX will respond to any STELLAR Purchase Order with: (i) a written or electronic Purchase Order confirmation statement (including quantity and ship date) and (ii) an actual ship date confirmation statement (which shall include the packing list) upon shipment of the ordered Product. The terms and conditions in this Agreement shall supersede and replace all preprinted form terms and conditions set forth on any Purchase Order acknowledgment.

1.

LIFE DX shall confirm Purchase Order within 72 hours from the receipt of the order.

2.

LIFE DX shall use all reasonable efforts to deliver ordered Commercial Product to STELLAR within fourteen (14) days of receipt of a Purchase Order.




c.

LIFE DX shall ship Product to the location(s) designated by STELLAR in the Purchase Order using FedEx.  LIFE DX shall pack all Product ordered in a manner suitable for shipment and sufficient to withstand the effects of shipping, including handling during loading and unloading.




d.

STELLAR may reject any Product units which do not meet Commercial Product Specifications.  To reject a Product, STELLAR shall notify LIFE DX in writing, within thirty (30) days of delivery of Product, of its rejection and shall return to LIFE DX the rejected Product.  LIFE DX shall credit STELLAR for any Product units returned by STELLAR on the next month’s invoice to STELLAR. 




(5)

Pricing and Payment 




a.

STELLAR agrees to pay LIFE DX $[ * ] per each ELISA test kit purchased from LIFE DX.




b.

LIFE DX shall invoice STELLAR monthly for any product ordered in the previous calendar month, less any Product rejected by STELLAR during that period.




c.

STELLAR shall pay for Commercial Product within ninety (90) days of receipt of LIFE DX’s invoice.  Unless otherwise agreed upon in advance, STELLAR shall pay LIFE DX in US dollars by means of a check, money order or wire transfer to a bank designated by LIFE DX.  




(6)

Risk Management




a.

Each party to this Agreement agrees to hold harmless the other party from injuries, damages and loss arising from the negligent acts and omissions its employees, officers and agents under this Agreement.  Each of the parties assumes no responsibility to the other party for any indirect or consequential damages suffered by another party to this Agreement, or by any person, firm or corporation not a party to this Agreement.  Each party shall maintain at its sole expense adequate insurance for self-insurance coverage to satisfy its obligations under this Agreement.  This provision shall survive termination of this Agreement.




(7)

Termination

 

a.

STELLAR may terminate this Agreement by giving one hundred twenty (120) days written notice to LIFE DX.  LIFE DX may terminate this Agreement by giving one hundred twenty (120) days written notice to STELLAR. In the event of such termination by LIFE DX, LIFE DX will take all reasonable steps to identify, qualify and validate a comparable manufacturing site and facility and will transfer all methods, processes, reagents, data and information necessary for the manufacture of all STELLAR Commercial Products under this Agreement.




(8)

Disputes:  Responsive to Notice for Performance, The Parties agree to use good faith efforts to negotiate any disputes.




(9)

Severability.  If any term or provision contained in this Agreement is or becomes illegal, null or void or against public policy, for any reason, or is held by any court of competent jurisdiction to be incapable of being construed or limited in a manner to make it enforceable, or is otherwise held by such court to be illegal, null or void or against public policy, the remaining terms and provisions in this Agreement shall not be affected thereby.  Furthermore, in lieu of any invalid or unenforceable term or provision, the parties hereto intend that there be added as a part of this Agreement a valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible.




(10)

Facsimiles; Counterparts.  Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of an original.  At the request of any party, the parties shall confirm facsimile transmission by signing a duplicate original document.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which will constitute one and the same instrument.




(11)

Further Assurances.  Each party agrees to promptly execute and deliver such documents and promptly due such other acts as are reasonably requested by the other as may be necessary or appropriate to effectuate the purposes of this Agreement.




(12)

Entire Agreement.  This Agreement, together with the attached schedule and the Confidential Disclosure Agreement, which are incorporated herein by reference, constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and all prior and contemporaneous agreements, representations, negotiations and understandings of the parties hereto, oral or written, are hereby superseded and merged herein.  Each party to this Agreement acknowledges that no representations, inducements, promises or agreements have been made, orally or otherwise, by any party, or, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement will be valid or binding.  No supplement, modification or amendment of this Agreement will be binding unless executed in writing by the parties hereto.  No waiver of any of the provisions of this Agreement will be deemed to constitute a waiver of any provision, whether or not similar, nor will any waiver constitute a continuing waiver.  No waiver will be binding unless executed by the party making the waiver.




(13)

Notices.  All notices, requests, demands and other communications under this Agreement must be in writing and will be deemed to have been duly given on the date of service if served personally, via facsimile or nationally-recognized overnight delivery service on the party to whom notice is to be given, or forty-eight (48) hours following deposit of such notice in the first class mail, registered or certified, return receipt requested, postage prepaid and properly addressed as follows:




To STELLAR at:

Stellar Biotechnologies

332 E. Scott Street

Port Hueneme, CA 93041

Attn.:  Frank Oakes, President

Telephone:  805 488-2147

Facsimile:  805 488-1278




To LIFE DX at:

Life Diagnostics, Inc

906 Old Fern Hill Road

West Chester, PA 19380

Attn.:  Chris Chadwick, CEO

Telephone:  610 431-7707

Facsimile:  610 431-7818







(14)

Captions and Headings.  The captions and headings of the sections and subsections of this Agreement are included for convenience only and are not to be considered in construing or interpreting this Agreement.




(15)

Construction.  The language of this Agreement will be interpreted and construed simply and in accordance with its fair meaning, and must not be construed strictly for or against any party hereto by reason of its draftsmanship or for any other reason whatsoever.







IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.









