Document:

2006 Share Incentive Plan adopted as of November 13, 2006

 Exhibit 10.4 
 SIMCERE PHARMACEUTICAL GROUP 
 2006 STOCK INCENTIVE PLAN 
 1. Purpose of the Plan 
 The purpose of the Plan is to
aid the Company and its Affiliates in recruiting and retaining key employees, directors or consultants of outstanding ability and to motivate such employees, directors or consultants to exert their best efforts on behalf of the Company and its
Affiliates by providing incentives through the granting of Awards. The Company expects that it will benefit from the added interest which such key employees, directors or consultants will have in the welfare of the Company as a result of their
proprietary interest in the Company’s success. 
 2. Definitions 
 The following capitalized terms used in the Plan have the respective meanings set forth in this Section: 
  

	 	(a)	Applicable Laws: All laws, statutes, regulations, ordinances, rules or governmental requirements that are applicable to this Plan or any Award granted pursuant to this Plan,
including but not limited to applicable laws of the People’s Republic of China, the United States and the Cayman Islands, and the rules and requirements of any applicable national securities exchange. 

  

	 	(b)	Act: The U.S. Securities Exchange Act of 1934, as amended, or any successor thereto. 

  

	 	(c)	Affiliate: With respect to the Company, any entity directly or indirectly controlling, controlled by, or under common control with, the Company or any other entity designated
by the Board in which the Company or an Affiliate has an interest. 

  

	 	(d)	Award: An Option, Stock Appreciation Right or Other Stock-Based Award granted pursuant to the Plan. 

  

	 	(e)	Beneficial Owner: A “beneficial owner”, as such term is defined in Rule 13d-3 under the Act (or any successor rule thereto). 

  

	 	(f)	Board: The Board of Directors of the Company. 

  

	 	(g)	Change in Control: The occurrence of any of the following events: 

 (i) the sale or disposition, in one or a series of related transactions, of all or substantially all, of the assets of the Company to any “person” or “group” (as such terms are defined in Sections
13(d)(3) or 14(d)(2) of the Act) other than the Permitted Holders; 
 (ii) any person or group, other than the Permitted Holders, is or
becomes the Beneficial Owner (except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether 

	 	 
such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the voting
stock of the Company (or any entity which controls the Company), including by way of merger, consolidation, tender or exchange offer or otherwise; or 

 (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by such Board or whose nomination for election by
the shareholders of the Company was approved by a vote of a majority of the directors of the Company, then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board, then in office. 
  

	 	(h)	Code: The U.S. Internal Revenue Code of 1986, as amended, or any successor thereto. 

  

	 	(i)	Committee: The Compensation Committee of the Board. 

  

	 	(j)	Company: Simcere Pharmaceutical Group, a company incorporated under the laws of the Cayman Islands. 

  

	 	(k)	Disability: Inability of a Participant to perform in all material respects his duties and responsibilities to the Company, or any Subsidiary of the Company, by reason of a
physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of not less than 90 consecutive days or (ii) such shorter period as the Committee may reasonably determine
in good faith. The Disability determination shall be in the sole discretion of the Committee and a Participant (or his representative) shall furnish the Committee with medical evidence documenting the Participant’s disability or infirmity which
is satisfactory to the Committee. 

  

	 	(l)	Effective Date: The date the Board approves the Plan, or such later date as is designated by the Board. 

  

	 	(m)	Employment: The term “Employment” as used herein shall be deemed to refer to (i) a Participant’s employment if the Participant is an employee of the
Company or any of its Affiliates, (ii) a Participant’s services as a consultant, if the Participant is consultant to the Company or its Affiliates and (iii) a Participant’s services as an non-employee director, if the Participant
is a non-employee member of the Board. 

  

	 	(n)	 Fair Market Value: On a given date, (i) if there should be a public market for the Shares on such date, the arithmetic mean of the high and low prices
of the Shares as reported on such date on the Composite Tape of the principal national securities exchange on which such Shares are listed or admitted to trading, or if the Shares are not listed or admitted on any national securities exchange, the
arithmetic mean of the per Share closing bid price and per Share closing asked 

  

 2 

	 	 
price on such date as quoted on the National Association of Securities Dealers Automated Quotation System (or such market in which such prices are regularly
quoted)(the “NASDAQ”), or, if no sale of Shares shall have been reported on the Composite Tape of any national securities exchange, including the NASDAQ on such date, then the immediately preceding date on which sales of the Shares have
been so reported or quoted shall be used, or (ii) if there should not be a public market for the Shares on such date, the Fair Market Value shall be the value established by the Committee in good faith. 

  

	 	(o)	ISO: An Option that is also an incentive stock option granted pursuant to Section 6(d) of the Plan. 

  

	 	(p)	LSAR: A limited stock appreciation right granted pursuant to Section 7(d) of the Plan. 

  

	 	(q)	Other Stock-Based Awards: Awards granted pursuant to Section 8 of the Plan. 

