Document:

exv10wpp

 

EXHIBIT 10.PP

SKYWORKS SOLUTIONS, INC.

2002 EMPLOYEE STOCK PURCHASE PLAN

1. Purpose.

The Skyworks Solutions, Inc. 2002 Employee Stock Purchase Plan (hereinafter the “Plan”) is intended
to provide a method whereby employees of Skyworks Solutions, Inc. (the “Company”) and its
participating subsidiaries (as defined in Article 18) will have an opportunity to acquire a
proprietary interest in the Company through the purchase of shares of the Company’s Common Stock.
It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan”
under Section 423 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation
in a manner consistent with the requirements of that Section of the Internal Revenue Code.

2. Eligible Employees.

All employees of the Company or any of its participating subsidiaries who are employed by the
Company at least ten (10) business days prior to the first day of the applicable Offering Period
shall be eligible to receive options under this Plan to purchase the Company’s Common Stock. Except
as otherwise provided herein, persons who become eligible employees after the first day of any
Offering Period shall be eligible to receive options on the first day of the next succeeding
Offering Period on which options are granted to eligible employees under the Plan. For the purpose
of this Plan, the term employee shall not include an employee whose customary employment is less
than twenty (20) hours per week or is for not more than five (5) months in any calendar year.

In no event may an employee be granted an option if such employee, immediately after the option is
granted, owns stock possessing five (5%) percent or more of the total combined voting power or
value of all classes of stock of the Company or of its parent corporation or subsidiary corporation
as the terms “parent corporation” and “subsidiary corporation” are defined in Section 424(e) and
(f) of the Internal Revenue Code. For purposes of determining stock ownership under this paragraph,
the rules of Section 424(d) of the Internal Revenue Code shall apply and stock which the employee
may purchase under outstanding options shall be treated as stock owned by the employee.

3. Stock Subject to the Plan.

The stock subject to the options granted hereunder shall be shares of the Company’s authorized but
unissued Common Stock or shares of Common Stock reacquired by the Company, including shares
purchased in the open market. Subject to approval of the stockholders, the aggregate number of
shares which may be issued pursuant to the Plan is 6,130,000 for all Offering Periods, subject to
increase or decrease by reason of stock split-ups, reclassifications, stock dividends, changes in
par value and the like. If any option granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, the unpurchased shares subject to such option shall again be available under the
Plan. If the number of shares of Common Stock available for any Offering Period is insufficient to
satisfy all purchase requirements for that Offering Period, the available

 

 

shares for that Offering Period shall be apportioned among participating employees in proportion to
their options.

4. Offering Periods and Stock Options.

There shall be Offering Periods during which payroll deductions will be accumulated under the Plan.
Each Offering Period includes only regular pay days falling within it. The Committee shall be
expressly permitted to establish the Offering Periods, including the Offering Commencement Date and
Offering Termination Date of any Offering Period, under this Plan; provided, however, that, in no
event shall any Offering Period extend for more than twenty-four (24) months. The Offering
Commencement Date is the first day of each Offering Period. The Offering Termination Date is the
applicable date on which an Offering Period ends under this Plan.

Subject to the foregoing, the Offering Periods shall generally commence and end as follows:

	 	 	 
	Offering	 	Offering
	Commencement Dates	 	Termination Dates
	Each August 1

	 	Each January 31
	Each February 1

	 	Each July 31

Provided, however, that (i) the Offering Commencement Date and Offering Termination Date of the
initial Offering Period under this Plan shall be October 21, 2002 and March 31, 2003, respectively,
and (ii) the Offering Commencement Date and Offering Termination Date of the Offering Period
immediately following the initial Offering Period under this Plan shall be April 1, 2003 and July
31, 2003, respectively.

On each Offering Commencement Date, the Company will grant to each eligible employee who is then a
participant in the Plan an option to purchase on the Offering Termination Date at the Option
Exercise Price, as hereinafter provided, that number of full shares of Common Stock reserved for
the purpose of the Plan, up to a maximum of 1,000 shares, subject to increase or decrease (i) at
the discretion of the Committee before each Offering Period or (ii) by reason of stock split-ups,
reclassifications, stock dividends, changes in par value and the like (the “Share Cap”); provided
that such employee remains eligible to participate in the Plan throughout such Offering Period. If
the eligible employee’s accumulated payroll deductions on the Offering Termination Date would
enable the eligible employee to purchase more than the Share Cap except for the Share Cap, the
excess of the amount of the accumulated payroll deductions over the aggregate purchase price of the
Share Cap shall be refunded to the eligible employee as soon as administratively practicable by the
Company, without interest. The Option Exercise Price for each Offering Period shall be the lesser
of (i) eighty-five percent (85%) of the fair market value of the Common Stock on the Offering
Commencement Date, or (ii) eighty-five percent (85%) of the fair market value of the Common Stock
on the Offering Termination Date, in either case rounded up to the next whole cent. In the event of
an increase or decrease in the number of outstanding shares of Common Stock through stock
split-ups, reclassifications, stock dividends, changes in par value and the like, an appropriate
adjustment shall be made in the number of shares and Option Exercise Price per share provided for
under the Plan, either by a proportionate increase in the number of shares and proportionate
decrease in the Option Exercise Price per share, or by a proportionate decrease in the number of
shares and a proportionate increase in the Option Exercise Price per share, as may be required to
enable an eligible employee who is then a

 

 

participant in the Plan to acquire on the Offering Termination Date that number of full shares of
Common Stock as his accumulated payroll deductions on such date will pay for at a price equal to
the lesser of (i) eighty-five percent (85%) of the fair market value of the Common Stock on the
Offering Commencement Date, or (ii) eighty-five percent (85%) of the fair market value of the
Common Stock on the Offering Termination Date, in either case rounded up to the next whole cent, as
so adjusted.

For purposes of this Plan, the term “fair market value” means, if the Common Stock is listed on a
national securities exchange or is on the National Association of Securities Dealers Automated
Quotation (“Nasdaq”) Global Select Market system, the closing sale price of the Common Stock on
such exchange or as reported on Nasdaq or, if the Common Stock is traded in the over-the-counter
securities market, but not on the Nasdaq Global Select Market, the closing bid quotation for the
Common Stock, each as published in The Wall Street Journal. If no shares of Common Stock are traded
on the Offering Commencement Date or Offering Termination Date, the fair market value will be
determined on the next regular business day on which shares of Common Stock are traded.

For purposes of this Plan the term “business day” as used herein means a day on which there is
trading on the Nasdaq Global Select Market or such national securities exchange on which the Common
Stock is listed.

No employee shall be granted an option which permits his rights to purchase Common Stock under the
Plan and any similar plans of the Company or any parent or subsidiary corporations to accrue at a
rate which exceeds $25,000 of fair market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at any time. The purpose of
the limitation in the preceding sentence is to comply with and shall be construed in accordance
with Section 423(b)(8) of the Internal Revenue Code. If the participant’s accumulated payroll
deductions on the last day of the Offering Period would otherwise enable the participant to
purchase Common Stock in excess of the Section 423(b)(8) limitation described in this paragraph,
the excess of the amount of the accumulated payroll deductions over the aggregate purchase price of
the shares actually purchased shall be refunded as soon as administratively practicable to the
participant by the Company, without interest.

5. Exercise of Option.

Each eligible employee who continues to be a participant in the Plan on the Offering Termination
Date shall be deemed to have exercised his or her option on such date and shall be deemed to have
purchased from the Company such number of full shares of Common Stock reserved for the purpose of
the Plan as his or her accumulated payroll deductions on such date will pay for at the Option
Exercise Price subject to the Share Cap and the Section 423(b)(8) limitation described in
Article 4. If a participant is not an employee on the Offering Termination Date and throughout an
Offering Period, he or she shall not be entitled to exercise his or her option.

If a participant’s accumulated payroll deductions in his or her account are based on a currency
other than the U.S. dollar, then on the Offering Termination Date the accumulated payroll
deductions in his or her account will be converted into an equivalent value of U.S. dollars based
upon the U.S. dollar-foreign currency exchange rate in effect on that date, as reported in The Wall
Street Journal, provided that such conversion does not result in an Option Exercise Price which is,
in fact, less than the lesser of an amount equal to 85 percent of the fair market value of the
Common Stock at the time such option is granted or 85 percent of the fair market value of the

 

 

Common Stock at the time such option is exercised. The Plan administrators (as defined in Article
19) shall have the right to change such conversion date, as they deem appropriate to effectively
purchase shares on any Offering Termination Date, provided that such action does not cause the
Plan, or any grants under the Plan, to fail to qualify under Section 423 of the Internal Revenue
Code.

6. Authorization for Entering Plan.

An eligible employee may enter the Plan by following a written, electronic or other enrollment
process, including a payroll deduction authorization, as prescribed by the Plan administrators
under generally applicable rules. Except as may otherwise be established by the Plan administrators
under generally applicable rules, all enrollment authorizations shall be effective only if
delivered to the designated Plan administrator(s) in accordance with the prescribed procedures not
later than ten (10) business days before an applicable Offering Commencement Date Participation may
be conditioned on an eligible employee’s consent to transfer and process personal data and on
acknowledgment and agreement to Plan terms and other specified conditions.

The Company will accumulate and hold for the employee’s account the amounts deducted from his or
her pay. No interest will be paid thereon. Participating employees may not make any separate cash
payments into their account.

Unless an employee files a new authorization, or withdraws from the Plan, his or her deductions and
purchases under the authorization he or she has on file under the Plan will continue as long as the
Plan remains in effect. An employee may increase or decrease the amount of his or her payroll
deductions as of the next Offering Commencement Date by filing a revised payroll deduction
authorization in accordance with the procedures then applicable to such actions. Except as may
otherwise be established by the Plan administrators under generally applicable rules, all revised
authorizations shall be effective only if delivered to the designated Plan administrator(s) in
accordance with the prescribed procedures not later than ten (10) business days before the next
Offering Commencement Date.

7. Maximum Amount of Payroll Deductions.

An employee may authorize payroll deductions in an amount of not less than one percent (1%) and not
more than ten percent (10%) (in whole number percentages only) of his or her eligible compensation.
Such deductions shall be determined based on the employee’s election in effect on the payday on
which such eligible compensation is paid. An employee may not make any additional payments into
such account. Eligible compensation means the wages as defined in Section 3401(a) of the Internal
Revenue Code, determined without regard to any rules that limit compensation included in wages
based on the nature or location or employment or services performed, including without limitation
base pay, shift premium, overtime, gain sharing (profit sharing), incentive compensation, bonuses
and commissions and all other payments made to the employee for services as an employee during the
applicable payroll period, and excluding the value of any qualified or non-qualified stock option
granted to the employee to the extent such value is includible in the taxable wages, reimbursements
or other expense allowances, fringe benefits, moving expenses, deferred compensation, and welfare
benefits, but determined prior to any exclusions for any amounts deferred under Sections 125,
401(k), 402(e)(3), 402(h)(1)(B), 403(b) or 457(b) of the Internal Revenue Code or for certain
contributions described in Section 457(h)(2) of the Internal Revenue Code that are treated as
Company contributions.

