Exhibit 10.1
 

 
MANUFACTURING AND SUPPLY AGREEMENT
 
Between
 
UNITED-GUARDIAN, INC.
 
And

 
SMITHS MEDICAL ASD, INC.

 
This MANUFACTURING AND SUPPLY AGREEMENT (“Agreement”) is effective November 1,
2013 (“Effective Date”), and is made and entered into by and between
UNITED-GUARDIAN, INC. (“UNITED”), a corporation organized and existing under the
laws of the State of Delaware, USA, with its principal place of business at 230
Marcus Blvd., P.O. Box 18050, Hauppauge, NY 11788 and SMITHS MEDICAL ASD, INC.
(“SMITHS”) having offices at 600 Cordwainer Dr., 3rd Floor, Norwell, MA 02061.
 
WHEREAS, UNITED and SMITHS desire to enter into an Agreement for SMITHS to
Manufacture the Product (as defined below) for a fee payable by UNITED to
SMITHS.

WHEREAS, SMITHS has the expertise and experience necessary to Manufacture (as
defined below) the Product.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:

1.  
DEFINITIONS

1.1.       “Affiliate” means any person or entity that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with a party, where control means the direct or indirect, legal
or beneficial ownership of more than twenty percent (20%) of the outstanding
voting rights in a company.
 
1.2.        “BFS” means blow-fill-seal packaging technology.

1.3.       “cGMP” means the current Good Manufacturing Practice Regulations that
apply to the manufacture, processing, packing, or holding of a drug, or the
Quality System Regulation that applies to the design, manufacture, packaging,
labeling and storage of a finished device, as such are or may be applicable to
the manufacture and packaging of the Product.

1.4.       “Facility” means the facility of SMITHS located in Vernon Hills, IL
used for Manufacture of the Product.

1.5.       “FD&C Act” The Federal Food, Drug, and Cosmetic Act.

1.6.       “Manufacture” includes all activities performed by SMITHS that are
subject to cGMP, including but not limited to the process by which SMITHS
utilizes its BFS and other equipment to produce and package the Product as
outlined in Schedule A.

1.7.       “Materials” means the specific equipment, tooling and supplies used
in connection with the Manufacture of the Product, and not used in connection
with the manufacture of other products by SMITHS.

1.8.       “Price” means the charge to UNITED for Product supplied by SMITHS.
All prices shall be in U.S. Dollars.

 
 

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1.9.       “Product” means Renacidin® Irrigation, the pharmaceutical product
listed on Schedule A attached hereto, in its final single-use dosage form.

1.10.     “Quality Agreement” means the agreement attached hereto as Schedule C
and made a part of this Agreement.

1.11.    “Regulatory Authority” means any local, state, federal, or
international regulatory agency, department, or bureau, including the United
States Food and Drug Administration (“FDA”), which is responsible for issuing
approvals, licenses, registrations, or authorizations necessary for the
Manufacture, use, storage, import, transport, or sale of Product.

1.12.    “Services” means the operations relating to the packaging of the
Product, such as quality assurance, and shipping as outlined in Schedule A.

1.13.    “Specifications” means the specifications contained in or referred to
in the Quality Agreement, as amended from time to time.
 

1.14.    “Territory” means the United States of America.

1.15.     “Contract Year” means the 12-month period beginning no later than the
1st day of the first full month that begins six (6) months after UNITED receives
approval from the FDA of its application to market the Product, or upon first
saleable product shipments intended for United Guardian customers, whichever
occurs first, and continuing for each 12-month period thereafter until this
Agreement terminates. UNITED agrees to give SMITHS at least 90 days notice and
lead time for all orders.

2.             PACKAGE AND SUPPLY

2.1        Manufacture, Supply and Purchase Obligations. SMITHS shall
Manufacture for and supply to UNITED, and UNITED shall purchase from SMITHS,
such quantities of the Product as UNITED may order from SMITHS in accordance
with the terms and conditions of this Agreement.  Based on firm orders and
forecasts provided by UNITED, and at no cost to Smiths, UNITED shall supply
SMITHS with certain raw materials needed to Manufacture the Product (“Raw
Materials”), which are set forth on Schedule B. Smiths shall Manufacture, test,
release, and ship Product to UNITED. SMITHS shall assume all responsibility and
risk, up to the replacement value, for the safekeeping, storage, and handling of
all shipments of Raw Materials received from UNITED.

UNITED shall purchase all of its requirements for Product from SMITHS, and
SMITHS shall sell Product exclusively to UNITED. SMITHS shall use UNITED
Materials, including but not limited to UNITED molds and related equipment as
set forth in Section 3.3 hereof, exclusively and solely for Manufacture of
UNITED Product unless otherwise agreed.