  

	 	(r)	Option: A stock option granted pursuant to Section 6 of the Plan. 

  

	 	(s)	Option Price: The purchase price per Share of an Option, as determined pursuant to Section 6(a) of the Plan. 

  

	 	(t)	Participant: An employee, director or consultant who is selected by the Committee to participate in the Plan. 

  

	 	(u)	Permitted Holder: means, as of the date of determination, (i) the Company or (ii) any employee benefit plan (or trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other Person of which a majority of its voting power of its voting equity securities or equity interest is owned, directly or indirectly, by the Company, 

  

	 	(v)	Person: A “person”, as such term is used for purposes of Section 13(d) or 14(d) of the Act (or any successor section thereto). 

  

	 	(w)	Plan: This Simcere Pharmaceutical Group 2006 Stock Incentive Plan. 

  

	 	(x)	Shares: Shares of common stock of the Company. 

  

	 	(y)	Stock Appreciation Right: A stock appreciation right granted pursuant to Section 7 of the Plan. 

  

	 	(z)	Subsidiary: A corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company.

  

 3 

 3. Shares Subject to the Plan 
 The total number of Shares which may be issued under the Plan is 12,000,000. The Shares may consist, in whole or in part, of authorized and unissued Shares, treasury Shares or Shares purchased on the open market. The
issuance of Shares or the payment of cash upon the exercise of an Award or in consideration of the cancellation or termination of an Award shall reduce the total number of Shares available under the Plan, as applicable. Shares which are subject to
Awards which terminate or lapse without the payment of consideration may be granted again under the Plan. 
 4. Administration 
 The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two individuals who are intended to qualify as “Non-Employee Directors” within the meaning of Rule 16b-3 under the Act (or any successor rule thereto) and an “independent director” as defined in NASE Rule
303A.02 Independence Tests (or any successor rule thereto). Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its affiliates or a
company acquired by the Company or with which the Company combines. The number of Shares underlying such substitute awards shall be counted against the aggregate number of Shares available for Awards under the Plan. The Committee is authorized to
interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors). The Committee shall have the full power and
authority to establish the terms and conditions of any Award consistent with the provisions of the Plan and to waive any such terms and conditions at any time (including, without limitation, accelerating or waiving any vesting conditions). The
Committee shall require payment of any amount it may determine to be necessary to withhold for any applicable taxes as a result of the exercise, grant or vesting of an Award. Unless the Committee specifies otherwise, the Participant may elect to pay
a portion or all of such withholding taxes by (a) delivery in Shares or (b) having Shares withheld by the Company from any Shares that would have otherwise been received by the Participant. 
 5. Limitations 
 No Award may be granted under the
Plan after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date. 
 6. Terms and Conditions of
Options 
 Options granted under the Plan shall be, as determined by the Committee, non-qualified or incentive stock options for U.S.
federal income tax purposes, as evidenced by the related Award agreements, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall
determine: 
  

	 	(a)	Option Price. The Option Price per Share shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of the Shares on the date an Option is
granted. 

  

 4 

	 	(b)	Exercisability. Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee, but in no event
shall an Option be exercisable more than six years after the date it is granted. 

  

	 	(c)	Exercise of Options. Except as otherwise provided in the Plan or in an Award agreement, an Option may be exercised for all, or from time to time any part, of the Shares for
which it is then exercisable. For purposes of Section 6 of the Plan, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable, the date payment is received by the Company
pursuant to clauses (i), (ii), (iii) or (iv) in the following sentence. The purchase price for the Shares as to which an Option is exercised shall be paid to the Company in full at the time of exercise at the election of the
Participant (i) in cash or its equivalent (e.g., by check), (ii) to the extent permitted by the Committee, in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such
other requirements as may be imposed by the Committee; provided, that such Shares have been held by the Participant for no less than six months (or such other period as established from time to time by the Committee in order to avoid adverse
accounting treatment applying generally accepted accounting principles), (iii) partly in cash and, to the extent permitted by the Committee, partly in such Shares or (iv) if there is a public market for the Shares at such time,
through the delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such Sale equal to the aggregate Option Price for the Shares
being purchased. No Participant shall have any rights to dividends or other rights of a stockholder with respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares
and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan. 

  

	 	(d)	 ISOs. The Committee may grant Options under the Plan that are intended to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the
Code (or any successor section thereto). No ISO may be granted to any Participant who at the time of such grant, owns more than ten percent of the total combined voting power of all classes of stock of the Company or of any Subsidiary, unless
(i) the Option Price for such ISO is at least 110% of the Fair Market Value of a Share on the date the ISO is granted and (ii) the date on which such ISO terminates is a date not later than the day preceding the fifth anniversary of the
date on which the ISO is granted. Any Participant who disposes of Shares acquired upon the exercise of an ISO either (i) within two years after the date of grant of such ISO or (ii) within 

  

 5 

	 	 
one year after the transfer of such Shares to the Participant, shall notify the Company of such disposition and of the amount realized upon such disposition.
All Options granted under the Plan are intended to be nonqualified stock options, unless the applicable Award agreement expressly states that the Option is intended to be an ISO. If an Option is intended to be an ISO, and if for any reason such
Option (or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a nonqualified stock option granted under the Plan; provided that such Option (or
portion thereof) otherwise complies with the Plan’s requirements relating to nonqualified stock options. In no event shall any member of the Committee, the Company or any of its Affiliates (or their respective employees, officers or directors)
have any liability to any Participant (or any other Person) due to the failure of an Option to qualify for any reason as an ISO. 