 

 

8. Unused Payroll Deductions.

Only full shares of Common Stock may be purchased. Any balance remaining in an employee’s account
after a purchase will be reported to the employee and will be carried forward to the next Offering
Period. However, in no event will the amount of the unused payroll deductions carried forward from
a payroll period exceed the Option Exercise Price per share for that Offering Period. If for any
Offering Period the amount of unused payroll deductions should exceed the Option Exercise Price per
share, the amount of the excess for any participant shall be refunded to such participant, without
interest.

9. Change in Payroll Deductions.

Unless otherwise permitted by the Committee prior to the commencement of an Offering Period,
payroll deductions may not be increased, decreased or suspended by a participant during an Offering
Period. However, a participant may withdraw in full from the Plan.

10. Withdrawal from the Plan.

An employee may withdraw from the Plan and withdraw all but not less than all of the payroll
deductions credited to his or her account under the Plan prior to the Offering Termination Date by
completing and filing a withdrawal notification with the designated Plan administrator(s) in
accordance with the prescribed procedures, in which event the Company will refund as soon as
administratively practicable without interest the entire balance of such employee’s deductions not
previously used to purchase Common Stock under the Plan. Except as may otherwise be prescribed by
the Plan administrators under generally applicable rules, all withdrawals shall be effective only
if delivered to the designated Plan administrator(s) in accordance with the prescribed procedures
not later than ten (10) business days before the Offering Termination Date.

An employee who withdraws from the Plan is like an employee who has never entered the Plan; the
employee’s rights under the Plan will be terminated and no further payroll deductions will be made.
To reenter, such an employee must re-enroll pursuant to the provisions of Article 6 before the next
Offering Commencement Date which cannot, however, become effective before the beginning of the next
Offering Period following his withdrawal.

11. Issuance of Stock.

As soon as administratively practicable after each Offering Period the Company shall deliver (by
electronic or other means) to the participant the Common Stock purchased under the Plan, except as
specified below. The Plan administrators may permit or require that the Common Stock shares be
deposited directly with a broker or agent designated by the Plan administrators, and the Plan
administrators may utilize electronic or automated methods of share transfer. In addition, the Plan
administrators may require that shares be retained with such broker or agent for a designated
period of time (and may restrict dispositions during that period) and/or may establish other
procedures to permit tracking of disqualifying dispositions of such shares or to restrict transfer
of such shares as required to ensure that the Company’s applicable tax withholding obligations are
satisfied.

 

 

12. No Transfer or Assignment of Employee’s
Rights.

An employee’s rights under the Plan are his or hers alone and may not be transferred or assigned
to, or availed of by, any other person. Any option granted to an employee may be exercised only by
him or her, except as provided in Article 13 in the event of an employee’s death.

13. Termination of Employee’s Rights.

Except as set forth in Article 14, an employee’s rights under the Plan will terminate when he or
she ceases to be an employee because of retirement, resignation, lay-off, discharge, death, change
of status, failure to remain in the customary employ of the Company for twenty (20) hours or more
per week, or for any other reason. Notwithstanding anything to the contrary contained in Article
10, a withdrawal notice will be considered as having been received from the employee on the day his
or her employment ceases, and all payroll deductions not used to purchase Common Stock will be
refunded without interest.

Notwithstanding anything to the contrary contained in Article 10, if an employee’s payroll
deductions are interrupted by any legal process, a withdrawal notice will be considered as having
been received from him or her on the day the interruption occurs.

14. Death of an Employee.

Upon termination of the participating employee’s employment because of death, the person(s)
entitled to receipt of the Common Stock and/or cash as provided in this Article 14 shall have the
right to elect, by written notice given to the Plan administrators prior to the expiration of the
thirty (30) day period commencing with the date of the death of the employee, either (i) to
withdraw, without interest, all of the payroll deductions credited to the employee’s account under
the Plan, or (ii) to exercise the employee’s option for the purchase of shares of Common Stock on
the next Offering Termination Date following the date of the employee’s death for the purchase of
that number of full shares of Common Stock reserved for the purpose of the Plan which the
accumulated payroll deductions in the employee’s account at the date of the employee’s death will
purchase at the applicable Option Exercise Price (subject to the limitations set forth in Article
4), and any excess in such account (in lieu of fractional shares) will be paid to the employee’s
estate as soon as administratively practicable, without interest. In the event that no such written
notice of election shall be duly received by the Plan administrators, the payroll deductions
credited to the employee’s account at the date of the employee’s death will be paid to the
employee’s estate as soon as administratively practicable, without interest.

Except as provided in the preceding paragraph, in the event of the death of a participating
employee, the Company shall deliver such Common Stock and/or cash to the executor or administrator
of the estate of the employee.

15. Termination and Amendments to Plan.

The Plan may be terminated at any time by the Company’s Board of Directors. It will terminate in
any case on December 31, 2012, or if sooner, when all of the shares of Common Stock reserved for
the purposes of the Plan have been purchased. In the event that the Board of Directors terminates
the Plan pursuant to this Article 15, the date of such termination shall be deemed as the Offering
Termination Date of the applicable Offering Period in which such termination date

 

 

occurs. Upon such termination or any other termination of the Plan, all payroll deductions not used
to purchase Common Stock will be refunded without interest.

The Committee or the Board of Directors may from time to time adopt amendments to the Plan provided
that, without the approval of the stockholders of the Company, no amendment may (i) except as
provided in Articles 3, 4, 24 and 25, increase the number of shares that may be issued under the
Plan; (ii) change the class of employees eligible to receive options under the Plan, if such action
would be treated as the adoption of a new plan for purposes of Section 423(b) of the Internal
Revenue Code; or (iii) cause Rule 16b-3 under the Securities Exchange Act of 1934 to become
inapplicable to the Plan.

16. Limitations of Sale of Stock Purchased
Under the Plan.

The Plan is intended to provide shares of Common Stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any employee in the conduct of his or
her own affairs. An employee may, therefore, sell stock purchased under the Plan at any time the
employee chooses, subject to compliance with any applicable federal or state securities laws and
subject to any restrictions imposed under Articles 11 and 26. Each employee agrees by entering the
Plan to promptly give the Company notice of any such Common Stock disposed of within two years
after the Offering Commencement Date on which the Common Stock was purchased showing the number of
such shares disposed of. The employee assumes the risk of any market fluctuations in the price of
such Common Stock.

17. Company’s Offering of Expenses Related to
Plan.

The Company will bear all costs of administering and carrying out the Plan.

18. Participating Subsidiaries.

The term “participating subsidiaries” shall mean any present or future subsidiary of the Company
which is designated by the Committee to participate in the Plan. The Committee shall have the power
to make such designation(s) before or after the Plan is approved by the stockholders.

19. Administration of the Plan.

The Plan may be administered by the Compensation Committee, or such other committee as may be
appointed by the Board of Directors of the Company (the “Committee”). No member of the Committee
shall be eligible to participate in the Plan while serving as a member of the Committee. In the
event that the Board of Directors fails to appoint or refrains from appointing a Committee, the
Board of Directors shall have all power and authority to administer the Plan (in such event the
word “Committee” shall refer to the Board of Directors).

The Committee shall have the authority to construe and interpret the Plan and options, and to
establish, amend and revoke rules and regulations for the administration of the Plan. The
Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully
effective. The interpretation and construction by the Committee of any provisions of the Plan or of
any option granted under it shall be final. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. Without limiting the foregoing, the
Committee shall have the power, subject to, and within the limitations of, the

 

 

express provisions of the Plan: (i) to determine when and how options to purchase shares of Common
Stock shall be granted and the provisions of each Offering Period (which need not be identical);
(ii) to designate from time to time which participating subsidiaries of the Company shall be
eligible to participate in the Plan; (iii) to determine the Offering Commencement Date and Offering
Termination Date of any Offering Period; (iv) to increase or decrease the maximum number of shares
which may be purchased by an eligible employee in any Offering Period; (v) to amend the Plan as
provided in Article 15, and (vi) generally, to exercise such powers and to perform such acts as it
deems necessary or expedient to promote the best interests of the Company and the participating
subsidiaries.

The Committee may delegate to one or more individuals the day-to-day administration of the Plan.
Without limitation, subject to the terms and conditions of this Plan, the President, the Chief
Financial Officer of the Company, and any other officer of the Company or committee of officers or
employees designated by the Committee (collectively, the “Plan administrators”), shall each be
authorized to determine the methods through which eligible employees may elect to participate,
amend their participation, or withdraw from participation in the Plan, and establish methods of
enrollment by means of a manual or electronic form of authorization or an integrated voice response
system. The Plan administrators are further authorized to determine the matters described in
Article 11 concerning the means of issuance of Common Stock and the procedures established to
permit tracking of disqualifying dispositions of shares or to restrict transfer of such shares.

With respect to persons subject to Section 16 of the Securities and Exchange Act of 1934, as
amended, transactions under the Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under said Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by that Committee.

No member of the Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted under it. The
Company shall indemnify each member of the Board of Directors and the Committee to the fullest
extent permitted by law with respect to any claim, loss, damage or expense (including counsel fees)
arising in connection with their responsibilities under this Plan.

As soon as administratively practicable after the end of each Offering Period, the Plan
administrators shall prepare and distribute or make otherwise readily available by electronic means
or otherwise to each participating employee in the Plan information concerning the amount of the
participating employee’s accumulated payroll deductions as of the Offering Termination Date, the
Option Exercise Price for such Offering Period, the number of shares of Common Stock purchased by
the participating employee with the participating employee’s accumulated payroll deductions, and
the amount of any unused payroll deductions either to be carried forward to the next Offering
Period, or returned to the participating employee without interest.

20. Optionees Not Stockholders.

Neither the granting of an option to an employee nor the deductions from his or her pay shall
constitute such employee a stockholder of the Company with respect to the shares covered by such
option until such shares have been purchased by and issued to him.

 

 

21. Application of Funds.

The proceeds received by the Company from the sale of Common Stock pursuant to options granted
under the Plan may be used for any corporate purposes, and the Company shall not be obligated to
segregate participating employees’ payroll deductions.

22. Governmental Regulation.

The Company’s obligation to sell and deliver shares of the Company’s Common Stock under this Plan
is subject to the approval of any governmental authority required in connection with the
authorization, issuance or sale of such stock.

In this regard, the Board of Directors may, in its discretion, require as a condition to the
exercise of any option that a Registration Statement under the Securities Act of 1933, as amended,
with respect to the shares of Common Stock reserved for issuance upon exercise of the option shall
be effective.

23. Transferability.

Neither payroll deductions credited to an employee’s account nor any rights with regard to the
exercise of an option or to receive stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the employee. Any such attempted assignment, transfer, pledge,
or other disposition shall be without effect, except that the Company may treat such act as an
election to withdraw funds in accordance with Article 10.

