QUOTATION Product Development and Pilot Lot Manufacturing Proposal Version 01 Citius Pharmaceuticals LLC (Referred to as Customer)

IGI, Inc.

Wheat Road and Lincoln Avenue

Buena, NJ 08310

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Facility. IGI is an FDA registered drug manufacturing establishment that is maintained in accordance with applicable US laws, rules and regulations, including without limitation, applicable current Good Manufacturing Practices.

Product Development. With the selected ingredients, IGI will use its product development laboratories and the other available resources to formulate various prototypes of the product.

Records. IGI will maintain all administration, supervision and record keeping, as required by applicable law and in accordance with IGI’s standard operating procedures and practices. All development records, batch records, reports and master batch records will be the property of Citius.

Master Batch Record. IGI will provide labor and materials for preparation and approval of the Master Batch Record and any subsequent revisions thereto.

Materials. IGI will provide cGMP release raw materials, components and excipients as agreed to by the parties.

Waste Disposal. IGI will manifest all hazardous waste and engage a contractor to dispose of all Product related waste in accordance with applicable laws, rules and regulations.

Storage. IGI will store the ingredients and Product including the development, scale-up, clinical and non-clinical testing and validation batches if any, in accordance with the applicable storage specifications until such time that Citius confirms that the project is terminated and that there is not further need to store the Product. .

Delivery. IGI will pack the Product as per the specification approved by the customer All shipments shall be F.O.B. IGI’s shipping docks. If Customer has not specifically designated a preferred carrier, IGI will select the carrier for shipment.

Customer’s Responsibilities

Project Instructions. Customer will:

Product Testing. Customer will be responsible for conducting any in vivo product testing.

Artwork. If IGI is labeling the Product, IGI will develop and Customer will approve artwork that meets all applicable regulatory requirements.

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Project Pricing.

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Revisions to Pricing. In addition to any reasons for price changes expressly set forth in Exhibit 1, IGI may revise the prices provided in this Quotation if reasonably unforeseeable circumstances affect the work required to complete the Project. IGI will notify Customer immediately if the costs to complete the Project exceed the prices stated in this Quotation. IGI will not commence work involving charges in excess of those stated in this Quotation without Customer approval unless such advance notice was not possible due to the circumstances.

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Standard Terms and Conditions. The Standard Terms and Conditions attached to this Quotation as Exhibit 1 are an integral part of this Quotation and are incorporated herein by reference. In the event of a conflict between the terms of this Quotation and the attached Standard Terms and Conditions, the Standard Terms and Conditions shall govern. In the event of a conflict between the terms and conditions of this Quotation and any purchase order or other documentation submitted by Customer, this Quotation shall govern.

Invoicing and Payment Terms. For project work, Customer will pay as per following schedule -

Initial Batches. Each batch of Product manufactured under this Quotation will be considered to be a “Development Batch” until IGI has manufactured full size batch of Products which meet the applicable Specifications. The term “Development Batch” shall include without limitation any batch manufactured following (i) a change in Specifications, or (ii) a scale-up in the manufacturing process to produce greater quantities of Product, until IGI has manufactured a batch of Product meeting the new Specifications. Customer shall be responsible for the cost of each Development Batch that fails to meet the Specifications unless IGI was grossly negligent in the manufacture of the out-of-Specification batch. IGI and Customer shall cooperate in good faith to resolve any problems causing the out-of-Specification batch.

Unlabeled Product. If IGI is to provide Customer with product which is not labeled, Customer represents and warrants that it will comply with all applicable regulations.

Termination. Customer may terminate this Quotation upon 15 days notice, subject to payment of any cancellation fees provided herein. Either party may terminate this Quotation: (i) effective upon sixty (60) days prior written notice to the other party, if the other party commits a material breach of this Quotation and fails to cure such breach by the end of such sixty (60) day period; provided, however, that failure to pay amounts due under this Quotation within thirty (30) days after such payments are due shall constitute cause for immediate termination of this Quotation, or at IGI’s discretion, IGI shall be relieved of any further obligation to perform under this Quotation until all outstanding payments are brought current, or (ii) effective upon written notice to the other party, if the other party becomes insolvent or admits in writing its inability to pay its debts as they become due, files a petition for bankruptcy, makes an assignment for the benefit of its creditors or has a receiver, trustee or other court officer appointed for its properties or assets.

Non Compete, Exclusivity and Data Rights. IG will only perform and provide development services and manufacture products containing hydrocortisone acetate and lidocaine base and/or lidocaine hydrochloride in any percentage (“Combination Products”), exclusively for Citius. IGI may not develop and or manufacture the Combination Products directly or indirectly for itself or any third party other than Citius. Upon the termination of the Project for any reason by either party, IG will not use the data generated under this contract for any commercial purpose without compensating Citius.