  

	 	(e)	Attestation. Wherever in this Plan or any agreement evidencing an Award a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of
an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option
as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option. 

 7.
Terms and Conditions of Stock Appreciation Rights 
  

	 	(a)	Grants. The Committee also may grant (i) a Stock Appreciation Right independent of an Option or (ii) a Stock Appreciation Right in connection with an Option, or a
portion thereof. A Stock Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time the related Option is granted or at any time prior to the exercise or cancellation of the related Option,
(B) shall cover the same number of Shares covered by an Option (or such lesser number of Shares as the Committee may determine) and (C) shall be subject to the same terms and conditions as such Option except for such additional limitations
as are contemplated by this Section 7 (or such additional limitations as may be included in an Award agreement). 

  

	 	(b)	 Terms. The exercise price per Share of a Stock Appreciation Right shall be an amount determined by the Committee but in no event shall such amount be less
than the greater of (i) the Fair Market Value of a Share on the date the Stock Appreciation Right is granted or, in the case of a Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, the Option Price of the
related Option and (ii) the minimum amount permitted by Applicable Laws. Each Stock Appreciation Right granted independent of an Option shall entitle a Participant upon exercise to an amount equal to (i) the excess of (A) the Fair
Market Value on the exercise date of one Share over (B) the exercise price per Share, times 

  

 6 

	 	 
(ii) the number of Shares covered by the Stock Appreciation Right. Each Stock Appreciation Right granted in conjunction with an Option, or a portion
thereof, shall entitle a Participant to surrender to the Company the unexercised Option, or any portion thereof, and to receive from the Company in exchange therefore an amount equal to (i) the excess of (A) the Fair Market Value on the
exercise date of one Share over (B) the Option Price per Share, times (ii) the number of Shares covered by the Option, or portion thereof, which is surrendered. The date a notice of exercise is received by the Company shall be the exercise
date. Payment shall be made in Shares or in cash, or partly in Shares and partly in cash (any such Shares valued at such Fair Market Value), all as shall be determined by the Committee. Stock Appreciation Rights may be exercised from time to time
upon actual receipt by the Company of written notice of exercise stating the number of Shares with respect to which the Stock Appreciation Right is being exercised. No fractional Shares will be issued in payment for Stock Appreciation Rights, but
instead cash will be paid for a fraction or, if the Committee should so determine, the number of Shares will be rounded downward to the next whole Share. 

  

	 	(c)	Limitations. The Committee may impose, in its discretion, such conditions upon the exercisability or transferability of Stock Appreciation Rights as it may deem fit.

  

	 	(d)	Limited Stock Appreciation Rights. The Committee may grant LSARs that are exercisable upon the occurrence of specified contingent events. Such LSARs may provide for a
different method of determining appreciation, may specify that payment will be made only in cash and may provide that any related Awards are not exercisable while such LSARs are exercisable. Unless the context otherwise requires, whenever the term
“Stock Appreciation Right” is used in the Plan, such term shall include LSARs. 

 8. Other Stock-Based Awards 
 The Committee, in its sole discretion, may grant or sell Awards of Shares, Awards of restricted Shares and Awards that are valued in whole or in part by
reference to, or are otherwise based on the Fair Market Value of, Shares (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including,
without limitation, the right to receive, or vest with respect to, one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance
objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made, the
number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such
Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable). 
  

 7 

 9. Adjustments Upon Certain Events 
 Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to all Awards granted under the Plan: 
  

	 	(a)	Generally. In the event of any change in the outstanding Shares after the Effective Date by reason of any Share dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination, combination or transaction or exchange of Shares or other corporate exchange, or any distribution to shareholders of Shares other than regular cash dividends or any transaction similar to the foregoing, the
Committee in its sole discretion and without liability to any person shall make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or kind of Shares or other securities issued or reserved for issuance
pursuant to the Plan or pursuant to outstanding Awards, (ii) the maximum number of Shares for which Options or Stock Appreciation Rights may be granted during a calendar year to any Participant, (iii) the maximum number of Shares for which
Other Stock-Based Awards may be granted during a calendar year to any Participant, (iv) the maximum amount of an Award that is valued in whole or in part by reference to, or is otherwise based on the Fair Market Value of, Shares that may be
granted during a calendar year to any Participant, (v) the Option Price or exercise price of any stock appreciation right and/or (vi) any other affected terms of such Awards. 