24. Effect of Changes of Common Stock.

If the Company should subdivide or reclassify the Common Stock which has been or may be optioned
under the Plan, or should declare thereon any dividend payable in shares of such Common Stock, or
should take any other action of a similar nature affecting such Common Stock, then the number and
class of shares of Common Stock which may thereafter be optioned (in the aggregate and to any
individual participating employee) shall be adjusted accordingly.

25. Merger or Consolidation.

If the Company should at any time merge into or consolidate with another corporation, the Board of
Directors may, at its election, either (i) terminate the Plan and refund without interest the
entire balance of each participating employee’s payroll deductions, or (ii) entitle each
participating employee to receive on the Offering Termination Date upon the exercise of such option
for each share of Common Stock as to which such option shall be exercised the securities or
property to which a holder of one share of the Common Stock was entitled upon and at the time of
such merger or consolidation, and the Board of Directors shall take such steps in connection with
such merger or consolidation as the Board of Directors shall deem necessary to assure that the
provisions of this Article 25 shall thereafter be applicable, as nearly as reasonably possible. A
sale of all or substantially all of the assets of the Company shall be deemed a merger or
consolidation for the foregoing purposes.

 

 

26. Withholding of Additional Tax.

By electing to participate in the Plan, each participant acknowledges that the Company and its
participating subsidiaries are required to withhold taxes with respect to the amounts deducted from
the participant’s compensation and accumulated for the benefit of the participant under the Plan,
and each participant agrees that the Company and its participating subsidiaries may deduct
additional amounts from the participant’s compensation, when amounts are added to the participant’s
account, used to purchase Common Stock or refunded, in order to satisfy such withholding
obligations. Each participant further acknowledges that when Common Stock is purchased under the
Plan the Company and its participating subsidiaries may be required to withhold taxes with respect
to all or a portion of the difference between the fair market value of the Common Stock purchased
and its purchase price, and each participant agrees that such taxes may be withheld from
compensation otherwise payable to such participant. It is intended that tax withholding will be
accomplished in such a manner that the full amount of payroll deductions elected by the participant
under Article 7 will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation otherwise payable
to any participant then, notwithstanding any other provision of the Plan, the Company may withhold
such taxes from the participant’s accumulated payroll deductions and apply the net amount to the
purchase of Common Stock, unless the participant pays to the Company, prior to the exercise date,
an amount sufficient to satisfy such withholding obligations. Each participant further acknowledges
that the Company and its participating subsidiaries may be required to withhold taxes in connection
with the disposition of stock acquired under the Plan and agrees that the Company or any
participating subsidiary may take whatever action it considers appropriate to satisfy such
withholding requirements, including deducting from compensation otherwise payable to such
participant an amount sufficient to satisfy such withholding requirements or conditioning any
disposition of Common Stock by the participant upon the payment to the Company or such subsidiary
of an amount sufficient to satisfy such withholding requirements.

27. Approval of Stockholders.

This Plan was first adopted by the Board of Directors on September 25, 2002 and amended on January
14, 2003, and approved, as amended, by the stockholders of the Company on March 10, 2003. The Plan
was subsequently amended and approved by the stockholders on March 30, 2006 and March 27, 2008.exv10w19

 

Exhibit 10.19

 

			
	*	 	Certain information in this exhibit has been omitted and will be filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request under 17 C.F.R.
Sections 200.80(b)(4), 200.83 and 230.406.

Enablex Agreement

Between

Shanghai Novartis Trading Co., Ltd

No 27, Huashen Road, Waigaoqiao Free Trade Zone, Shanghai

(“Novartis”)

and

Beijing Med-Pharm Corporation

600 W. Germantown Pike, Suite 400 Plymouth Meeting PA 19462

(“BMP”)

Whereas, Novartis Pharma AG and its affiliates are the world-wide owner of rights of the product
Enablex®, a medication for the treatment of over-active bladder, and markets and sells
this product in many countries; and Novartis has the right to develop and Commercialize the product
Enablex® in the People’s Republic of China (“PRC”)

Whereas, BMP is interested in obtaining the right to register, and then to market and sell, the
product Enablex® in the PRC; and

Whereas, Novartis, in view of BMP’s commitment to successfully register and Commercialize this
product in PRC, is willing to grant BMP the pertinent rights;

Now, therefore, the Parties have agreed as follows:

TABLE OF CONTENES

	 	 	 	 	 
	1

	 	DEFINITIONS	 	 
	2.

	 	APPOINTMENT	 	 
	3.

	 	BRANDING ELEMENTS AND INTELLECTUAL PROPERTY OF ENABLEX ®	 	 
	4.

	 	FORECASTS.ORDERING AND DELIVER	 	 
	5.

	 	PRODUCT SUPPLY	 	 
	6.

	 	DEVIATIONS, WITHDRAWAL AND RECALL	 	 
	7.

	 	TARGET UNIT SALES, MIMIMUM SALES PERFORMANCE AND TARGET MARKET SHARE
	 	 
	8.

	 	BMP’S DUTY TO ACHIEVE MARKET SUCCESS	 	 
	9.

	 	REMUNERATION AND PAYMENT	 	 
	10.

	 	EXCHANGE OF INFORMATION	 	 
	11.

	 	PRODUCT REGISTRATION AND GOVERNMENT REGULATIONS	 	 

 Confidential

Page 1 of 26

 

	 	 	 	 	 
	12.

	 	THIRD PARTY CLAIMS	 	 
	13.

	 	WARRANTIES AND LIMITATION OF LIABILITY	 	 
	14.

	 	IMPROVEMENTS	 	 
	15.

	 	DURATION	 	 
	16.

	 	DEFAULT AND TERMINATION	 	 
	17.

	 	CONFIDENTIALITY	 	 
	18.

	 	ARBITRATION	 	 
	19.

	 	INDEPENDENT PARTIES	 	 
	20.

	 	FORCE MAJEURE	 	 
	21.

	 	DOMICILIA AND NOTICES	 	 
	22.

	 	GOVERNING LAW	 	 
	23.

	 	SEVERABILITY	 	 
	24.

	 	ENTIRE AGREEMENT	 	 
	25.

	 	NON-VARIATION	 	 
	26.

	 	NON- WAIVER	 	 
	27.

	 	CESSION AND ASSIGNMENT	 	 

ANNEXURE 1 — MARKET SHARE AND TARGET UNIT SALES COMMITTED BY BMP; MARKETING AND SALES EXPENSES

ANNEXURE 2 — QUALITY ASSURANCE AGREEMENT

ANNEXURE 3
— BMP’S DETAILED SALES FORCE STRUCTURE

ANNEXURE 4 — PHARMACOVIGILENCE AGREEMENT

ANNEXURE 5 — CONTACT PERSONS AND RESPONSIBLE PERSONS

ANNEXURE 6 — TRADEMARKS AND PATENTS

ANNEXURE
7 — NOVARTIS PHARMA PROMOTIONAL PRACTICES POLICY
AND GUIDELINES (NP4)

ANNEXURE 8 — CODE OF CONDUCT

ANNEXURE 9 — TRAINING CONFIRMATION FORM

	1	 	DEFINITIONS
	 
	 	 	In this Agreement, unless inconsistent with the context, the following words and
expressions shall bear the meanings assigned thereto and cognate words and expressions shall
bear corresponding meanings:
	 
	1.1	 	“Affiliate” means:

	 	1.1.1.	 	a person which directly or indirectly controls a Party;
	 
	 	1.1.2.	 	a person which is directly or indirectly controlled by a Party;

Page 2 of 26

 

	 	1.1.3.	 	a person which is controlled directly or indirectly by the ultimate
parent company of a Party.
	 
	 	 	 	and for the purpose of this clause 1.1. control means ownership of 50% ( fifty
percent) or more of the voting stork of a company or otherwise having the power to
govern the financial and the operating policies or to appoint the management of a
person.

	1.2	 	“the/this Agreement” means the agreement set out in this document and in the Annexures
hereto;
	 
	1.3	 	“Business Day” means any day other than a Saturday, Sunday or official public holiday in
the People’s Republic of China ;
	 
	1.4	 	“Competing Product ” means a medicine in the same therapeutic class as the Product, i.e.
products falling within the World Health Organization (“WHO”) Anatomical Therapeutic
Chemical(ATC4) G04B4 category .
	 
	1.5	 	“Code of Conduct ” means the Novartis Code of Conduct document, published by Novartis and
notified to BMP, from time to time. And the code of Conduct as at the Signature Date is
attached here to as Annexure 8;
	 
	1.6	 	“Branding elements of
Enablex®
” means the styles , designs words, pictorial
representations, positioning, key messages and the campaign and any combination thereof used
or authorized for use by Novartis with or in respect to the product , the trademark rights
and brand elements of Enablex® from time to time, by Novartis;
	 
	1.7	 	” Improvements” means all improvements, whether patentable or not, made by the Parties
during the duration of this Agreement in respect of the Products, including indication
extensions and new indications for the Products, but specifically excludes new compound
preparations of the products and the Product containing another drug substance;
	 
	1.8	 	“Intellectual Property” includes all intellectual property relating to the Product,
especially Patents and Trademarks.
	 
	1.9	 	“Commercialize” or “Commercialization” means the active and diligent marketing and
promotion of the sale of the Product in the Field and in the Territory (it being understood
that BMP shall purchase the Product from Novartis and then resell it in its own name and on
its own account to customers in (and only for) the Territory));
	 
	1.10	 	“Field” shall mean the treatment of overactive bladder i.e, World Health Organization
(“WHO”) Anatomical Therapeutic Chemical(ATC4) G04B4 category;
	 
	1.11	 	“Global Data Package” means the Product data that are in the possession of
Novartis’ Affiliates at global level and which in Novartis’ view are relevant
and necessary for the purposes of the development and registration to be

Page 3 of 26

 

	 	 	undertaken by BMP;
	 
	1.12	 	“NP 4” means the Pharma Promotional Practices Policy and Guidelines of the Novartis group, a
hard copy of which Novartis has separately provided to BMP prior to the Signing Date (Attached
as Annexure 7), and as Novartis may notify to BMP from time to time in case of amendments;
	 
	1.13	 	“Parties” means Novartis and BMP and “Party” means either one of them as the context
indicates;
	 
	1.14	 	“Patents” means the patents of this Product listed in Annex 6; There are two patents granted
in the Territory, ie,

	 	 	 	 	 
	 

	 	Chinese Patent No: 
	 	90101543.1
	 

	 	Title:
	 	A Process for Preparing Pyrrolidine Derivatives

	 
	 	 	 	 
	 

	 	Chinese Patent No:
	 	96196977.6
	 

	 	Title:
	 	Pharmaceutical Formulations containing Darifenacin

	1.15	 	“Product” means the brand medicine marketed under the trademark Enablex®,
containing the drug substance darifenacin, in 7.5 mg (seven point five milligram) and 15mg
(fifteen milligram) dosage forms; For clinical trial and registration purpose under this
Agreement, both 7.5mg and 15mg dosage forms shall be included.
	 