2.2        cGMP Compliance.  SMITHS shall Manufacture the Product in accordance
with the Specifications, with applicable cGMP’s and with such other applicable
laws and regulations as shall be set forth in the Quality Agreement.

2.3        Services and Information to be provided by UNITED.

(a)  UNITED shall provide SMITHS with all necessary scientific and technical
data relating to the Product, including bulk Product specifications and Product
formulations subject to the confidentiality provisions set forth in paragraph 11
hereof. UNITED shall also provide all pertinent environmental health and safety
information necessary to assure safe handling and disposal of the Raw Materials
and the Product by SMITHS’ employees.  In addition, UNITED shall, at its cost,
make available to SMITHS, on an as-needed basis, the services of UNITED
technicians who are familiar with such data.

(b)  Without diminishing the obligation of SMITHS to comply with all applicable
cGMP’s and other applicable laws and regulations, UNITED shall endeavor to
notify SMITHS in writing within 30 days of any final changes to cGMP’s or other
final rule or regulation of a Regulatory Authority of which UNITED becomes
aware, that apply to the Manufacture of the Product.
 
 
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2.4        FDA Debarment.  SMITHS certifies that it is not debarred under
subsection 306 (a) or (b) of the FD&C Act and that it has not and will not use
in any capacity the services of any person debarred under such law with respect
to services to be performed under this Agreement.  SMITHS further certifies that
it will immediately notify UNITED in writing if it becomes debarred under
subsection 306 (a) or (b) of the FD&C Act.

3.             LICENSE AND REGISTRATIONS

3.1        Mutual Grants. The parties acknowledge and agree that nothing herein
shall be deemed to terminate the confidentiality provisions contained in the
Confidentiality Agreement dated February, 21 2013, which continues to apply to
all correspondence and discussions between the parties that took place prior to
the effective date of this Agreement. The confidentiality provisions contained
in this Agreement will control all discussions or correspondence that took place
or will take place beginning on the effective date of this Agreement, and any
conflict between the terms of the previous Confidentiality Agreement and the
confidentiality provisions of this Agreement shall be resolved in favor of the
terms herein.  Nothing in this Agreement shall be construed as giving either
party any license or right in trademarks, patents, designs, copyright or other
intellectual property rights belonging to the other party, except that SMITHS
shall have limited license to use UNITED’s trademarks to the extent that SMITHS
is required by UNITED to apply the same to the Product or its packaging for the
purpose of this Agreement.
 
3.2        Regulatory Licenses.  SMITHS will be responsible for, and bear the
costs of, filing for all necessary permits, establishment and facility licenses
required by Regulatory Authorities necessary for SMITHS to Manufacture the
Product for UNITED under this Agreement.  UNITED will be responsible for, and
bear the costs of, filing all necessary permits, licenses, registrations,
certificates, approvals and other forms of authorization from all Regulatory
Authorities necessary for UNITED to market and sell the Product, including the
marketing authorizations. To the extent either party possesses relevant
information, SMITHS and UNITED shall cooperate in obtaining all relevant
permits, licenses, registrations, certificates, approvals and other forms of
authorizations. The obligation of purchase and supply as set forth in Section
2.1 shall become effective upon the granting of the necessary permits and
approvals by the Regulatory Authorities.

In the event UNITED is required to file a regulatory submission due to SMITHS
changing its manufacturing process, equipment, or location, and such change was
not requested by UNITED, then SMITHS shall be responsible for all costs incurred
by UNITED as a result of such change, including but not limited to the costs of
a new mold, parison heads, or filling system, new pilot and stability batches,
and the costs of preparing and submitting any new regulatory filings that are
required as a result of SMITHS making such changes, including consultant costs.
If a regulatory filing is required as the result of the occurrence of a Force
Majeure (as defined in paragraph 15.1 of this Agreement), then UNITED agrees to
pay all of the costs of such filings. In situations where the parties agree to
make changes that benefit both parties, and that requires the filing of a new
submission, the parties agree to share equally in the costs of that new filing.

SMITHS shall be responsible for the cost of producing any batches of Product
that are required as part of any new regulatory submission pursuant to this
paragraph unless either (a) the new submission is the result of a change
requested by UNITED, or (b) the batches produced can be sold by UNITED.  If new
batches are required for a submission that benefits both parties and which was
mutually agreed upon by both parties, the cost of the submission batches will be
shared equally unless they can be marketed by UNITED, in which case the cost of
such batches will be borne entirely by UNITED.
 