  

	 	(b)	 Change in Control. In the event of a Change of Control after the Effective Date, (i) if determined by the Committee in the applicable Award agreement or
otherwise, any outstanding Awards then held by Participants which are unexercisable or otherwise unvested or subject to lapse restrictions shall automatically be deemed exercisable or otherwise vested or no longer subject to lapse restrictions, as
the case may be, as of immediately prior to such Change of Control and (ii) the Committee may, but shall not be obligated to, (A) cancel such Awards for fair value (as determined in the sole discretion of the Committee) which, in the case
of Options and Stock Appreciation Rights, may equal the excess, if any, of value of the consideration to be paid in the Change of Control transaction to holders of the same number of Shares subject to such Options or Stock Appreciation Rights (or,
if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options or Stock Appreciation Rights) over the aggregate exercise price of such Options or Stock Appreciation Rights or (B) provide for the
issuance of substitute Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted hereunder as determined by the Committee in its sole discretion or (C) provide that for a period of 

  

 8 

	 	 
at least 15 days prior to the Change of Control, such Options shall be exercisable as to all shares subject thereto and that upon the occurrence of the
Change of Control, such Options shall terminate and be of no further force and effect. 

 10. No Right to Employment or Awards

 The granting of an Award under the Plan shall impose no obligation on the Company or any Subsidiary to continue the Employment of a
Participant and shall not lessen or affect the Company’s or Subsidiary’s right to terminate the Employment of such Participant. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant
(whether or not such Participants are similarly situated). 
 11. Successors and Assigns 
 The Plan shall be binding on all successors and assigns of the Company and a Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors. 
 12.
Nontransferability of Awards 
 Unless otherwise determined by the Committee, an Award shall not be transferable or assignable by the
Participant otherwise than by will or by the laws of descent and distribution. An Award exercisable after the death of a Participant may be exercised by the legatees, personal representatives or distributees of the Participant. 
 13. Amendments or Termination 
 The Board may amend,
alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made, (a) without the approval of the shareholders of the Company, if such action would (except as is provided in Section 9 of the Plan), increase the
total number of Shares reserved for the purposes of the Plan or change the maximum number of Shares for which Awards may be granted to any Participant or (b) without the consent of a Participant, if such action would diminish any of the rights
of the Participant under any Award theretofore granted to such Participant under the Plan; provided, however, that the Committee may amend the Plan in such manner as it deems necessary to permit the granting of Awards meeting the requirements of any
Applicable Laws. 
 Without limiting the generality of the foregoing, to the extent applicable, notwithstanding anything herein to the
contrary, this Plan and Awards issued hereunder shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any 

  

 9 

 
amounts payable hereunder will be taxable to a Participant under Section 409A of the Code and related Department of Treasury guidance prior to payment
to such Participant of such amount, the Company may (a) adopt such amendments to the Plan and Awards and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or
appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Awards hereunder and/or (b) take such other actions as the Committee determines necessary or appropriate to comply with the requirements of
Section 409A of the Code. 
 14. Jurisdictions 
 In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may, in its sole discretion, may provide for such special terms as it may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom applicable in the jurisdiction in which the Participant resides or is employed. Moreover, the Committee may approve such supplements to, amendments, restatements, or
alternative versions of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, restatements or
alternative versions shall increase the Share limitation contained in Section 3 hereof. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted that would violate any Applicable Laws.

 15. Distribution of Shares 
 The
obligation of the Company to make payments in Shares pursuant to an Award shall be subject to all Applicable Laws and to any such approvals by government agencies as may be required. Without limiting the generality of the foregoing, Shares
distributed pursuant to an Award may consists, in whole or in part, of authorized and unissued Shares, treasury Shares or Shares purchased on the open market. Additionally, in the discretion of the Committee, American Depository Shares may be
distributed in lieu of Shares in settlement of any Award, provided that the American Depository Shares shall be of equal value to the Shares that would have otherwise been distributed. If the number of Shares represented by an American Depository
Share is other than on a one-to-one basis, the limitations of Section 3 shall be adjusted to reflect the distribution of American Depository Shares in lieu of Shares. 
 16. Taxes 
 No Shares shall be delivered under the Plan to any Participant until such Participant has
made arrangements acceptable to the Committee for the satisfaction of any income and employment tax withholding obligations under any Applicable Laws, in particular, the tax laws, rules, regulations and government orders of the People’s
Republic of China or the U.S. federal, state or other local tax laws, as applicable. The Company and each of its Subsidiaries shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s payroll tax obligations, if any) required to be withheld under any Applicable Laws with respect to any Award issued to the Participant hereunder. The
Committee 

  

 10 

 
may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares otherwise issuable
under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting,
exercise or payment of any Award (or which may be repurchased form the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to satisfy the Participant’s federal, state, local and other income
and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the Committee, be limited to the number of Shares which have a Fair Market Value on the date of withholding or
repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and other income tax any payroll tax purposes that are applicable to such taxable income. 
 17. Choice of Law 
 The Plan shall be governed by and
construed in accordance with the laws of the state of New York.  
 18. Effectiveness of the Plan 
 The Plan shall be effective as of the Effective Date and shall terminate ten years later, subject to earlier termination by the Board pursuant to
Section 13 hereof. 
  