	1.16	 	“Unit” refers to a package of 14 tablets.
	 
	1.17	 	“Registration” means all registrations of the Product with the relevant authorities that are
necessary to develop and to Commercialize the Product in the Territory, in accordance with
applicable legislation;
	 
	1.18	 	“Registration Date” means the date upon which the PRC Registrations are granted by the
relevant PRC authorities.
	 
	1.19	 	“Signing Date” means the date of signature of this Agreement by the Party signing last in
time;
	 
	1.20	 	“Territory” means the territory of the People Republic of China (excluding Hong Kong, Macau
and Taiwan);
	 
	1.21	 	“Trademark” means the trademark registrations as in Annex 6.
	 
	1.22	 	“Market ” means Overactive Bladder market defined as G04BD in China Pharma Association (CPA)
and in case CPA data is not available, G4B4 in IMS.
	 
	1.23	 	“Market Share” means the value share over the defined Market.
	 
	1.24	 	“Minimum Sales Performance” means 80% of the Target Unit Sales as specified in Article 7 and
Annexure 1.

Page 4 of 26

 

	2.	 	APPOINTMENT
	 
	2.1	 	Novartis hereby appoints BMP, on an exclusive basis, to

	 	(i)	 	develop and register the Product in the Field and in the Territory (see, in particular,
Article 11 below), and
	 
	 	(ii)	 	Commercialize the Product for use in the Field in the Territory
	 
	 	and BMP accepts such appointment, on the terms and conditions set out in this Agreement.

	2.2	 	BMP shall (and shall cause its affiliate to), during the duration of this Agreement,

	 	(i)	 	purchase the Products for the purpose of sale within the Territory exclusively from
Novartis;
	 
	 	(ii)	 	not manufacture, introduce, develop, register and/or Commercialize, directly or
indirectly, any Competing Product in the Territory without the prior consent in writing of
Novartis;
	 
	 	(iii)	 	Commercialize the Product only in the Field;
	 
	 	(iv)	 	not directly or indirectly, Commercialize any of the Products to any person outside
the Territory or to any person whom it knows or reasonably suspects will use or sell the
Products outside of the Territory or to any person not permitted by law to purchase or
deal in such Products, without the prior consent in writing of Novartis.
	 
	 	(v)	 	not, without the prior consent in writing of Novartis, appoint agents, independent
contractors or sub-distributors in the Territory for the Commercialization of the Products;
	 
	 	(vi)	 	comply at all times during the operation of this Agreement with the provisions of the
Code of Conduct and the NP4;

	2.3	 	Novartis retains the right to

	 	2.3.1	 	develop, register and Commercialize and
	 
	 	2.3.2	 	grant rights to a third party
	 
	 	for the Commercialization of the Products or Competing Products in the Territory outside
the Field, i.e. for other indications than for the Field.
	 
	 	If Novartis plans to grant to a third party the right to Commercialize in the Territory the
Product outside the Field or a Competing Product, Novartis will notify BMP. At BMP’s
request, the parties will discuss in good faith whether Novartis would grant such right to
BMP; provided, however, that Novartis will not be obligated to grant such right to BMP.

	2.4	 	During the operation of this Agreement, save as otherwise provided in this Agreement,
Novartis shall not:

	 	2.4.1	 	Commercialize the Products for use in the Field in the Territory on its own
behalf; or
	 
	 	2.4.2	 	grant any rights for the Commercialization of the Products for use in the
Field in the Territory to a third party;

Page 5 of 26

 

	3.	 	BRANDING ELEMENTS AND INTELLECTUAL PROPERTY OF ENABLEX ®
	 
	3.1	 	Novartis hereby grants to BMP an exclusive non-transferable right and license in the
Territory and in the Field to solely use the Trademarks and Patents (details see Annexure 6)
in the Commercialization of the Product in accordance with the terms and conditions of and for
the duration of this Agreement.
	 
	 	 	BMP shall not use in its business (or apply or obtain registration for) any trademark or
corporate name or trading name identical with or confusingly similar to the trademark
Enablex® or the logo or any other branding element used in connection with the
trademark Enablex® .
	 
	 	 	For the avoidance of doubt, the license under the Patents only cover the further
development, registration, Commercialization of the Product in the Field and in the
Territory, but not the manufacturing of the Product.
	 
	3.2	 	Except as expressly stated in above clause 3.1, this Agreement does not grant to BMP any
license, right or interest in or to Novartis intellectual property. BMP acknowledges that,
save as otherwise expressly provided in this Agreement, the exclusive ownership of, as well as
all the rights, title and interest in and to, Novartis intellectual property vests in
Novartis.
	 
	3.3	 	BMP shall use the branding element of the trademark Enablex ® in the
Commercialization of the Product in the Territory and in all informational, educational or
promotional materials for the Product. Novartis undertakes to notify BMP within a reasonable
time, in writing, of the branding element of the trademark Enablex ® and any
changes or additions thereto during the duration of this Agreement.
	 
	 	 	BMP shall ensure that the informational, educational or promotional materials and
activities be strictly compliant with the Novartis NP4 and Code of Conduct, which will be
attached as Annexure 7 and Annexure 8. BMP shall designate (1-2) representatives to be
trained of NP4 guidelines and Code of Conduct by Novartis within 2 months prior to the
Registration Date. Afterwards, the rest representatives of BMP who will promote
Enablex® shall be trained by the trained representatives hereof. BMP shall
ensure that every medical representative who will promote Enablex® shall be
trained of the above guidelines and shall sign the training confirmation form (Annexure 9)
before he/she starts promoting Enablex®. BMP shall maintain record of all
training confirmation forms.
	 
	 	 	Novartis reserves the right to audit and check the promotional materials and activities
initiated by BMP as well as the training confirmation forms. If Novartis has any corrective
suggestions to any non-compliance, BMP shall follow Novartis suggestions and make
corrections (including to withdraw and destroy any non-compliant materials) soonest but no
later than 5 Business Days upon receipt of Novartis suggestions. BMP shall also be
responsible for any consequence from or related to its non-compliant materials and shall

Page 6 of 26

 

	 	 	compensate any loss incurred to Novartis thereof, except the consequence or the loss
results from following any suggestions from Novartis.

	3.5	 	In the 1st quarter of 2009, Novartis will provide to BMP its global marketing
strategy on the Product and BMP will prepare its own marketing strategy plan by reference
of and based on the Novartis global marketing strategy. BMP shall submit its marketing
strategy plan to Novartis no later than twelve months before expected Registration Date.
BMP shall follow any of Novartis reasonable suggestions regarding the marketing plan and
BMP can go ahead to fulfill the marketing plan if Novartis does not reply within 30
Business Days or BMP has amended the marketing plan as Novartis suggests.
	 
	3.6	 	In each July after Registration, Novartis will provide to BMP its global marketing strategy
on the Product and BMP will prepare its own marketing strategy plan by reference of and based
on the Novartis global marketing strategy. BMP shall submit its marketing strategy plan to
Novartis no later than September 30 of the year. BMP shall follow any of Novartis reasonable
suggestions regarding the marketing plan and BMP can go ahead to fulfill the marketing plan if
Novartis does not reply within 30 Business Days or BMP has amended the marketing plan as
Novartis suggests.
	 
	3.7	 	Consequent upon BMP’s acknowledgement and recognition of the exclusive ownership and rights
in and to the intellectual property by Novartis, save as otherwise expressly provided for in
this Agreement, the prosecution of or defense of any claim in the Territory with respect to
any such intellectual property shall be the sole responsibility and undertaken at the sole
discretion of Novartis. In such event, BMP shall forthwith notify Novartis of any claims or
possible infringements of such intellectual property of which BMP becomes aware and BMP shall,
if required by Novartis and at the cost of Novartis, join with Novartis as a party to any such
proceeding. BMP shall render all reasonable assistance to Novartis in regard to the
proceedings contemplated in this clause 3.7.
	 
	3.8	 	For the purposes of Article 3, any reference to “Novartis” shall include a reference to a
Novartis Affiliate, where consistent with the context.
	 
	4.	 	FORECASTS, ORDERING AND DELIVERY
	 
	4.1	 	Novartis undertakes to use its reasonable endeavours to supply the Products to BMP on the
agreed delivery dates and in accordance with other provisions of this Agreement.
	 
	4.2	 	BMP shall provide Novartis with a purchase order, in writing, of its ordering requirements.
Novartis shall confirm acceptance of the purchase order of BMP within 10 (ten) Business Days
of receipt thereof.
	 
	4.3	 	A minimum order quantity (per order) shall apply (“MOQ”), and this MOQ shall be 25% of the
Target Unit Sales of the pertinent year specified in clause 7.1 below and Annexure I as
attached and shall be a minimum of 3400 Units or a multiple thereof , but this formula for the
calculation of the MOQ shall be

Page 7 of 26

 

	 	 	subject to periodic review and reasonable adaptation as agreed by the Parties. The maximum
number of orders per year is four.

	4.4	 	Novartis will only deliver the Products in Unit. Novartis will deliver the products to BMP no
later than 120 days if delivered by air or 150 days if delivered by sea, after Novartis
confirms the purchase order. The products delivered by Novartis to BMP shall have at least a
shelf life of 15 months at the time of receipt by BMP.
	 
	4.5	 	The Products shall be delivered to BMP together with the necessary documentation for receipt
of such delivery. The transfer of all risk in and to the Products shall pass from Novartis to
BMP in accordance with the provisions of this Agreement and the CIP/CIF under INCOTERMS 2000.
	 
	4.6	 	BMP undertakes to comply at all times during the operation of this Agreement with the
provisions set out in the quality assurance agreement, attached hereto as Annexure 2.
	 
	5.	 	PRODUCT SUPPLY
	 
	5.1	 	The price for the supply of the Product in 7.5 mg dosage form by Novartis to BMP (“supply
price”) shall be [*]/tablet (equals to USD [*]/Unit) and USD [*]/tablet (equals to USD
[*]/Unit) for 15 mg dosage form, unless changed as according to clause 8.4.
	 
	5.2	 	The price is CIP Beijing or CIF Beijing/Shanghai in accordance with Incoterms 2000. BMP will
be responsible all the expenses, duties relate to, but not limited to the customs clearance,
drug inspection fee, inspect sample cost and the domestic transportation.
	 
	5.3	 	BMP shall pay to Novartis within 60 days from the date of invoice from Novartis.
	 
	5.4	 	Until receipt of the full payment of each order from BMP, Novartis shall remain the owner of
the Product.
	 
	6.	 	DEVIATIONS, WITHDRAWAL AND RECALL
	 
	6.1	 	BMP shall be deemed to have thoroughly examined the Products at the place and time of
delivery thereof and shall notify Novartis of any observable shortages or defects in the
packaging in respect of the delivered Products within 5 (five) Business Days of the date of
delivery, in which event Novartis shall investigate such shortages or defects in the
packaging. Novartis shall replace the defective Products or provide Products in the quantity
of such shortage, along with the products of next order by BMP.
	 