3.3       Ownership.  The molds, associated filling systems, parison heads (if
any), and any other equipment that is paid for by UNITED and used by SMITHS to
Manufacture the Product (as set forth in Schedule B), shall be owned by UNITED,
and for the duration of this Agreement UNITED will be solely responsible for
insuring that equipment.  Except as otherwise set forth herein, SMITHS shall own
and have property rights to all specific Materials and general manufacturing
equipment needed to Manufacture Product.  Notwithstanding anything contained
herein, SMITHS shall be the exclusive owner of any intellectual property rights
arising from SMITHS efforts hereunder that are not specifically related to the
Product, its formulation or packaging.
 
 
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4.             FORECASTS, ORDERS AND DELIVERY

4.1         Forecasts.  On or prior to the tenth (10th) calendar day of January,
April, July and October in each year during the term of this Agreement, UNITED
shall provide to SMITHS a commercially reasonable rolling forecast of Product
for the twelve months following the month in which such forecast is submitted.
The first three (3) months of each forecast constitutes a firm order.

4.2         Orders.  UNITED shall issue quarterly Purchase Orders before the
tenth (10th) calendar day of each calendar quarter, specifying quantity of
Product and delivery requirements for the calendar quarter following the one in
which the Purchase Order was submitted.

4.3         Delivery.  SMITHS shall deliver ordered quantities of the Product on
or before the date specified in the applicable purchase order, provided such
date is at least 90 days after receipt of the purchase order, or the alternative
date agreed upon in advance with UNITED. All shipping costs are the
responsibility of UNITED.

4.4         Shipments.  SMITHS shall deliver with each batch of Product in a
shipment a Certificate of Analysis, accompanied by a statement that the batch
was Manufactured according to this Agreement (including the Quality Agreement),
together with any other batch related records specified in the Quality
Agreement. SMITHS shall also provide release documents at the time each batch of
Product is shipped.

4.5         Obsolete Inventory.  Any UNITED-specific obsolete materials
purchased by SMITHS to Manufacture the Product, including but not limited to Raw
Materials, work in process, and packaging materials shall be reimbursed to
SMITHS by UNITED at SMITHS costs. The maximum amount of obsolete inventory that
UNITED will reimburse SMITHS for will be that associated with the first three
(3) months of the most current forecast.  At such time as agreed by both parties
UNITED shall bear the cost of shipment to UNITED or all destruction costs
related to said inventory unless otherwise agreed to in writing. United's
obligation is limited to Raw Materials, packaging materials and work in process
labor.  Any finished goods produced under a firm order shall be purchased by
UNITED at the contracted price.

5.           DELIVERY
 
5.1         Terms of Delivery.  The Product shall be shipped from SMITHS to a
destination designated by UNITED.  Each shipment shall be Ex Works Vernon Hills,
IL.  The transportation costs for shipment of Product from SMITHS to UNITED
designated location shall be borne by UNITED.  Transportation shall be arranged
by SMITHS to occur in full-truckload quantities when possible.

6.           PRICES AND PAYMENT

6.1         Price.  The prices for the Product shall be as set forth on Schedule
B.  

6.2         Payment.  Payment of the Price shall be made within thirty (30) days
from date of receipt of the SMITHS invoice.  SMITHS shall date and send invoices
to UNITED for the Product upon shipment of the Product to UNITED.  If UNITED
fails to pay or procure payment of the full amount of any invoice when due, and
without in any manner excusing such violation, UNITED agrees to pay SMITHS
interest at a rate of 1.5% per month (or the highest rate permitted by
applicable laws, if lower) on the amount due and owing to SMITHS, from the date
the payment is due until paid.  Without prejudice to any of its other rights,
SMITHS may withhold shipments of the Product if UNITED has not paid an invoice
when due.

6.3        Adjustment of Price.  Prices do not include, and UNITED is
responsible for, any and all applicable taxes and governmental fees,
assessments, duties and charges.  The prices for the Product for the first three
(3) years following the Effective Date of this Agreement are provided in
Schedule A.  Thereafter, Smiths may increase once per year, provided that UNITED
is notified in writing sixty (60) days in advance of each subsequent adjustment.
For any price increase in excess of 5% in any one year, within thirty (30) days
after the receipt of notice of the price increase, UNITED may request written
documentation from SMITHS showing the increase in the amount of Smiths’ costs
for labor or components used in manufacturing the Product that is the basis for
such price increase, and SMITHS shall furnish such documentation within thirty
(30) days thereafter, and any such price increase in excess of 5% will be
limited to the documented labor and component cost increases. Any such
adjustment to price shall be evidenced as an amendment to Schedule A of this
Agreement and signed by both parties. Notwithstanding the foregoing, if
unforeseen market issues arise during the term of the Agreement that require
further consideration relative to price adjustments, the parties will promptly
and fairly address this issue.