EXHIBIT A




PRODUCT DEVELOPMENT PLAN





				
	Timeline and Development Costs / Expenses for KLH ELISA Test Kits

	 
	 
	 

	 
	 
	 
	 

	Mouse anti-KLH ELISA Test Kits - IgG and IgM

	Time (wks)

	 
	Cost


	1.  Isolate anti-KLH IgG and IgM for calibration studies

	 
	 
	 

	Requires at least 25 ml serum from 7- and 21-day post immunization animals

	 
	 
	 

	At ~0.25 ml/mouse + 100 mice X 2 + 200 mice total

	 
	$

	[ * ]


	 
	 
	 
	 

	Affinity isolation and characterization of anti-KLH subunit IgG and IgM

	2

	$

	[ * ]


	 
	 
	 
	 

	Validate IgG and IgM ELISAs

	5

	$

	[ * ]


	 
	 
	 
	 

	2.  Compare anti-KLH responses of subunit KLH, IMG KLH, Sigma KLH, bioSyn KLH

	 
	 
	 

	Requires 30 mice total

	2

	$

	[ * ]


	 
	 
	 
	 

	3.  Reagent costs (misc tdb)

	 
	$

	[ * ]


	 
	 
	 
	 

	subtotal

	 
	$

	[ * ]


	 
	 
	 
	 

	Rat anti_KLH ELISA Test Kits - IgG and IgM

	 
	 
	 

	1.  Isolate anti-KLH IgG and IgM for calibration studies

	 
	 
	 

	Requires at least 50 ml serum from 7- and 21-day post immunization animals

	 
	 
	 

	At ~5.0 ml/rat = 10 rats X 2 = 20 rats total

	 
	$

	[ * ]


	 
	 
	 
	 

	Affinity isolation and characterization of anti-KLH subunit IgG and IgM

	2

	$

	[ * ]


	 
	 
	 
	 

	Validate IgG and IgM ELISAs

	5

	$

	[ * ]


	 
	 
	 
	 

	2.  Compare anti-KLH responses of subunit KLH, IMG KLH, Sigma KLH, BioSyn KLH

	 
	 
	 

	Requires 30 rats total

	2

	$

	[ * ]


	 
	 
	 
	 

	3.  Reagent costs (misc tdb)

	 
	$

	[ * ]


	 
	 
	 
	 

	subtotal

	 
	$

	[ * ]


	 
	 
	 
	 

	Monkey anti-KLH ELISA Test Kits - IgG and IgM

	 
	 
	 

	1.  Isolate anti_KLH IgG and IgM for calibration studies

	 
	 
	 

	Requires at least 1000 ml serum from normal animals

	 
	$

	[ * ]


	 
	 
	 
	 

	Affinity isolation and characterization of anti-KLH subunit IgG and IgM

	2

	$

	[ * ]


	 
	 
	 
	 

	Validate IgG and IgM ELISAs

	5

	$

	[ * ]


	 
	 
	 
	 

	2.  Compare anti-KLH responses of subunit KLH, IMG KLH, Sigma KLH, bioSyn KLH 

	 
	 
	 

	(recommends not - too expensive)

	 
	 
	 

	 
	 
	 
	 

	3.  Compare anti-KLH responses of Rhesus and Cyno

	2

	$

	[ * ]


	 
	 
	 
	 

	4.  Reagent costs (misc tdb)

	 
	$

	[ * ]


	 
	 
	 
	 

	subtotal

	 
	$

	[ * ]


	 
	 
	 
	 

	TOTAL COST (est)

	 
	$

	[ * ]


	 
	 
	 
	 

	time requirements are estimates. Development for all six (6) test kits will be run in parallel. Total projected development time

is ~3-5 months


	 

	Some initial start-up expenses may be required but remaining balance payable upon completion of the activity





















EXHIBIT B




COMMERCIAL PRODUCT SPECIFICATIONS





			
	Product Specifications

	Performance 

	Acceptance 


	Mouse Anti-KLH IgG ELISA Kit with control

	·

Quantitative detection of standards in ng/mL of IgG 

·

Kit stability: 6 months at 2 to 8C from the date of purchase

·

Total assay CV ≤ 10%

	Equivalent or better


	Mouse Anti-KLH IgM ELISA Kit 

with control

	·

Quantitative detection of standards in ng/mL of IgM 

·

Kit stability: 6 months at 2 to 8C from the date of purchase

·

Total assay CV ≤10%

	Equivalent or better


	Rat Anti-KLH IgG ELISA Kit with control

	·

Quantitative detection of standards in ng/mL of IgG corresponding to the units published in Life #4010-1 product insert

·

Kit stability: 6 months at 2 to 8C from the date of purchase

·

Total assay CV ≤ 10%

	Equivalent or better


	Rat Anti-KLH IgM ELISA Kit with control

	·

Quantitative detection of standards in ng/mL of IgG corresponding to the units published in Life #4000-2C product insert

·

Kit stability: 6 months at 2 to 8C from the date of purchase

·

Total assay CV ≤ 10%

	Equivalent or better


	Monkey Anti-KLH IgG1 ELISA Kit with control

	·

Quantitative detection of standards in ng/mL of IgG 

·

Kit stability: 6 months at -20C from the date of purchase

·

Total assay CV ≤ 10%

	Equivalent or better


	Monkey Anti-KLH IgM ELISA Kit with control

	·

Quantitative detection of standards in ng/mL of IgG 

·

Kit stability: 6 months at -20C from the date of purchase

·

Total assay CV ≤ 10%

	Equivalent or better













Insert PIs (Herb and Chris to provide)

Mock-up of Stellar–brand labels (kit box, bulk packaging, vials, etc.) (see attachment)