	6.2	 	For any concealed defects that can not be detected at the time of delivery, BMP shall notify
Novartis no later than 5 Business Days after detection of the defect. If the defect proves to
be a manufacturing defect, Novartis will recall

Page 8 of 26

 

	 	 	the batch of product and will deliver to BMP the non-defective products in the same
quantity as the defective products, along with the products of next order by BMP. Novartis
will not be liable for any defects that are not proven to be a manufacturing defect or not
caused by Novartis.
	 
	6.3	 	The remedy as set out in above clause 6.1 and clause 6.2 shall be the sole remedy. In no
event shall Novartis have any liability to BMP or any third party for such defective, damaged
or missing Product beyond replacing the Product.
	 
	6.4	 	BMP shall cooperate and provide such reasonable assistance as may be
required by Novartis, at Novartis’ cost, in the event of a total or partial recall or
withdrawal of any of the Products. Insofar as Novartis is required to reimburse BMP in
terms of this clause 6.4, such amount shall be limited to the reasonable and actual costs
of BMP incurred in respect of the total or partial recall or withdrawal of the Products; If
the recall or withdrawal makes it impossible for the Products to be marketed and sold in
the Territory during the term of this Agreement, the Agreement will be terminated
immediately upon the date of the recall notice from Novartis to BMP and Novartis will
reimburse BMP using the following formula:
	 
	 	 	(The purchase price paid by BMP for the recalled/withdrawal products) + (the registration
fee of 0.3 million USD) + (the remaining agreement term/ agreement term after Registration)
x milestone payments of USD1 million+(remaining agreement term/agreement term)x upfront
payment of USD2 million + [other reasonable costs and expenses that are directly related
to the recall/withdrawal of the Products (eg, the expenses related to product withdrawal,
disposal expense as necessary and transportation fee, etc)]
	 
	 	 	Simply for illustration of the operation of this clause 6.4:
	 
	 	 	If recall happens at the end of 2014, the recalled/withdrawal products from BMP is worth
of USD 2.5 million and BMP spends about USD 0.5million to recall the related Products, the
total reimbursement Novartis needs to pay is:
	 
	 	 	USD 2.5 M + 0.3 M +(5/10)x1M + (5/13)x2 M + 0.5 M=USD 4.47 M
	 
	 	 	In the above formula, the reimbursement of the registration fee (0.3 million USD) and the
reimbursement of the pro-rata milestone payment will occur only if the recall or withdrawal
happens after these payments have been made.

The reimbursement shall not apply where the recall/withdrawal is due to actions of BMP or
any other person for whose conduct BMP is responsible in law.
	 
	 	 	In no event will Novartis pay for the recalled/withdrawal products in a volume exceed the
ordered and delivered volume during the 6 (six) months period prior to the withdrawal or
recall of this Product, nor will Novartis pay for any products that are out of shelf life.
	 
	 	 	Notwithstanding anything to the contrary contained in this clause 6.4, BMP shall be
responsible for the costs incurred by BMP and/or Novartis and shall reimburse Novartis for
the reasonable and actual costs of Novartis incurred in

Page 9 of 26

 

	 	 	respect of the total or partial recall or withdrawal of the Products due to or arising out
of:

	 	6.4.1	 	the improper storage or distribution of the Products by BMP; or
	 
	 	6.4.2	 	the negligent or intentional conduct of BMP or of any other person for whose
conduct BMP is responsible in law, and

	7.	 	TARGET UNIT SALES, MIMIMUM SALES PERFORMANCE AND TARGET MARKET SHARE
	 
	7.1	 	BMP shall use its best efforts to achieve the target market share (“TMS”) and target unit
sales (“TUS”) in respect of the Products during the operation of this Agreement, as attached
in Annexure 1; Under significant changes of market conditions, TUS can be revised under mutual
written agreement. In case the Parties can not reach the agreement, then the original TUS
shall be unchanged.
	 
	7.2	 	The following criteria will be used to determine BMP’s penalties in case of
underperformance.

	 	7.2.1	 	In case BMP does not meet the Minimum Sales Performance in any calendar year
(the Minimum Sales Performance is 80% of each year’s TUS as calculated in Annexure 1),
BMP will be subject to a penalty of 50% of gap between the Minimum Sales Performance
and the actual sales performance in that calendar year.
	 
	 	7.2.2	 	In case BMP does not meet the TMS in any calendar year, BMP will be subject
to a penalty of 50% of the gap between the actual market share and the TMS multiplied
by the actual market size data, calculated
	 
	 	7.2.3	 	from the actual market size data as published by China Pharma Association
(CPA), and converted at supply price level. If the CPA data does not exist, then the
IMS data shall apply, also converted at supply price level.
	 
	 	7.2.4	 	In case BMP does not meet the Minimum Sales Performance AND the TMS in a
year, BMP shall be subject only to the higher of the penalties as calculated above.

	7.3	 	In case BMP fails to reach either the Minimum Sales Performance or the TMS for two
consecutive years, Novartis shall have the right (but not the obligation, and in addition to
all other remedies) to:

	 	7.3.1	 	terminate the Agreement without any compensation to BMP by giving 1 (one) month prior
notice to BMP; and/or
	 
	 	7.3.2	 	to request payment from BMP of the penalty as stated in clause 7.2.

	 	 	Simply for illustration of the operation of this Article 7: if the TUS for a specific
calendar year is 4 million units and BMP only sells 3 million units, then BMP’s
underperformance as compared to the Minimum Sales Performance is 200,000 units, and the
penalty that Novartis could request would therefore be 200,000 units x 0.65 USDx50% =
USD65,000.
	 
	 	 	If the TMS as committed for a specific year is 30% while the actual market share of BMP is
25% and the actual market size as published by CPA for that

Page 10 of 26

 

	 	 	year is USD 25 million, then the penalty for not meeting the TMS will be 25 million USD x
5% ÷2.17 x0.65USDx50% = 186, 875 USD (assuming the hospital listing price is 2.17 USD and
CPA market calculated at hospital listing prices).
	 
	7.4	 	If Novartis does not exercise its rights pursuant to clause 7.3 in writing by the end of June
that follows the consecutive two calendar years in which the shortfall in either the TUS or
TMS has occurred, these rights can be exercised based on any two accumulated consecutive years
(example: if BMP misses the targets in years 2014 and 2015, and Novartis does not exercise its
rights pursuant to clause 7.2 by the end of June 2016, they shall be expired for the years
2014 and 2015; however, if BMP again misses the targets in years 2016, Novartis can exercise
its rights pursuant to clause 7.2 in respect of years 2015 and 2016 if it acts before the end
of June 2017).
	 
	7.5	 	In the event that the TUS or TMS as calculated in clause 7.1 and Annexure 1 is not met due to
a significant failure to deliver or delay in delivery of the Products (amount exceeding 25% of
TUS and delay of more than 3 months) in such calendar year for which Novartis is responsible,
then the parties will discuss to renegotiate the TUS and /or TMS for the specific calendar
year.
	 
	8.	 	BMP’S DUTY TO ACHIEVE MARKET SUCCESS
	 
	8.1	 	BMP shall use its best endeavours to actively Commercialize the Products in the Territory
under the Patents and the Trademark.
	 
	8.2	 	BMP shall devote no less than the following resources to the development and
Commercialization of the Product:

	 	8.2.1	 	A sales force detailing the Product to physicians in Urology Therapy Area in
the Territory and consisting of at least the following number of full time sales
representatives

	 	•	 	60 sales representatives full time equivalent during the first 12
months following the Registration of the Product,
	 
	 	•	 	80 sales representatives full time equivalent during the next 12
months;
	 
	 	•	 	followed by a gradual increase of this number to 200 sales
representatives full time equivalent, to be reached — and then maintained — at
the latest by the end of the 5th year from the Registration of the
Product.

	 	8.2.2	 	A detailed sales force structure will be provided by BMP and attached as
Annexure 3.
	 
	 	8.2.3	 	The target listed hospitals is 400 in 30 top cities after the first two
years of the Registration.

Page 11 of 26

 

	 	8.2.4	 	BMP shall have at least 4 employees (corresponding to at least 2 full time
employees) for the clinical trial and Registration of the Product and shall invest no
less than USD 0.3 million for development and Registration;
	 
	 	8.2.5	 	BMP will invest every year in the Commercialization of the Product the
resources outlined in Annexure 1.

	 	 	Upon the request of Novartis, BMP shall provide all necessary and supporting documents to
show its resource commitment as above.
	 
	8.3	 	BMP will be responsible to apply for the Pricing and Reimbursement for this Products in the
name of Novartis, and will do so in close co-ordination and consultation with Novartis. The
agreed Initial Retail Price (applying for the first commercial sales of the Product following
the Registration) is USD[*]/tablet for 7.5 mg (USD [*]/Unit) and [*]/tablet for 15mg (equals
to USD[*]/Unit), the above IRP will be subject to final approval by relevant PRC government.
Any revision in the IRP must be mutually agreed in writing and in case no agreement is
reached, the IRP stay at the level above specified.
	 
	8.4	 	During the duration of the Agreement, if the Retail Price (“RP”) for both 7.5 mg or/and 15mg
as denominated in USD (based on the current foreign exchange rate at the time of order
acceptance by Novartis) decreases by no more than 25% with respect to Initial Retail Price
(“IRP”), the supply price from Novartis will not change; if the RP as denominated in USD
decreases by more than 25% with respect to IRP, the Parties will negotiate about changing the
supply price and the RP will keep unchanged if the Parties can not agree on the adjustment.
Novartis reserves the right to increase the supply price in proportion with any increase in
the RP in USD (based on the current foreign exchange rate at the time of order acceptance by
Novartis).
	 
	8.5	 	Novartis will remain the valid registration of the Trademark of the Product during the term
of this Agreement in the People’s Republic of China in the name of Novartis, at Novartis’
costs, and with the assistance from BMP if and as required by Novartis. Trademark maintenance
and defense remains under sole Novartis responsibility.
	 
	8.6	 	The costs of any modification or change to the packaging of the Products which is required by
a relevant regulatory authority in the Territory shall be borne by the Parties in equal
shares. The costs of any other (discretionary) modifications or changes to the packaging
proposed by Novartis or proposed by BMP and consented to by Novartis shall be borne by the
Party proposing such modification or change.
	 
	8.7	 	Throughout the operation of this Agreement, BMP shall keep at its principal place of
business, clear and separate and detailed records showing all material information ( including
but not limited to the information about customer, the sales coverage and volume, the
distribution channel, listed hospitals, national and regional key opinion leaders, etc)
regarding the sale of the Products in the Territory.

Page 12 of 26

 

	8.8	 	BMP shall keep Novartis fully informed about the progress of the Commercialization by way of
quarterly written reports, semi-annual formal face-to-face meetings, and ad hoc information in
case of any important developments in-between.
	 