 
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7.  
WARRANTY

7.1.       SMITHS’ Warranty.  SMITHS warrants to UNITED that the Product, at the
time of delivery to UNITED as provided in Section 5: (i) will conform to the
Specifications as then in effect, (ii) were Manufactured in accordance with cGMP
and other applicable legal requirements relating to the manufacturing of
Product, and (iii) are free and clear of all liens or encumbrances; (iv) are not
adulterated as defined under Title 21 - FOOD AND DRUGS: CHAPTER 9 - FEDERAL
FOOD, DRUG, AND COSMETIC ACT: SUBCHAPTER V - DRUGS AND DEVICES: Part A - Drugs
and Devices: Sec. 351 - Adulterated drugs and devices. However, SMITHS shall not
be responsible in the event adulteration was caused by adulterated Raw Materials
provided by United. SMITHS further warrants to UNITED that through the
expiration date, Product: (I) will be free from any defects in material and
workmanship, and (II) will not fail to meet Specifications for a reason that is
attributable to any deviations by SMITHS from cGMP. SMITHS acknowledges that the
properties of the plastic bottle are such that they may be subject to change
based upon heat, cold and method of packaging, freight and handling. Due to the
uncertainty of these variables, SMITHS agrees to use commercially reasonable
efforts in preparing Product for shipment. To the extent that a claim is made
that Product fails to comply with the Specifications and such claim is related
solely to a deformity or defect in the Product that may be environmentally
related, it shall be UNITED’s obligation to show that the carrier stored and
transported Product in accordance with the environmental parameters.   SMITHS’
sole obligation and Buyer's exclusive remedy for any breach of the warranty in
this Section 7.1 will be replacement of the defective Product.

7.2        Mutual Representations.  Each party hereby represents and warrants
that it has the full power and authority to enter into and perform this
Agreement, and each party knows of no contract, agreement, promise, undertaking
or other fact or circumstance that would prevent the full execution and
performance of this Agreement.

8.           QUALITY CONTROL REQUIREMENTS

8.1        General.  SMITHS shall perform quality control release testing of the
Product, in accordance with cGMP and all other applicable regulatory
requirements and agreed analytical and other testing procedures for Product
release. UNITED shall at its own expense conduct inspections and tests as it
deems necessary to determine the acceptability of the Product for distribution
into interstate commerce within 30 days after receipt of delivery.  Should
UNITED fail to inspect the Product within that time or fail to notify SMITHS of
any deficiency within 30 days UNITED shall be deemed to have inspected and
approved the Product.  Notwithstanding anything herein to the contrary, the
thirty (30)-day notice provision shall not apply to any latent defect that is
not, or could not, be detected within that timeframe by standard accepted QC
inspection protocols.

8.2        Stability and Sterility Assurance.  SMITHS shall perform any
sterility testing of the Product in accordance with cGMP and all other
applicable regulatory requirements, such testing costs to be borne by
SMITHS.  UNITED will be responsible for the cost of all analytical and stability
and agreed analytical and testing procedures with costs borne by UNITED.
 
8.3        Quality Agreement.  The Product shall be Manufactured in accordance
with the Quality Agreement. The parties shall agree upon reasonable tests to be
undertaken by SMITHS prior to release and shipment of the Product, including all
inspection methods to determine the acceptability of a batch, and such
procedures shall be a part of or appended to the Quality Agreement (Schedule C)
and incorporated therein.  This section is subject to Section 8.1.

8.4         Inspections.

(a)  UNITED shall subject a Product to a quality control inspection in
accordance with the applicable UNITED quality control standards and procedures
at UNITED’s discretion as set forth in the Quality Agreement.

 
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(b)  At a reasonable time but no more than once per year (or such additional
times as mandated by a Regulatory Authority or as necessary for investigation of
an issue related to Quality Controls ), upon at least 48 hours notice, SMITHS
shall permit UNITED, or its representatives, to inspect during regular business
hours SMITHS’ manufacturing facility for the purpose of assuring compliance with
cGMP and any other applicable regulatory and quality assurance requirements,
procedures or standards.  Upon reasonable prior notice, SMITHS shall permit
UNITED to review periodically SMITHS’ quality control procedures and records, at
reasonable times with a representative of SMITHS present, in order to assure
satisfaction of the requirements of this Agreement. The use of any third party
representative shall be subject to SMITHS’ reasonable consent.  Any such
representative shall be required as a condition to an inspection to execute
SMITHS’ non-disclosure agreement and to abide by such other conditions as SMITHS
reasonably deems necessary for the protection of its confidential or proprietary
information.  UNITED shall be responsible for any breach of confidentiality by
any such representative.