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Citius Pharma

IGI Laboratories , Inc.

Signature

Signature

Printed Name

Printed Name

Title

Title

Date

Date

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Mail or fax the proposal acceptance sheet to:

IGI, Inc

105 Lincoln Avenue 

Buena, NJ 08310 

(856) 697-0250 (Fax)

Wire payment to:

Overnight mail payment to:

Regular mail payment to:

IGI, Inc

PO Box 687 105 Lincoln Avenue

Buena, NJ 08310

IGI, Inc

PO Box 687 105 Lincoln Avenue

Buena, NJ 08310

Quotation Expiration. This Quotation is valid for ninety (90) days from the date of the Quotation, unless extended by IGI.

B. Audits. Customer may conduct two quality assurance facility audits per year at no cost. Such audits may be performed by Citius or consultants appointed by Citius.

C. Regulatory Inspections. IGI will promptly notify Customer of any regulatory inspections directly relating to or affecting or impacting the Project. Customer accepts reasonable and documented costs charged by a regulatory authority for inspections directly related to the Project.

D. Price Changes. IGI may revise the prices provided in this Quotation if (i) Customer’s requirements or any Customer-provided information is inaccurate or incomplete, (ii) Customer revises IGI’s responsibilities, the Specifications, the Project Instructions, procedures, assumptions, processes, test protocols, test methods or analytical requirements, to the extent applicable to the Project, or (iii) for such other reasons set forth in the Quotation.

E. Payments. IGI will invoice Customer as set forth in the Quotation. IGI charges a late payment fee of 1½% per month for payments not received by the date specified in the Quotation. Failure to bill for interest due shall not be a waiver of IGI’s right to charge interest.

F. Taxes. Customer will pay any sales, use, gross receipts, compensating or other taxes, licenses, or fees (excluding IGI’s net income and franchise taxes) to be paid by IGI to any tax jurisdiction arising from the Project.

G. Hazardous Materials. Customer warrants to IGI that no specific safe handling instructions are applicable to any substance or material provided by Customer to IGI, except as disclosed to IGI in writing by the Customer in sufficient time for review and training by IGI prior to delivery. Where appropriate or required by law, Customer will provide a Material Safety Data Sheet for all Customer-provided materials, finished Product, and reference standards.

H. Shipment. Unless otherwise specified in the Quotation, all product, raw materials and components shipped by IGI are delivered F.O.B. IGI’s facilities.

I. Limitations of Liability. NOTWITHSTANDING ANY OTHER PROVISION IN THIS QUOTATION, IGI’S LIABILITY UNDER THIS QUOTATION SHALL NOT EXCEED THE TOTAL AMOUNT PAID BY CUSTOMER TO IGI HEREUNDER. NOTWITHSTANDING THE FOREGOING, IGI’S LIABILITY FOR LOSSES TO API, BULK DRUG PRODUCT OR OTHER MATERIALS PROVIDED BY CUSTOMER, WHETHER OR NOT INCORPORATED INTO FINISHED PRODUCT, SHALL NOT EXCEED $5,000. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES, WHETHER OR NOT FORESEEABLE, ARISING FROM THE PROJECT OR THIS QUOTATION. 

J. Confidentiality. All information disclosed by a party in connection with this Quotation shall be confidential information, unless such information is (1) already known to the receiving party, as evidenced by written records; (2) independently developed or discovered by the receiving party without the use of the disclosing party’s confidential information, as evidenced by written records; (3) in the public domain other than through the fault of the receiving party; (4) disclosed to the receiving party by a third party not in breach of a duty of confidentiality owed to the disclosing party; or (5) required to be disclosed by law, or court or administrative order; provided, that the receiving party first gives prompt notice thereof to the disclosing party. Neither party shall, without the other party’s prior written consent, use the confidential information of the other party or disclose such information to anyone other than employees of the receiving party or its affiliated entities who require such information to perform such party’s obligations under this Quotation. This undertaking shall survive for 7 years following termination of this Quotation.

K. Intellectual Property. All IGI Materials, including without limitation, all improvements, developments, derivatives or modifications to the IGI Materials, shall be owned exclusively by IGI. All Customer Materials, including, without limitation, all improvements, developments, derivatives or modifications to the Customer Materials shall be owned exclusively by Customer. For purposes hereof, “IGI Materials” means all IGI proprietary information, intellectual property, and developments, including without limitation, all patents, patent applications, know-how, inventions, designs, concepts, improvements, technical information, manuals, instructions or specifications, which are owned, licensed or used by IGI in developing, formulating, manufacturing, filling, processing (sterile or non-sterile), packaging, analysis or testing pharmaceutical products and the packaging equipment, processes or methods of packaging, or any improvements to any of the foregoing. For purposes hereof, “Customer Materials” means all proprietary information, intellectual property, and developments, including without limitation, all patents, patent applications, know-how, inventions, designs, concepts, improvements, technical information, manuals, instructions or specifications, which are owned, licensed or used by Customer relating to the API or the formulation thereof.