 11Exclusive Distribution Agreement

 Exhibit 10.5 
 Exclusive Distribution Agreement 
 This Agreement is made on
December 31st day, 2006 by and between : 
 Name: China Pharmaceutical University Pharmaceutical Company 
 Address: No.50, Majia Street, Zhongyang Road, Nanjing

 (hereinafter called “Party A”) 
 Name: Jiangsu
Simcere Pharmaceutical Co.,Ltd 
 Address: 12 Huayuan Road, Nanjing 
 (hereinafter called “Party B”) 
 Party A and Party B hereby agree following clauses through friendly consultation in accordance with the
principle of mutual cooperation and development: 
 Article 1 Definition 
 In this Agreement, unless the context requires otherwise: 
  

	1.1	“Product” means diclofenac sodium sustained-release capsules manufactured by Party A and sold under the brand names respectively owned by party A and Party B;

  

	1.2	“Territory” means China including Hong Kong, Macau and Taiwan; 

  

	1.3	“Trademark” means those brand names showed on the package of Product, for example the “Antine”; 

  

	1.4	The headings to the clauses are for convenience only and shall not affect the construction or interpretation of this Agreement. 

 Article 2 Exclusive Distribution and Legal Relations 
  

	2.1	Exclusive Distribution: Party B shall be the sole and exclusive distributor of the Product of Party A during the term of this agreement. Party B shall dedicate its human
resources, material resources and financial resources to the market development, the establishment of distribution networks and the provision of excellent sales services, and assure the realization of the benchmark sales volume of the Product so as
to allow Party A to specially engage in the production of the Product. Party B shall enjoy any and all rights and powers as the sole and exclusive distributor. 

  

	2.2	Legal Relations: This Agreement grants any and all rights and powers on the exclusive distribution of the Product to Party B. Party A shall not sell or transfer the Product
to any natural person, firm or company other than the exclusive distributor within the Territory, or allow, in any way, any natural person, firm or company other than the exclusive distributor within the Territory to get the Product. Party A shall
not engage, in any way, any natural person, firm or company other than the exclusive distributor within the Territory as its distributor, representative or agent to sell the Product. Any inquiry about the Product shall be referred to Party B.

  

	2.3	Promises: During the term of this Agreement, as the sole and exclusive distributor, Party B and Party B’s affiliated companies (excluding Party B’s chain drug
stores) shall not sell any drugs which have same active ingredients as that of Product, and shall collect relevant information, win clients, promote the sale of the Product, and endeavor to make the brand name of the Product become a domestic
well-known brand. 

 Article 3 Party A’s Liabilities 
  

	3.1	Advertisement Materials: Party A shall provide reasonable quantity of Product samples, advertisement materials and other supplementary sales promotion materials on the
Product to Party B in accordance with Party B’s demands. 

  

	3.2	Distribution Back-up Party A shall endeavor to support Party B’s distribution of the Product. Party shall not voluntarily invite an offer from other clients in Party
B’s distribution Territory. Party A shall provide suggestions, which benefit the distribution of the Product, to Party B from time to time. 

  

	3.3	Referral: Unless otherwise provided herein, any and all clients who directly submit price inquiries or purchase order to Party A shall be referred to Party B.

 Article 4 Party B’s Liabilities 
  

	4.1	Distribution: To distribute the Product within Territory and provide services to clients, Party B shall build up and maintain a organization with competent management
capacity, and shall endeavor to realize the benchmark sales volume specified in this Agreement. 

  

	4.2	Intercommunication: To better cooperate with Party A and coordinate the relations between the production and the marketing, Party B shall convene a quality and sales analysis
seminar seasonally to discuss and analyze market development situations so as to timely adjust marketing strategies to promote the healthy development of the production and the sale. 

 Article 5 Sale 
  

	 5.1
	 Benchmark Sales Volume: The benchmark sales amount shall be 48000 pieces (20-capsule small box) for the year of
2007, which shall begin on January 1st and end on December 31st. 

  

	5.2	Package for 20-Capsule Small Box: Each small box contains 50mg×20 capsules, each middle-size box contains 10 small boxes, and each piece contains 20 middle-size boxes.

  

	5.3	Package for 10-Capsule Small Box: Each small box contains 50mg×10 capsules, each middle-size box contains 10 small boxes, and each piece contains 20 middle-size boxes.

  

	5.4	Conversion: Every 2 pieces of 10-capsule small boxes shall be deemed as one piece of 20-capsule small boxes. 

  

	5.5	Adjustment: If parties hereto agree to adjust the package specification of some Product, the number of capsules (to be sold) involved in the adjustment shall remain
unchanged, and shall offset the benchmark sales volume specified in this Article. 