(c)  SMITHS shall (i) fully cooperate with UNITED or its representatives who may
visit SMITHS’ production facility as provided in Section 8.4(b), (ii) take
appropriate corrective action within 15 days or another reasonable number of
days as agreed to by the parties (or immediately if there are issues of safety,
health, etc.) of notification to comply with cGMP requirements, and (iii) when
requested by UNITED, describe in writing corrective action planned or taken.

8.5        Regulatory Inspections.  In the event that any portion of the SMITHS
facility involved in the Manufacture of Product or any aspect of its Quality
Control System that is relevant to SMITHS’s Manufacture of the Product is the
subject of an inspection by any Regulatory Authority or any other duly
authorized agency of any national, state, or local government, SMITHS shall
notify UNITED promptly upon learning of such inspection and shall supply UNITED
with copies of any correspondence or portions of correspondence that relate to
the Product.  In the event that either party receives any correspondence or
other communication from any Regulatory Agency relating to the Manufacture of
the Product, it shall provide the other party with a copy of each such
communication and the proposed response.

8.6        Records.  UNITED shall have the right to audit SMITHS’s’ records
relating to its performance under this Agreement.  SMITHS shall maintain reserve
samples, all batch and other packaging and analytical records, all records of
shipments of Product and all validation data relating to the Product, and other
applicable records, for the time periods required by applicable laws and
regulations, and shall make such data available to UNITED and Regulatory
Authorities upon UNITED’s reasonable request or if required by law.
 
9.           REJECTION

9.1           General.  In the event that any portion of the Product delivered
to UNITED by SMITHS shall fail to conform to any of the Specifications, UNITED
may reject that portion by giving written notice to SMITHS within 30 days after
receipt of delivery. SMITHS shall be given an opportunity to investigate whether
or not the Product meets Specifications and if it is agreed that the Products do
not meet specifications, UNITED shall be entitled to return such non-conforming
Products to SMITHS at SMITHS’ expense, and to receive fully compliant Product in
replacement, subject to SMITHS having in stock relevant materials and
components..  If there is a disagreement as to whether product is conforming or
not, the product will be sent to an independent laboratory for a final
determination, the cost of which shall be borne by the party whose determination
of conformance or non-conformance was incorrect. If it is determined that the
product is non-conforming, UNITED shall destroy any non-conforming Product at
SMITHS’s expense, and in accordance with all applicable legal
requirements.  This section is subject to Section 8.1.  SMITHS shall reimburse
UNITED for the cost of all Raw Materials lost as a result of Product failing to
meet Product specifications.

9.2           Dispute Resolution.  If SMITHS disputes UNITED’s rejection, the
parties shall submit samples of the rejected Product for analysis to a mutually
acceptable independent laboratory, whose decision in the matter shall be final
and binding.  The costs of such analysis shall be borne by SMITHS, unless such
analysis shows that the Product met the Specifications, in which case UNITED
shall bear the cost of such analysis.
 
 
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10.           INDEMNIFICATION

10.1      SMITHS.  Except to the extent that UNITED is required to indemnify
SMITHS under Section 10.1 of this Agreement, SMITHS shall defend and hold UNITED
and its Affiliates, as well as its shareholders, directors, officers, employees
and agents harmless from any and all liability, costs, claims and expenses,
including reasonable attorney’s fees, arising from third party claims for death
or injury to person or damage to tangible property as a consequence of a
defective Product manufactured and supplied by SMITHS under this Agreement,
unless the defect is caused by the Raw Materials provided by UNITED to SMITHS.

SMITHS SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
SUSTAINED OR INCURRED BY UNITED IN CONNECTION WITH THE PRODUCT SUPPLIED
HEREUNDER.  THE WARRANTIES SET OUT IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO,
IMPLIED WARRANTIES OF MERCHANT ABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.  SMITHS DISCLAIMS ALL OTHER EXPRESS OR IMPLIED WARRANTIES.

10.2      UNITED shall defend, indemnify and hold SMITHS and its Affiliates,
their shareholders, directors, officers, employees and agents harmless from and
against any and all liability, loss, damage, causes of action, suits, claims,
demands, settlements, costs and expenses or judgments of any nature whatsoever,
resulting from the Product or their marketing, sale, clinical testing, clinical
use or other use (or misuse), including any design defect, failure to warn or
other product liability or intellectual property claims, except to the extent
SMITHS is required to indemnify UNITED under Section 10.1 of this Agreement.

10.3           Defense Control.  To the extent a party shall be required to
indemnify the other party; such indemnifying party shall have control of the
defense and settlement thereof, but no party shall settle a claim that admits
fault on the part of the other party without such party’s written consent, not
to be unreasonably withheld or delayed. The obligation to indemnify shall be
applicable so long as the indemnified party gives prompt notice of the claim to
the indemnifying party and provides the indemnifying party with such assistance
as is reasonably required under the facts and circumstances.