L. Warranties. IGI will perform the Project in accordance with the Specifications, Project Instructions and United States current Good Manufacturing Practices or current Good Laboratory Practices, as applicable. THE WARRANTIES SET FORTH IN THE QUOTATION AND THESE STANDARD TERMS AND CONDITIONS ARE THE SOLE AND EXCLUSIVE WARRANTIES MADE BY IGI TO CUSTOMER AND THERE ARE NO OTHER WARRANTIES, REPRESENTATIONS OR GUARANTEES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, REGARDING THE PRODUCTS OR PROJECT, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

IGI expressly denies any and all responsibility for claims of patent infringement. The customer accepts and will hold IGI harmless; the customer assumes full responsibility for any 3^rd party claims arising from implied patent infringement.

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M. Customer Obligations. Unless otherwise agreed to by the parties in writing, Customer is solely responsible to (i) provide complete and accurate scientific data regarding the Project, (ii) if applicable, review and approve all in-process and finished product test results to ensure conformity of such results with the product Specifications, regardless of which party is responsible for finished product release, (iii) prepare all required submissions to regulatory authorities, and (iv) perform such other obligations of Customer set forth in the Quotation.

N. Indemnification. Customer will indemnify and hold harmless IGI, its affiliates and their officers, directors, agents and employees against any third party claim arising directly or indirectly from (a) the promotion, marketing, distribution or sale of the Product, (b) use or exposure to the Product, (c) exposure to materials provided by Customer, (c) negligence or willful misconduct of Customer, (d) breach of this Quotation by Customer, or (e) use of any intellectual property provided by Customer to IGI. IGI will indemnify Customer for any third party claim arising from (i) any negligence or willful misconduct by IGI, or (ii) IGI’s breach of this Quotation.

O. Set-Off. Without limiting IGI’s rights under law or in equity, IGI and its affiliates, parent or related entities, collectively or individually, may exercise a right of set-off against all amounts due to IGI from Customer. For purposes of this Section, IGI, its affiliates, parent or related entities shall be deemed to be a single creditor.

P. Force Majeure. Neither party will be liable for any failure to perform or for delay in performance resulting from any cause beyond its reasonable control, including without limitation, acts of God, fires, floods, or weather; strikes or lockouts, factory shutdowns, embargoes, wars, hostilities or riots, shortages in transportation; provided, however, that if IGI cannot complete an order within ninety (90) days due to any such cause, Customer may terminate this Quotation without liability to IGI.

Q. Use and Disposal. Customer represents and warrants to IGI that Customer will hold, use and/or dispose of Product and materials provided by IGI in accordance with all applicable laws, rules and regulations.

R. Record Retention. Unless the parties otherwise agree in writing, IGI will retain batch, laboratory and other technical records for the minimum period required by applicable law. 

S. Independent Contractor. It is expressly agreed that IGI and Customer shall be independent contractors and that the relationship between the two parties shall not constitute a partnership, joint venture or agency.  

T. Publicity. Neither party will make any press release or public disclosure regarding this Quotation or the transactions contemplated hereby without the other party's express prior written consent, except as required by applicable law or by any governmental agency, in which case the party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other party as to the form, nature and extent of the press release or public disclosure prior to making the public disclosure.

U. Authority. Customer grants IGI full authority to use any Customer supplied materials or substances. Customer and IGI each represent and warrant that it has taken all necessary action on its part to authorize the execution and delivery of this Quotation and this Quotation has been duly executed and delivered on behalf of such party, and constitutes a legal, valid, binding obligation, enforceable against such party in accordance with its terms.

V. Amendment & Precedence. This Quotation constitutes the entire agreement of the parties related to the Project and may not be modified without the other party’s prior written consent. These Standard Terms and Conditions supersede any conflicting terms and conditions set forth in the Quotation. Any previous written acknowledgement, statement or prior understanding between the parties related to the Project is superseded by this Quotation.

W. Dispute Resolution. If a dispute arises between the parties in connection with this Quotation, the respective presidents or Senior Executives of IGI and Customer shall first attempt to resolve the dispute. If such parties cannot resolve the dispute, such Dispute shall be resolved in the jurisdiction of the defendant party by binding arbitration in accordance with the then existing commercial arbitration rules of The CPR Institute for Dispute Resolution ("CPR"), 366 Madison Avenue, New York, NY 10017.

X. Survival. These Standard Terms and Conditions shall survive termination or expiration of this Quotation.