	8.9	 	BMP shall ensure and keep the Product Registration and any other preconditions valid and to
meet any regulatory requirements for its sale in the Territory during the term of this
Agreement at its own cost and risk.
	 
	9.	 	MILESTONES AND PAYMENTS
	 
	9.1	 	In consideration for the rights granted by Novartis to BMP in terms of this Agreement, BMP
shall pay to Novartis under the following milestones:

	 	9.1.1	 	USD2,000,000 (United States dollars two million ) within 30 calendar days
after the Signing Date; and
	 
	 	9.1.2	 	USD 1,000,000 (United States dollars one million ) within 30 calendar days
from the date of the official grant of the Registration.

	 	 	The above payments are non-refundable, except under the situation of clause 6.4 and clause
16.4 or in case Novartis breaches this Agreement as stipulated in Article 16.1.
	 
	9.2	 	BMP shall bear all the costs for, and expenses relating to, its activities under this
Agreement, including but not limited to

	 	9.2.1	 	the development and registration of the Product in the Field and in the
Territory;
	 
	 	9.2.2	 	the clinical trials during the development and registration phase and during
the Commercialization phase;
	 
	 	9.2.3	 	the Commercialization of the Product.

	9.3	 	Any and all payments under this Agreement shall be made in United States dollars and are
exclusive of value added tax, or similar tax as may be levied in the Territory. Novartis
will be in charge of the business tax levied by the authority in the Territory.
	 
	9.4	 	BMP shall make the payments by money transfer into a bank account to be specified by
Novartis, and against invoice that Novartis shall promptly issue.
	 
	9.5	 	All amounts due by BMP to Novartis in terms of or arising out of this Agreement, unless paid
on due date, shall bear interest form due date to date of payment, calculated at a rate
equivalent to the one year fixed term loan rate issued by the Central Bank of China plus 10%,
or the maximum rate permitted by applicable law, whichever is less. If the payment is overdue
for 3 months, Novartis shall have the right to terminate the Agreement. The right of
termination of this Agreement under this clause 9.5 does not apply to the disputed payment
that has been submitted for arbitration under Article 18.

Page 13 of 26

 

	9.6	 	Upon the termination of this Agreement for any reason (except for the defaults by Novartis
under 16.1) , all amounts then owing by BMP to Novartis shall immediately become due, owing
and payable.
	 
	9.7	 	All amounts payable by BMP to Novartis in terms of this Agreement shall be made without
deduction or set-off and BMP shall not be entitled, for any reason whatsoever, to withhold or
defer any payment.
	 
	10	 	EXCHANGE OF INFORMATION
	 
	10.1	 	The Parties undertake to exchange such information in respect of the marketing, distribution
and sale of the Products in the Territory as is required for the due performance of this
Agreement. For this purpose, BMP and Novartis appoint the contact persons referred to in
Annexure 5.
	 
	10.2	 	Each of the Parties shall immediately inform the other Party of any facts or developments,
whether economic, legal or otherwise, which may materially affect the Commercialization of the
Products in the Territory.
	 
	10.3	 	Subject to the provisions of clause 6.4, each of the Parties agrees to cooperate with the
other Party and provide the other Party with all reasonable assistance and support in respect
of:

	 	10.3.1	 	recalls or withdrawals of any of the Products;
	 
	 	10.3.2	 	adverse event reporting; and
	 
	 	10.3.3	 	any other aspect of Commercialization of the Products in the Territory as the
Parties may agree upon , form time to time,

	 	 	In particular, the Parties, shall enter into an agreement in respect of adverse event
reporting materially similar to or the same as the agreement entitled “ Pharmacovigilence
Agreement”, attached hereto as Annexure 4. Except there is anything to the contrary by law,
all interaction with the relevant regulatory authorities in the Territory in relation of
the Products shall be undertaken by Novartis, after consultation with BMP.
	 
	10.4	 	BMP shall not publish or submit for publication to any person any scientific articles or
manuscripts relating to or referring to the Product, without the prior written consent of
Novartis, which consent shall not be unreasonably withheld;
	 
	10.5	 	In the event a third party acquires a significant shareholding in BMP, BMP shall forthwith
provide notice thereof in writing to Novartis;
	 
	10.6	 	BMP undertakes, in a professional manner, to receive and process all customer enquires
regarding the Products in the Territory.
	 
	11.	 	PRODUCT REGISTRATION AND GOVERNMENT REGULATIONS
	 
	11.1	 	The registration of the Products for any purpose required by law will be conducted by BMP in
a timely fashion and by dedicating enough financial and personnel resources as stipulated in
clause 8.2.4 . Upon the request of Novartis,

Page 14 of 26

 

	 	 	BMP shall provide all necessary and supporting documents to show its resource commitments
as above.
	 
	11.2	 	Novartis will support the clinical trial and registration as follows:

	 	11.2.1	 	Provide BMP with the Global Data Package within 3 months after Novartis confirms the
request from BMP;
	 
	 	11.2.2	 	The Clinical Trial Designs in all phases (including Phase IV clinical trial or any
other clinical study after the Registration) will need to be approved in advance by
Novartis in writing.

	11.3	 	BMP shall apply for the Product Registration in the name of Novartis, and the Product
Registration will remain in Novartis name.
	 
	11.4	 	The costs of applying for and maintaining the Registrations in the Territory will be paid by
BMP.
	 
	11.5	 	Ownership of the dossiers relating to the Products and all other rights to the Products and
the Registrations will at all times remain with Novartis.
	 
	11.6	 	BMP shall use its best efforts to get clinical trial permission from the relevant authorities
in the Territory as soon as possible but in any case (other than indicated below) no later
than May 31, 2009. If BMP does not get the permission by May 31, 2009, Novartis shall have the
right to terminate this Agreement and without any compensation to BMP. If the Parties agree
that the delay in clinical trial permission is due to the change in the regulation or policy
in the Territory or the regulatory government structure or Novartis does not provide the
Global Data Package within 3 months, the Parties will negotiate in good faith to set the new
clinical trial permission date.
	 
	11.7	 	For the clinical trial products, Novartis will provide to BMP free of charge but BMP shall
notify Novartis at least 4 months in advance of the required quantity for the clinical trial
as showed in the clinical trial designs.
	 
	11.8	 	BMP shall keep Novartis fully informed about the progress of the Registration by way of
quarterly written reports, semi-annual formal face-to-face meetings, and ad hoc information in
case of any important developments in-between.
	 
	11.9	 	BMP shall use its best efforts to finish the Registration as soon as possible but in any case
(other than indicated below) no later than by Dec 31, 2010. If BMP does not finish the
Registration by Dec 31, 2010, Novartis shall have the right to terminate this Agreement and
without any compensation to BMP. If the Parties agree that the delay in Registration is due to
the change in the regulation or policy in the Territory or the regulatory government structure
or Novartis does not provide the Global Data Package within 3 months, the Parties will
negotiate in good faith to set the new Registration Date.
	 
	11.10	 	Except as expressly stated in this Agreement, each of the Parties shall at all times comply
at its own expense with all applicable laws in force in the Territory relating to the
registration, manufacture, packaging, Commercialization and use of the Products.

Page 15 of 26

 

	12.	 	THIRD PARTY CLAIMS
	 
	12.1	 	Subject to the further provisions of this Article 12 and Article 13, BMP shall bear the risks
in relation to the exercise of the rights granted to it in terms of this Agreement;
	 
	12.2	 	Novartis hereby indemnifies and holds harmless BMP, its employees and agents (each a “BMP
indemnified party”) against any and all third party claims, causes of actions, losses, damages
and costs of any nature made or asserted against a BMP indemnified party, by a third party
(collectively “Loss”) to the extent that such Loss results or arises from the negligent or
intentional conduct of Novartis in the manufacture, storage or delivery of the Products ,
provided that the aforegoing indemnification shall not be applicable to any Loss to a BMP
indemnified party to the extent that such Loss arises or results in whole or in part from the
negligent or intentional act or omission of a BMP indemnified party and BMP hereby indemnifies
and holds harmless Novartis, its employees, and agents in respect of any Loss so arising.
	 
	12.3	 	BMP shall promptly notify Novartis of any Loss in respect of which BMP intends to claim
indemnification under this Article 12, and Novartis shall be entitled to assume the defence
thereof in its own name or otherwise with attorneys, counsel and/or experts of its choosing,
provided that BMP shall have the right to retain its own legal representatives if Novartis
does not so assume the defence or if representation of BMP by the legal representatives
retained by Novartis would be inappropriate due to actual or potential differing interests
between BMP and Novartis. The failure to deliver notice to Novartis within a reasonable time
of BMP becoming aware of any Loss in respect of which B intends to claim indemnification shall
relieve Novartis of any liability to BMP under this Article 12.
	 
	12.4	 	The indemnity in this Article 12 shall not apply to amounts paid in settlement of any Loss if
such settlement is effected without the consent of Novartis.
	 
	12.5	 	BMP, its employees and agents, shall cooperate fully with Novartis and its legal
representatives in the investigations of any Loss covered by the indemnity in this Article 12.
	 
	13	 	WARRANTIES AND LIMITATION OF LIABILITY
	 
	13.1	 	Novartis warrants that :

	 	13.1.1	 	the Products will be manufactured according to Novartis quality standards;
	 
	 	13.1.2	 	the proper quality assurance and quality control procedures regarding the Product
are in place at all times. Novartis shall retain batch data records and quality
control certificate for each batch of the Product.
	 
	 	13.1.3	 	as at the Registration Date, the manufacture of the Products shall be in accordance
with the relevant regulatory requirements in the Territory;

Page 16 of 26

 

	13.2	 	Novartis does not warrant that the manufacture of the Products does not infringe any third
party rights, however Novartis warrants that it is not aware of any such infringement of third
party rights. BMP shall promptly notify Novartis of any claims from third party in respect of
infringement by the Product, and Novartis shall assume the defence thereof or otherwise with
attorneys, counsel and/or experts of its choosing, at its own cost. Novartis shall compensate
BMP of the direct loss that incurred from claims of the Product infringement. BMP shall not
defend the claims or make any settlement with third party for the claims without the prior
written consent from Novartis and Novartis will not be liable for any results thereof.
	 
	13.3	 	Novartis does not warrant or accept any liability in relation to:

	 	13.3.1	 	the registerability of the Product and/or the scope and continuance of the
Registrations;
	 
	 	13.3.2	 	the safety, efficacy or other properties of the Products, or the consequences of
their use.

	 	 	however Novartis warrants that it is not aware of any factual circumstances existing as at
the Signature Date which would call into question the aforementioned items.
	 
	13.4	 	The warranties set out in this Agreement are the only warranties made by Novartis. Novartis
grants no implied warranties including warranties of merchantability, suitability or fitness
for a particular purpose and no other express warranties.
	 
	13.5	 	Notwithstanding anything to the contrary contained in this Agreement, neither Party shall be
liable to the other Party in respect of any special or consequential damages, including loss
of earnings or profits, unless such liability arises out of the grossly negligent or
intentional conduct of the former Party.
	 