 Article 6 Quality and Examination 
  

	6.1	Warranty: Party A guarantee that The quality of medicine shall satisfy quality standards and relevant quality requirements. The medicine shall accompany quality certificate.
The package shall accord with relevant regulations and satisfy relevant transportation requirements. 

  

	6.2	Quality Defect means the non-conformance arising from raw materials, working process and other process existing before Party B examine and accept the Product (after Party A
transport the Product to Party B’s storehouse). 

	6.3	Examination: Party B shall request the drug administration to examine the Product, and shall undertake relevant examination fees in advance. In case Party A has any queries
about the examination result, Party A may otherwise request the drug administration carry out a separate examination, and shall undertake relevant examination fees. In case there is any discrepancy between two examination results and Party A and
Party B could not agree on the discrepancy, Party A and Party B may request a competent institute for drug control to have an examination, and the examination result shall bind both parties. The examination fees shall be born by the responsible
party. 

  

	6.4	Return: In case Party B find any quality defects in the Product which is still in the shelf life, Party B shall inform such quality defects to Party A. Upon requested by
Party B, Party A shall accept any and all returned defective Product and compensate Party B basing on the volume of returned defective Product, and shall undertake relevant costs and expenses arising therefrom. In case Party B request Party A to
replace all defective Product with good Product, Party A shall implement the exchange in accordance with Party B’s requirements as soon as possible. 

  

	6.5	Responsibility: Party A shall undertake any and all legal responsibilities arising from quality defect(s) found by the drug administration through examination. Any and all
economic losses caused therefrom shall also be born by Party A. Party B will not waiver any rights to damages arising from the return, exchange or replacement of the Product with quality defect(s). Party B shall timely notify Party A of any and all
quality complaints about the Product. 

  

	6.6	Non-quality Defect: After the Product is accepted and stored into the storehouse by Party B, any and all losses caused by the damage arising from the self-delivery, shipment
and the sale of the Product and other non-quality defects shall be born by Party B. 

 Article 7 Package 
  

	7.1	Package Specification I: Each capsule shall include 50 mg diclofenac sodium, each small box contains 20 capsules, each middle-size box contains 10 small boxes, and each piece
contains 20 middle-size boxes. 

  

	7.2	Package Specification II: Each capsule shall include 50 mg diclofenac sodium, each small box contains 10 capsules, each middle-size box contains 10 small boxes, and each
piece contains 20 middle-size boxes 

  

	7.3	Package Materials: The choice of package materials shall be mutually decided by Party A and Party B. 

  

	7.4	Indication: Party A shall print the manufacturing date, the approval number, the full name of the manufacturer and the exclusive distributor and other indications on various
packages. 

  

	7.5	Adjustment: During the exclusive distribution period, Party B shall be entitled to request Party A to adjust the package specification. Subject to relevant regulations and
laws, Party A shall formulate relevant budgets and plans in accordance with Party B’s requirements, and have those budgets and plans confirmed by Party B exercised. 

  

	7.6	Change: The change in the cost of raw materials caused by the adjustment of package specification, after being confirmed by Party B, shall be set as the base of the
settlement price for the Product of new specification. 

	7.7	Loss: Any and all losses arising from the adjustment of package specification requested by Party B shall be undertaken by Party B. Any and all losses arising from the
adjustment of package specification for the compliance of relevant laws and regulations shall be apportioned by Party A and Party B through negotiation. 

  

	7.8	Anti-Counterfeiting: Party A shall be responsible for the provision of anti-counterfeiting code and logistics bar code related to Product. 

 Article 8 Supply 
  

	8.1	Supply Request: Party B shall in advance request the supply of the Product by fax or other written form agreed by both parties. 

  

	8.2	Supply: Every month, Party A shall ensure the supply of the Product in accordance with Party B’s requirements. 

  

	8.3	Request: Party B may request Party A to supply the Product one time or several times each month. The requested volume for each month shall not be less than 1/15 of the yearly
benchmark sales volume. Each batch of Product shall accompany the quality certificate issued by Party A’s quality assurance division. Otherwise, Party B shall be entitled to refuse such batch of Product, and Party B shall be responsible for
relevant subsequences. 

  

	8.4	Additional Supply: In case the requested supply exceed the specified volume, Party B shall notify Party A in advance by fax or other written form agreed by both parties.
Party A shall endeavor to ensure the supply on time if its output capacity permits. If Party A is unable to satisfy Party B’s supply requirements, Party A shall notify Party B in advance by fax or other written form agreed by both parties.

  

	8.5	Shipment: Party A shall transport the Product to the place or storehouse designated by Party B to complete the performance of its delivery obligation and undertake relevant
freights. Unless otherwise agreed by parties hereto, the risk and ownership of the Product shall not transfer before Party B finishes the quality examination and accept the Product. 

 Article 9 Stock 
  

	9.1	Monthly Stock: Party A guarantees that it will maintain 1000 pieces in stock after it satisfies Party B’s supply request every month. 