11.           CONFIDENTIALITY

11.1      General.   Each party shall hold in strictest confidence all
information supplied by the other party (“Discloser”), including but not limited
to all written material, product samples, Specifications, drawings, designs,
plans, layouts, forecasts, product formulations, business plans and financial
information, procedures, computer programs, models, prototypes or other
information of any description (“Confidential Information”) received from the
other party (the “Discloser”) for a period of seven (7) years after the date of
disclosure. During the period of confidentiality, the receiving party
(“Recipient”) agrees not to divulge any of the Confidential Information to any
third party (except to employees and legal or financial advisors on a
need-to-know basis, all of whom shall be required by Recipient to be bound by
the same degree of confidentiality as Recipient), nor to use the Confidential
Information for any purpose other than as agreed by the disclosing party.

11.2      Confidential Information may be disclosed either orally or in writing,
including graphic material and electronic, magnetic or other data, may be
disclosed either orally or in writing to an employee of the Recipient on a need
to know basis only.  When disclosed in writing, the information will be labeled
as confidential by the Discloser.  When disclosed orally, such information will
be identified as confidential at the time of disclosure, with subsequent
confirmation in writing referencing the type of information disclosed.
Regardless of whether such information is labeled or confirmed in writing, any
such information that would be known to a reasonable person under the
circumstances shall be deemed Confidential Information.  Confidential
Information shall not be deemed to include:

 
(a)
information which is or becomes generally available to the public otherwise than
through a breach of this Agreement;

 
(b)
information which Recipient can establish, by its written records, was in its
possession prior to the disclosure hereunder, or was developed independently of
any disclosure hereunder; or

 
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(c)  information which is approved in writing by the Discloser for release by
Recipient.

11.3      It is understood and agreed that the disclosure of Confidential
Information by the Discloser shall not grant Recipient any express, implied or
other license or rights to patents or trade secrets of the Discloser (including
any subsidiary or Affiliate thereof), nor shall it constitute any sort of joint
venture or undertaking between the parties.

11.4      Recipient shall secure documents, information, items of
work-in-process and work products that embody Confidential Information in the
same manner that it secures its own confidential information of like
sensitivity.  In addition, Recipient shall maintain reasonable procedures to
prevent loss of any confidential or proprietary documents.  In the event of any
loss, the Discloser shall be promptly notified of such loss.

11.5      Recipient agrees to return all Confidential Information, including all
copies thereof upon written demand by the Discloser.

11.6      All materials, drawings, designs, specifications, notes, memoranda, or
data furnished shall be and remain the property of the Discloser.

11.7      Recipient shall not be in breach of this Agreement if it discloses
Confidential Information pursuant to a demand by a court or judicial or
governmental authority of proper jurisdiction (including the FDA) with which
Recipient is obliged to comply, provided Recipient will provide Discloser with
reasonable notice of such demand and take such steps as Discloser may reasonably
request to assist Recipient in obtaining a protective order preventing or
limiting the disclosure and/or any other measures requiring that the
Confidential Information be protected.

12.           TERM AND TERMINATION

12.1      Term.  This Agreement shall be binding on both parties as of the
Effective Date specified above and, unless terminated in accordance with Section
12.2 or 12.3 below, shall remain in full force and effect for 6 years from the
date UNITED receives FDA approval of its application to market the Product
(“Term”). The Term may only be extended by mutual written agreement of the
parties.

12.2      Automatic Termination.  Unless UNITED has not received FDA approval of
its application to market the Product and provided notice to this effect to
SMITHS by the end of the business day on March 31, 2015, this Agreement will
automatically terminate at the end of the business day on March 31, 2015.

12.3      Early Termination. Without prejudice to any other rights that it may
have hereunder or by law or in equity, either party may terminate this Agreement
immediately by written notice to the other party upon the occurrence of any of
the following:

(a)  
the other party becomes insolvent or an order for relief is entered against the
other party under any bankruptcy or insolvency laws or laws of similar import;

(b)  
the other party makes an assignment for the benefit of its creditors or a
receiver or custodian is appointed for it or its business is placed under
attachment, garnishment or other process involving a significant portion of its
business; or

(c)  
the other party is guilty of a material breach of its undertakings or warranties
under this Agreement and, after thirty (30) days written notice from the
terminating party specifying the breach and stating its intent to so terminate,
fails to cure the breach.