	14	 	IMPROVEMENTS
	 
	14.1	 	During the operation of this Agreement, Novartis, in its sole discretion, may make available,
to BMP for Commercialization in the Territory, improvements to the Products made by Novartis,
a Novartis Affiliate or a licensee of Novartis, on terms and conditions as may be agreed by
the Parties.
	 
	14.2	 	During the operation of this Agreement, Novartis shall make available to BMP, at no cost,
Novartis’ scientific information relevant to the Products, including clinical trial results,
insofar as such information relates to or is relevant to the Field.
	 
	15	 	DURATION
	 
	 	 	This Agreement shall commence on the Signature Date and, save as may otherwise be provided
for in this Agreement, shall continue thereafter until Dec 31 2020. The Parties will discuss
about the renewal of this Agreement 6 (six)

Page 17 of 26

 

	 	 	months before the expiration of this Agreement and this Agreement may be renewed or the deal
re-negotiated upon the agreement of the Parties.

	16	 	DEFAULT AND TERMINATION
	 
	16.1	 	An event of default shall occur if:

	 	16.1.1	 	BMP does not pay the amount payable under this Agreement for 3 months; or
	 
	 	16.1.2	 	BMP does not pay the amount as in clause 9.1.1 within 30 calendar days after the
Signing Date; or
	 
	 	16.1.3	 	BMP does not pay the amount as in clause 9.1.2 within 30 calendar days from the date
of the official grant of the Registration; or
	 
	 	16.1.4	 	BMP does not get the permission for clinical trial of the Product in both dosage
forms as according to clause 11.6.
	 
	 	16.1.5	 	BMP does not finish the Registration of the Product in both dosage forms in the
Territory before December 31, 2010 as according to clause 11.9 ;
	 
	 	16.1.6	 	BMP does not meet the Minimum Sales Performance or the TMS in two consecutive
calendar years as stipulated in clause 7.2 and 7.3;
	 
	 	16.1.7	 	BMP does not fulfill its resource commitment as in clause 8.2 and clause 11.1 and
Annexure 1;
	 
	 	16.1.8	 	BMP does not submit the clinical trial designs of the Product in both dosage forms
to Novartis for approval or does not follow Novartis approved clinical trial designs
of the Product in both dosage forms;
	 
	 	16.1.9	 	BMP does not submit its marketing plan to NVS as specified in clauses 3.5 and 3.6;
	 
	 	16.1.10	 	BMP unilaterally increases or decreases the IRP as in clause 8.4;
	 
	 	16.1.11	 	BMP fails to comply with any of the provisions of the NP4 or the Code of Conduct or
fails to provide the training to its representatives as outlined in clause 3.4; or
	 
	 	16.1.12	 	BMP sells the whole or a majority (more than 50% of common shares) of its
pharmaceutical assets or pharmaceutical business; or
	 
	 	16.1.13	 	BMP sells a significant portion of its pharmaceutical business or pharmaceutical
assets (more than 20% of its common shares) to another company directly involved in
pharmaceutical business; or
	 
	 	16.1.14	 	BMP ceases to be owned or controlled by a person who is a BMP Affiliate, as at the
Signature Date: or
	 
	 	16.1.15	 	Either Party or its parent company is provisionally or finally liquidated, wound-up
or placed in judicial management or takes any steps for its voluntary winding up or is
deregistered or is in bankruptcy, save in the instance of a bona fide corporate
restructuring; or
	 
	 	16.1.16	 	Upon insolvency of the Party, or the appointment of an official receiver of any
part of the property or the business of the Party, or the filing of a petition in
bankruptcy against the Party, or the commencement of any proceedings under any
bankruptcy or insolvency laws in respect of the Party or if the Party discontinues its
business; or
	 
	 	16.1.17	 	Either Party commits a breach of a material term or conditions of this Agreement.

Page 18 of 26

 

	 	 	and
	 
	 	 	where any of the above event (except 16.1 which shall be 3 months) is capable of remedy,
fails to remedy such event within 30 (thirty) Business Days of notice calling upon it to do
so.
	 
	16.2	 	Upon the happening of an event of default by a Party (“the defaulting Party”), as
contemplated in clause 16.1, or any other event which gives rise to a right of cancellation by
the other Party (“ the non-defaulting Party”)in accordance with the laws of the People’s
Republic of China, the non-defaulting Party shall be entitled, in addition and without
prejudice to any other right or remedy which it may have in terms of this Agreement or in law,
forthwith and without notice either to:

	 	16.2.1	 	cancel this Agreement with 30 (thirty) days prior notice and claim and recover such
damages as the non-defaulting Party may be able to prove that it has sustained or as
expressly stipulated in this Agreement; or
	 
	 	16.2.2	 	enforce performance of the terms thereof including the right to claim such damages
as the non-defaulting Party may be able to prove that it has sustained arising out of
any such breach.

	16.3	 	If a third party acquires a significant shareholding in BMP and such third party
Commercializes a Competing Products or the Products in other Fields in the Territory, except
as expressly allowed in this Agreement, then Novartis shall be entitled to terminate this
Agreement on 1 (one) month notice in writing within a reasonable time of receipt of BMP’s
notice in terms of clause 10.5. Notwithstanding the preceding provisions of this clause 16.3,
Novartis undertakes to meet with BMP, prior to exercising its right to terminate, to discuss
whether termination may be avoided by the Parties agreeing on appropriate amendments to this
Agreement.
	 
	16.4	 	Call-back right for Novartis: Novartis may terminate this Agreement for any (or no)
reason and at any time 3 years after the Registration with 3 (three) months prior notice
(“Call-back Right”). If Novartis exercises this Call-back Right, then Novartis will compensate
BMP as follows:

	 	 	 	Registration fee (0.3 Million USD) + (the remaining agreement term/ agreement term
after Registration) x milestone payments of USD 1 million+(remaining agreement
term/agreement term)x upfront payment of USD 2 million + 2x profits of BMP of
previous 12 months. Profits of BMP will be calculated as 0.65USDx target unit
sales of the previous 12 months before the call back.
	 
	 	 	 	for example, if Novartis decides to exercise the call back rights in Jan 1, 2016
and the Registration is finished Jan 1 2010, and BMP sold 3 million units in
2015, then Novartis will compensate BMP:
	 
	 	 	 	0.3M USD +[4/ 10]×1M+4/13x2M+2x0.65USDx 3 million =5.215M USD

Page 19 of 26

 

	16.5	 	Upon termination of this Agreement for any reason other than an event of default by BMP, at
Novartis’ sole discretion, BMP may be granted the right to sell all of the Product it holds in
inventory at the time of termination. All such sales of Products shall be subject to the terms
and conditions of this Agreement as in effect immediately prior to termination. Novartis shall
be entitled, but not obliged, to grant BMP the right to sell Products which have been ordered
by BMP prior to the date of termination, but which have not yet been delivered to BMP as at
such date.
	 
	 	 	If Novartis decides not to grant the right to BMP to sell the Product at the time of
termination, the procedure as in clause 16.6 will apply.
	 
	 	 	This clause 16.5 does not apply to the situation under clause 6.4 and clause 16.4.
	 
	16.6	 	Upon termination of this Agreement due to or as a result of an event of default by BMP, the
unsold Products held in inventory by BMP at the time of termination shall be dealt with in the
following manner:

	 	16.6.1	 	BMP shall permit Novartis and/or its nominee reasonable access to the place at which
such unsold Products are then located so as to enable Novartis and/or its nominee to
inspect such unsold Products and to take possession of any Products that is in
inventory;
	 
	 	16.6.2	 	BMP shall, if required by Novartis within 10 (ten) Business Days of the inspection
referred to in clause 16.6.1, deliver to Novartis or is nominee, as the case may be,
BMP’s unsold Products.

	 	16.6.2.1	 	Novartis will pay the then current price at the time of products return,
for the unsold products that were (1) ordered and delivered products 6 (six)
months prior to the termination of this Agreement and (2)in good saleable
condition; and (3)with a remaining shelf-life of more than 6 months;
	 
	 	16.6.2.2	 	Novartis will pay, less a provision, the quantum of which shall be
determined reasonably by Novartis for the products were ordered and
delivered within 6 (six) months before the termination of this Agreement but
the unsold products are damaged or un-saleable or with a remaining shelf-life
or less than 6 (six) months.
	 
	 	16.6.2.3	 	For the unsold products outside the scope of above 16.6.2.1 and 16.6.2.2,
Novartis will not pay and BMP shall return and deliver the products to
Novartis freely.
	 
	 	16.6.2.4	 	Any transport costs reasonably incurred by Novartis and/or its nominee to
acquire the Products in terms of clause 16.6.2 shall be paid by BMP;

	 	 	 	In no event will Novartis pay for the unsold products in a volume exceed the
ordered and delivered volume 6 (six) months prior to the termination of this
Agreement.

	16.7	 	The amounts to be paid by Novartis and/or its nominee to BMP in terms of clause 6.4, 16.4 and
16.6 shall be paid within 60 (sixty) Business Days from

Page 20 of 26

 

	 	 	the date of termination of this Agreement, provided that Novartis shall be entitled to set
off or apply any monies payable by it to BMP pursuant to this clause towards and in
reduction of any amounts then due to Novartis by BMP;

	16.8	 	Upon termination of this Agreement for whatever reason, BMP shall forthwith and without
prejudice to any other rights which Novartis may have:

	 	16.8.1	 	Cease all Commercialization of the Products, save as otherwise provided for in
clause 16.5 and 16.6;
	 
	 	16.8.2	 	have no right whatsoever in or to the Products, the Registrations, the Patents, the
Trademarks, the Branding elements of the trademark of Enablex ®or any
information regarding the Products provided to BMP in terms of this Agreement and
shall promptly return to Novartis, at BMP’s own expense, all such information,
documentation, the Patents, the Trademarks, Branding elements of the trademark Enablex
® and any material containing the Trademarks of the Enablex ® .
	 
	 	16.8.3	 	Provide to Novartis, any and all the marketing and sale information about the
Product (including but not limited to the information as showed in clause 8.7).

	17.	 	CONFIDENTIALITY
	 
	17.1	 	No right, title or ownership interest shall be acquired by any Party in any confidential
information, including technical, business or commercial information, specifications, samples,
data, computer programs or documentation (“Confidential Information”) of any other Party that
is in existence prior to the date of this Agreement and is furnished or available or otherwise
disclosed pursuant to this Agreement unless specifically agreed to the contrary herein or in
any written ancillary document.
	 