  

	9.2	Notification: Party B shall notify Party A of its stock of the Product monthly so as to assist Party A to formulate the production plan. 

 Article 10 Advertisement 
  

	10.1	Promotion: To make the brand of the Product become one of domestic well-known brands, Party A shall utilize its advantages and influences to assist Party B to promote the
Product’s market. 

  

	10.2	Media Advertisement: The full name, shorted name or logos of Party A and Party B shall appear in main media advertisements at the same time. 

 Article 11 Intellectual Property 
  

	11.1	Guarantee about Relevant Rights: Party A guarantee that the Product shall be free of any securities, and any third party has no rights to claim for any compensation about the
industrial property or other intellectual properties 

	11.2	Guarantee about Relevant Technologies: Party A guarantee that it is the legal owner of relevant proprietary technologies concerning the Product, and dose not infringe any
third party’s intellectual rights. 

  

	11.3	Infringement Dispute: In case a third party claim that Party A has infringed its rights, Party A shall be responsible for the consultation with said third party and all
subsequent legal and economic results. Besides, Party A shall compensate Party B’s losses arising therefrom. 

  

	11.4	Trademark: The “Antine” shall be the registered trademark of the Product. During the term of this Agreement, neither party shall be entitled to use said trademark
unilaterally. This restriction shall survive during the term of this Agreement. 

 Article 12 Price 
  

	12.1	Price Setting: The wholesale price and the retail price of the Product shall be decided by Party A and Party B jointly, and shall be submitted to the drug administration or
the price authority for approval before formally adopted. 

  

	12.2	Approval Procedure: To better develop the market, one party shall respect the other party’s motion about the price adjustment. Party A shall be responsible to go through
relevant approval procedure. 

 Article 13 Settlement and Payment 
  

	13.1	Settlement Basis: The tax-inclusive settlement price for the Product of 20-capsule small box shall be RMB 5.20 per box. 

  

	13.2	Payment Mode: The payment shall be made by the cheque for transfer or other methods agreed by both parties. 

  

	 13.3
	 Time Limit: The payment shall be made not later than the 91st day after Party B has examined and accepted the Product. 

  

	13.4	Late Payment: In case Party B fails to make the payment on time, Party B shall pay a penalty at the rate of 0.03% per day for the late payment to Party A unless relevant
provisions of this Agreement or Party A agree to exempt Party B’s default liabilities or Party B has reasonable explanations. 

  

	13.5	Incidental Obligation: Party A shall issue VAT invoices when it release Product to Party B. In case Party b fails to make the payment on time, Party A shall be entitled to
delay the insurance of relevant VAT invoices. The delayed time shall be equal to the delayed payment time. 

  

	13.6	Price Adjustment: In case the state carry out downward adjustment, the settlement price shall be adjusted downwardly at the same ratio. 

  

	13.7	Package Adjustment: After the package specification is modified, the settlement price of the Product shall be otherwise negotiated on. 

 Article 14 Confidentiality 
  

	14.1	Trade Secret: Any and all information to which either party has adopted confidential treatment should be deemed as trade secrets of said party. Any and all information whose
unauthorized disclosure to a third party may damage the other party’s commercial interest shall also be deemed as trade secrets. 

	14.2	Confidentiality: During the term of this Agreement and after this Agreement is terminated, neither party shall disclose the other party’s trade secrets or utilize
relevant trade secrets beyond the authorization under this Agreement without the consent of the other party. 

 Article 15 Force Majeure

  

	15.1	Force Majeure: In case either party suffers any events beyond human’s control and therefore induce the late performance or failure of the performance of this Agreement
or any or all provisions of each separate contract, to relevant extent, its default liabilities shall be exempted and the other party shall not claim for compensation. Such events include fire, flood, tsunami, earthquake, typhoon, thunderbolt,
murrain or other epidemic diseases, explosion and war. 

  

	15.2	Notice: The party suffering the force majeure shall notify the other party in writing, and shall provide the certification issued by competent authority so as to prove the
existence of the force majeure. 

  

	15.3	Review: In case either party or both parties of this Agreement lose its or their deserving interests and benefits under this Agreement due to relevant legislations or
government administrative order, both parties hereto shall review and adjust relevant provisions of this Agreement so as to recover its or their position which it or they should have under this Agreement. 

  

	15.4	Else: In case the force majeure or its influence continue more than 90 days, and the resumption of this Agreement is possible, both parties shall be entitled to relevant
reviewing rights under preceding paragraph. 

 Article 16 Term 
  

	 16.1
	 Term: The term of this Agreement shall be 1 year from January 1st, 2007 to December 31st, 2007. This Agreement shall automatically terminate when such term expires. 

  

	16.2	Renewal: Parties hereto may negotiate on whether to renew this Agreement or not 90 days before the expiration of this Agreement. 