In addition to the termination rights above, UNITED shall have the right to
terminate this agreement within 10 days after its initial visit to SMITHS
manufacturing facility (but no later than March 1, 2015 if no visit takes place
before that date), should Smiths’ Vernon Hills manufacturing site have any
negative changes to its accreditation, its manufacturing facility, its ability
to manufacture Product in accordance with cGMPs, or if any Form 483s are issued
by the FDA and go unresolved as per required FDA guidelines.
 
 
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12.4      Effect of Termination.  Termination of this Agreement shall not
release either Party from fulfilling any obligations it may have incurred prior
to such termination.  Notwithstanding such termination or expiration, the
provisions set forth in the Sections 3.3, 7.1, 7.2, 8.1, 8.5, 10, and 11 shall
survive termination of the Agreement. Upon the expiration or termination of this
Agreement, SMITHS shall reasonably cooperate with UNITED in the transfer of
production of the Product to such production facility designated by UNITED
whereby UNITED shall bear cost and expense of transferring said Product and
equipment and, subject to UNITED’s reimbursement of all costs reasonably
incurred by SMITHS, provide reasonable technical and regulatory assistance, with
a view to the continued supply to UNITED of Product as contemplated by this
Agreement.  Notwithstanding anything herein, termination shall not relieve
UNITED of its obligations to pay for Product ordered prior to the termination
notice nor shall either Party be relieved by virtue of a notice of termination
of any of their obligations that by their nature survive termination of this
Agreement.

13.           RECALL

13.1      Product Recall.  In the event (i) any national government authority or
other regulatory agency issues a request, directive or order that the Product be
recalled, or (ii) a court of competent jurisdiction orders such a recall, or
(iii) UNITED reasonably determines after consultation with SMITHS that the
Product should be recalled because the Product does not conform to the
specifications at the time of shipment by SMITHS, or (iv) UNITED reasonably
determines that the Product should be recalled for any reason, the parties shall
take the appropriate actions to effect the recall.  UNITED shall be responsible
for bearing all costs associated with a recall unless such recall results
primarily from the breach of SMITHS’s express warranty under Article 7.1 of this
Agreement in which case SMITHS shall be responsible for all the reasonable
expenses of recalling the Product (including, but not limited to notification
and shipping charges and man-hours spent arranging, coordinating and conducting
the recall).
 
13.2      Recall Administration and Product Returns.  UNITED will be responsible
for all returns and all aspects of any recall except as provided in Article 13.1
above.  Procedures for handling returns will be covered by communications from
UNITED to SMITHS. UNITED will reimburse SMITHS for any and all reasonable
expenses incurred by SMITHS in processing and/or disposing of any returns unless
such returns are deemed to be the responsibility of SMITHS in accordance with
article 13.1 above.

14.           ADVERSE REACTION RESPONSIBILITY

14.1      General.  Except where SMITHS is obligated by law to author a
notification, UNITED will be solely responsible for processing and providing all
legally required notification to the proper authorities for all adverse reaction
and/or complaint calls and or correspondence related to the Product.  UNITED
will notify SMITHS in writing of all adverse reactions and/or complaints related
to alleged defects with the Manufacturing of the Product. SMITHS shall have the
right to participate in and direct all responses related to the packaging and
quality of Product Manufactured by SMITHS. SMITHS agrees to report per its
standard operating procedures by phone and in writing material
adverse  complaints including complaints of adverse reactions to the Product or
in relation to SMITHS’s Manufacturing of the Product, regardless of what is
being alleged.

15.           GENERAL PROVISIONS

15.1      Force Majeure.  Neither party hereto shall be responsible or liable in
any way for failure or delay in carrying out the terms of this Agreement (other
than the obligation to make payment for Products delivered) resulting from any
cause or circumstance beyond its reasonable control, including, but not limited
to, fire, flood, other natural disasters, war, terrorism, interruption of
transit, accident, explosion, civil commotion, inability of SMITHS to obtain raw
materials or packaging materials (in the event this occurs, the parties will
mutually agree to work together to resolve the situation as quickly as
possible), and acts of any governmental authority; provided, that the party so
affected shall give prompt notice thereof to the other.  No such failure or
delay shall terminate this Agreement, and each party shall complete its
obligations hereunder as promptly as reasonably practicable following cessation
of the cause or circumstances of such failure or delay; provided however, that
if any of the above conditions continues to exist for more than 90 days after
the date of notice given with regard thereto, either party may terminate this
Agreement forthwith upon notice to the other.

 
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15.2      No Agency.  Neither party is, nor will it be deemed to be, an agent or
legal representative of the other party for any purpose.  Neither party will be
entitled to enter into any contracts in the name of, or on behalf of the other
party, nor will a party be entitled to pledge the credit of the other party in
any way or hold itself out as having authority to do so.