	17.2	 	Unless the Party whose Confidential Information is furnished, made available or disclosed
otherwise agrees in writing, such Confidential Information shall:

	 	17.2.1	 	Be treated in confidence by the receiving Party and shall be used only for purposes
set forth in this Agreement;
	 
	 	17.2.2	 	Be disseminated only to those employees or agents of the receiving Party who have
agreed or are otherwise under a duty to maintain such confidential information in
confidence;
	 
	 	17.2.3	 	Together with any copies, be returned to the relevant Party or destroyed when no
longer needed.

	17.3	 	The duty to treat confidential information in confidence in terms of clause 20 shall not
apply to:

	 	17.3.1	 	Confidential information in the public domain otherwise than by breach of this
Agreement;
	 
	 	17.3.2	 	Confidential information which was previously known by a Party free of any
obligation to keep it in confidence;
	 
	 	17.3.3	 	Confidential information requested by a governmental authority having jurisdiction
over the disclosing Party provided that the disclosing Party makes reasonable efforts
to obtain protective arrangements reasonably satisfactory to the Party owning the
confidential information.

Page 21 of 26

 

	17.4	 	The provisions of this clause 17 shall remain in effect notwithstanding the termination,
expiry or cancellation of this Agreement.
	 
	17.5	 	For the avoidance of doubt, Clause 16.8.3 shall in any case prevail over clause 17, and
Novartis shall have the right to freely use any information covered by clause 16.8.3.
	 
	18	 	ARBITRATION
	 
	 	 	Any dispute arising out of or in relation to the execution and fulfillment of this Agreement
shall be consulted friendly by the Parties. If the Parties can not reach any agreement
within 60 days after the dispute arises, then either party can submit the dispute to the
China International Economic and Trade Arbitration Committee for arbitration. The
arbitration will be conducted in Beijing in Chinese and be in accordance with the then
current rules of the arbitration committee. The arbitration award shall be final and binding
on both parties without the right of appeal. The Parties agree that the arbitration
procedure set forth in this Section shall be the sole and exclusive means of settling and
resolving disputes that the Parties are not able to resolve amicably.
	 
	 	 	The parties shall share equally the reasonable documented cost of such arbitration
proceeding, but not the individual cost of the parties in participating in such proceeding.
	 
	19	 	INDEPENDENT PARTIES
	 
	 	 	All transactions between Novartis and BMP shall be on a principal-to-principal basis, BMP
buying for its own account and selling in its own name and for its own account. Nothing in
this Agreement shall constitute or deem to constitute a partnership or other form of joint
venture between the Parties or constitute or be deemed to constitute either Party as agent
or employee of the other for any purpose whatsoever and neither Party shall:

	 	19.1	 	have authority or power to contract in the name of the other or to give any
warranty, representation or understanding on the other’s behalf or to create any
liability against the other in any way or for any purpose whatsoever; and
	 
	 	19.2	 	in any correspondence or other dealings and transactions concerning this
Agreement, give any indications that it is acting other than as principal.

	20	 	FORCE MAJEURE
	 
	20.1	 	No Party shall be liable for any failure to fulfill any of their obligations under this
Agreement insofar as such failure is due to force majeure, for which purpose force majeure
shall include, but not be limited to, all events beyond the control of the Party claiming
force majeure which can not be foreseen, or if foreseeable can not reasonably be avoided,
which occur during the operation of this Agreement and prevent or hinder the carrying out of
the obligations of the Party claiming force majeure, and without limitation shall include act
of

Page 22 of 26

 

	 	 	God(the elements), war (whether declared or not), blockage, embargo, boycott, revolution,
invasion, insurrection, riot, civil commotion, mob violence, sabotage, strikes, lock-outs,
epidemics, quarantine or other reasons.
	 
	20.2	 	The Party affected by the force majeure (the “affected Party”) shall notify the other Party,
within 10 (ten) Business Days from the date on which the occurrence or expected occurrence of
the force majeure comes to the notice of the affected Party, of the force majeure event and
the nature, extent and anticipated duration of the force majeure. If the affected Party fails
to notify the other Party as aforesaid, the affected Party shall not be entitled to rely on
the force majeure provisions contained in this Agreement.
	 
	20.3	 	The affected Party shall use its best endeavours to obviate or remove the results of the
force majeure in the shortest time practicable and shall, in any event, not refrain from the
due performance in terms of the Agreement of such of its obligations as my remain unaffected
by the force majeure.
	 
	20.4	 	All performance time limits set in this Agreement for compliance by the affected Party shall
be extended for such a period as may reasonably be required to obviate or remove the effects
of the said force majeure, provided that in the event of such period being in excess of a
total period of 40 (forty) Business Days, the Party not affected shall have the right to
unilaterally terminate this Agreement with immediate effect by way of written notice to the
affected Party.
	 
	21.	 	DOMICILIA AND NOTICES
	 
	21.1	 	Any notice, demand or other communication:

	 	21.1.1	 	properly addressed by a Party to the other at the address in the first page of this
Agreement in terms hereof for the time being and sent by prepaid registered post
shall be deemed to be received by the latter on the 14th (fourteenth) day
following the date of posting thereof:
	 
	 	21.1.2	 	sent by telefax to its chosen telefax number stipulated herein, shall be deemed to
have been received on the date of dispatch (unless the contrary is proved).

	21.2	 	Notwithstanding anything to the contrary contained in this clause 21, a written notice or
communication actually received by a Party shall be an adequate written notice or
communication to it notwithstanding that it was not sent to or delivered at the address in the
first page.
	 
	22.	 	GOVERNING LAW
	 
	 	 	The interpretation, construction and effect of this Agreement and the rights and
obligations of the Parties shall be governed by the laws of the People’s Republic of China.
	 
	23.	 	SEVERABILITY

Page 23 of 26

 

	 	 	Each provision of this Agreement is severable from all others, notwithstanding the manner
in which they may be linked together or grouped grammatically and if in terms of any
judgment or order, any provision, phrase, sentence, paragraph or clause is found to be
defective or unenforceable for any reason, the remaining provisions phrases, sentences,
paragraphs and clauses shall nevertheless continue to be of full force. In particular and
without limiting the generality of the aforegoing, the Parties acknowledge the intention to
continue to be bound by this Agreement notwithstanding that any provision may be found to
be unenforceable or void or voidable, in which event, the provision concerned shall be
severed from the other provisions, each of which shall continue to be of full force.
	 
	24	 	ENTIRE AGREEMENT
	 
	 	 	This Agreement and its Annexures contain the entire agreement between the Parties in regard
to the matters with which this Agreement is concerned, and no Party shall be bound by any
undertakings, representations, warranties, promises or the like not recorded or otherwise
contained herein.
	 
	25	 	NON-VARIATION
	 
	 	 	No variation or consensual cancellation of this Agreement shall be of any force or effect
unless reduced to writing and signed by the Parties.
	 
	26	 	ON-WAIVER
	 
	 	 	No Party shall be regarded as having waived, or be precluded in any way from exercising,
any right under or arising form this Agreement by reason of such Party’s having at any time
granted any extension of time for, or having shown any indulgence to the other Party with
reference to, any payment or performance hereunder, for having failed to enforce, or
delayed in the enforcement of, any rights of action against the other Party.
	 
	27	 	CESSION AND ASSIGNMENT
	 
	27.1	 	Subject to the provisions of clause 27.3, each of the Parties shall be entitled, with the
other Party’s prior consent in writing, which consent shall not be unreasonably withheld, to
cede or assign rights and obligations arising out of this Agreement to an Affiliate of such
Party.
	 
	27.2	 	Subject to the provisions of clause 27.3, a Party which assigns any of its obligations in
terms of this clause 27 shall remain responsible to the other Party for the proper fulfillment
of the assignment obligations by the assignee.
	 
	27.3	 	Notwithstanding anything to the contrary contained in this Agreement, Novartis may assign
this Agreement without:

	 	i.	 	the consent of BMP; and
	 
	 	ii.	 	compensation to BMP;

Page 24 of 26

 

	 	 	in the event of a sale, transfer or other divestiture of its right, title and interest in
or to the Products in the Territory. This Agreement shall, accordingly, upon assignment
thereof into the name of the assignee, remain in full force and effect, save that the
assignee shall be substituted for Novartis and acquire all rights and be liable to perform
all the obligations which Novartis enjoyed against or was liable to perform in favor of BMP
in terms of this Agreement.

This Agreement has been executed in two identical copies.

ANNEXURE 1 Target Market Share and Target Unit Sales Committed by BMP

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2011	 	2012	 	2013	 	2014	 	2015	 	2016	 	2017	 	2018	 	2019	 	2020
	TMS
	 	 	[*]	%	 	 	[*]	%	 	 	[*]	%	 	 	30	%	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TUS(000’ tablets)
	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	16,638	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 	 	 	[*]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

The TMS and TUS shall be fixed unless the Parties agree otherwise. For the year of 2011, the TUS
and TMS shall be for the whole year of 2011 ( except for the reason as listed in clause 11.9), no
matter of the exact date when BMP gets the Registration granted. The Parties will review in case
of drastic market trends. If the Parties can not agree anyway, the current data shall keep
unchanged.

Marketing & Sales (M&S) Expenses and Advertisement and Promotional Expenses (A&P)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	USD (million)	 	2011	 	2012	 	2013	 	2014	 	2015	 	2016	 	2017	 	2018	 	2019	 	2020
	Total M&S

	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	A&P (%)

	 	[*]%
	 	[*]%
	 	[*]%
	 	[*]%
	 	[*]%
	 	[*]%
	 	[*]%
	 	[*]%
	 	[*]%
	 	[*]%
	A&P

	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]
	 	[*]

ANNEXURE 2 — QUALITY ASSURANCE AGREEMENT

ANNEXURE 3
— BMP’S DETAILED SALES FORCE STRUCTURE

ANNEXURE 4 — PHARMACOVIGILENCE AGREEMENT

ANNEXURE 5 — CONTACT PERSONS AND RESPONSIBLE PERSONS

	 	 	 
	Shanghai Novartis Trading Co., Ltd

	 	Beijing Med-Pharm Corporation
	Jinsong Dong (contact)

	 	Richard Liu (contact)
	010-65058833-8878

	 	010-58797711-220
	Lorenzo Cazzoli

	 	Byron Wang
	010-65058833-8918

	 	010-58797711-288

Page 25 of 26

 

ANNEXURE 6 — TRADEMARKS AND PATENTS

	1.	 	Trademarks registered in the Territory to be licensed under this Agreement
	 
	 	 	ENABLEX Registration Number 1122307

ENABLEX (Chinese YI NENG BU) Registration Number 1099483
	 
	2.	 	There are two patents granted in the Territory, ie,

	 	 	 	 	 
	 

	 	Chinese Patent No: 
	 	90101543.1
	 

	 	Title:
	 	A Process for Preparing Pyrrolidine Derivatives

	 
	 	 	 	 
	 

	 	Chinese Patent No:
	 	96196977.6
	 

	 	Title:
	 	Pharmaceutical Formulations containing Darifenacin

ANNEXURE 7 — NOVARTIS PHARMA PROMOTIONAL PRACTICES POLICY
AND GUIDELINES (NP4)

ANNEXURE 8 — CODE OF CONDUCT

ANNEXURE 9 — TRAINING CONFIRMATION FORM

Page 26 of 26

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]