 Article 17 Termination of This Agreement 
  

	17.1	Termination: Parties hereto shall carefully and earnestly perform relevant articles of this Agreement. Under following conditions, either party shall be entitled to notify
the other party in writing to terminate this Agreement or some provisions thereof: 

  

	(1)	either party fails to perform its obligation under this Agreement and fails to correct such default within 30 days as from the date when it receives the other party’s writing
notification; 

  

	(2)	either party declares its bankruptcy voluntarily or involuntarily, has applied for restructuring, liquidation, dissolution or appointed its receiver; or 

  

	(3)	either party is unable to perform its obligation when Force Majeure events under Article 15 occurs, and either party or both parties hereto does not exercise its or their review
rights. 

  

	17.2	Effect of Terminating: The termination of this Agreement shall not release any undischarged debts under this Agreement. Notwithstanding the termination of this Agreement,
either party shall be entitled to claim compensation for those losses it suffers because of the other party’s defaults before the termination of this Agreement. 

 Article 18 Default Liabilities and Rewards 
  

	18.1	Principles: Party A and Party B shall abide by this Agreement. Either party shall be entitled to request the default party compensate its losses arising from relevant
defaults. 

  

	18.2	Unfulfilment of the Benchmark Sales Volume: In case Party B fails to fulfill the benchmark sales volume under this Agreement, Party B shall pay RMB 0.5 for each box unsold
within the benchmark sales volume to Party A as a penalty in the next year. 

  

	18.3	Unfulfilment of the Supply: Party A shall endeavor to make its supply of the Product satisfy Party B’s sales demand, and the yearly benchmark supply volume shall not be
less than the benchmark sales volume. In case Party A fails to fulfill the yearly supply volume, Party A shall pay RMB 0.5 for each box unsupplied within the yearly benchmark supply volume as a penalty in the next year. 

  

	18.4	Compensation for Losses (Party A): In case Party A violates relevant provisions of Article 2 under this Agreement or unilaterally stop the performance of this Agreement,
Party A shall pay damages to Party B. The damages shall be equal to the amount that benchmark sales volume multiply 20% of the tax-inclusive settlement price and plus Party B’s market development expenses, advertisement costs and the marketing
expenses. 

  

	18.5	Compensation for Losses (Party B): In case Party B violates relevant provisions of Article 2 under this Agreement or unilaterally stop the performance of this Agreement,
Party B shall compensate Party A for losses it suffers therefrom. 

  

	18.6	Rewards: In case the yearly sales volume reaches 48000 pieces, Party A shall reward 2760 pieces to Party B. In the yearly sales volume exceeds 50760 pieces, Party A shall
reward 15% of the excess to Party B. 

 Article 19 Settlement of Disputes 
  

	19.1	Negotiation: Any and all disputes arising from the performance of this Agreement or in connection with this Agreement shall be settled by parties hereto through friendly
negotiation. 

  

	19.2	Litigation and Conciliation: In case parties hereto fail to reach agreement through negotiation, either party may be bring a litigation against the other party, and if
possible, said litigation shall be settled through conciliation under the direction of the court. 

 Article 20 Notice 
  

	20.1	Notice Mode: Any and all notices, requests or other communications in connection with this Agreement shall be in writing, by letter, telex, fax or email.

  

	20.2	Service: In case relevant notices, requests or other communications has already been sent to the party due to receive relevant notices, requests or communication at its
address, relevant notices, requests or other communications shall be deemed as having being received by the party within reasonable time period. 

  

	20.3	Information: In case either party changes its name, legal representative, address, telephone number or other matters that it should inform the other party, such party shall
inform the other party within 5 working days as from the date when such change happens. 

 Article 21 Effectiveness of This Agreement and Others 
  

	 21.1
	 Effectiveness of This Agreement: This agreement shall go into effect as from the date duly authorized
representatives of parties hereto sign and stamp this Agreement, and parties hereto shall be bound by this Agreement. This Agreement shall be formally performed from January 1st, 2007. 

  

	21.2	This Agreement is determined by both parties’ current management officers through negotiation. In case a material change happens to either party’s management officers, the
exclusive sales price and the sales volume shall be otherwise determined. 

  

	21.3	Unmentioned Matters: Any supplements or amendment on matters unmentioned in this Agreement shall not be effective unless made in writing and signed by both parties’ duly
authorized representatives. 

  

	21.4	Entire Agreement: This Agreement constitutes the entire agreement and understanding of parties hereto concerning the subject matter of this Agreement, and supersede any and
all memorandums, statements, agreements, annexes or supplementary agreements, guarantees concerning the subject matter of this Agreement, whether written or oral, unless otherwise expressly provided by this Agreement. 

  

	21.5	Copies: This Agreement and its annexes shall be made in four copies, and Party A and Party B shall each keep two copies. 

 Party A: China Pharmaceutical University Pharmaceutical Company 
 Signature: 
 Date 
 Stamp 
 Party B: Jiangsu Simcere Pharmaceutical Co.,Ltd 
 Signature:

 Date 
 Stamp

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]