15.3      Choice of Law and Jurisdiction.  This Agreement, along with the
schedules attached, incorporated and referenced herein and all purchase orders
issued hereunder shall be governed and interpreted, and all rights and
obligations of the parties shall be determined, in accordance with the laws of
the State of New York, without regard to its conflict of laws rules.  Any
dispute, controversy or claim under this Agreement shall be brought in a court
of competent subject matter jurisdiction in New York, and both parties agree to
accept the personal jurisdiction of such court. Both Parties knowingly and
willingly waive their respective right to a trial by jury in any action or
proceeding related to this Agreement.

15.4      Notices.  All notices, requests, demands, waivers, consents, approvals
or other communications to any party hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally to such party or sent to
such party by facsimile transmission or by registered or certified mail, postage
prepaid, to the addresses set forth below (or to such other address as the
addressee may have specified in notice duly given to the sender as provided
herein):

If to SMITHS:
 
SMITHS Medical
330 Corporate Woods Parkway
Vernon Hills, IL  60061
Attn:  Robert Turoff, Director of Operations
Facsimile:  847-793-0320

With copy to:
SMITHS Medical
Office of General Counsel
1265 Grey Fox Road
St. Paul, MN  55112

If to UNITED:
Ken Globus
General Counsel
230 Marcus Blvd.
Hauppauge, NY 11788

Such notice, request, demand, waiver, consent, approval or other communications
will be deemed to have been given as of the date so delivered, sent by facsimile
transmission, or five (5) days after so mailed.

15.5      Severability.  In the event that any pro­vision of this Agreement
shall be found in any juris­diction to be in violation of public policy or
illegal or unenforceable in law or equity, such finding shall in no event
invalidate any other provision of this Agreement in that jurisdiction, and this
Agreement shall be deemed amended to the minimum extent required to comply with
the law of such jurisdiction.

15.6      Entire Agreement.  This Agreement, along with any schedules attached,
incorporated and referenced herein, states the entire agreement reached between
the parties hereto with respect to the transactions contemplated hereby and may
not be amended or modified except by written instrument mutually agreed and
signed by the parties and attached hereto.  To the extent of any conflict
therein, the terms of the Quality Agreement shall take precedence over all other
terms, provisions, documents, schedules, or exhibits of this Agreement, while
the terms of Schedule B shall take precedence over all other terms, provisions,
documents, schedules or exhibits of this Agreement with the exception of the
Quality Agreement.

15.7.     No Waiver.  The failure of either party hereto to enforce at any time,
or for any period of time, any provision of this Agreement shall not be
construed as a waiver of such provision or of the right of such party thereafter
to enforce each and every provision.  Any waiver by a party of any of its rights
under this Agreement shall be in writing signed by such party.

 
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15.8      Assignment, Binding Effect.  Neither party shall assign this Agreement
nor any of its respective rights or obligations here­under without the prior
written consent of the other party, which consent will not be unreasonably
withheld, conditioned or delayed except to any Affiliate in which event no
consent from the other party is required or as otherwise permitted
hereunder.  UNITED may, however, assign this Agreement to any third party that
acquires UNITED’s rights in the Product, provided the assignee shall have the
resources to comply with all of UNITED’s obligations and shall agree in writing
to be bound by the terms of this Agreement. Either party may assign this
Agreement in connection with a sale of all or substantially all of its
assets.   SMITHS will assign this Agreement to any third party that acquires
SMITHS.  In the event of an acquisition of SMITHS by any third party or
discontinuation of SMITHS’s manufacturing operations at its Vernon Hills
location, UNITED may move or take possession of any equipment at any SMITHS
location that it owns or has purchased, directly or indirectly, pursuant to
SMITHS completing the terms of this Agreement.  Any attempted assignment except
as provided herein shall be void and ineffective.  This Agreement and the rights
herein granted shall be binding upon and shall inure to the benefit of UNITED
and SMITHS and their respective successors and permitted assigns.

15.9     Headings.  All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.

15.10   Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which taken together shall constitute one and the same
instrument.

15.11   Amendments.  No modification, alteration or amendment of this Agreement
shall be binding upon the parties unless contained in a writing signed by a duly
authorized agent for each respective party and specifically referring hereto.
 
15.12   Judicial Proceeding.  If any judicial proceeding is necessary to enforce
or interpret the terms of this agreement, the prevailing party shall be entitled
to reasonable attorney’s fees, costs and expenses in addition to any other
relief to which such party is entitled.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of
the day and year first above written.

 
UNITED-GUARDIAN, INC.
SMITHS MEDICAL ASD, INC.

 

BY: ______________________________
BY: ____________________________

NAME: Ken Globus
NAME:

TITLE:  President
TITLE:

DATE: ____________________________
DATE: __________________________

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