Exhibit 10.4
 
CHINA YONGXIN PHARMACEUTICALS INC.
 
2010 EQUITY INCENTIVE PLAN
 
NOTICE OF GRANT OF RESTRICTED STOCK
 
Unless otherwise defined herein, the terms defined in the 2010 Equity Incentive
Plan (the “Plan”) will have the same defined meanings in this Notice of Grant of
Restricted Stock (the “Notice of Grant”) and Terms and Conditions of Restricted
Stock Grant, attached hereto as Exhibit A (together, the “Award Agreement”).
 
Participant:
 
Address:
 
Participant has been granted the right to receive an Award of Restricted Stock,
subject to the terms and conditions of the Plan and this Award Agreement, as
follows:
 
Grant Number
 
Date of Grant
 
Vesting Commencement Date
 
Number of Shares of Restricted Stock (the “Shares”)
 
 [Exercise Price Per Share $]
 
Term/Expiration Date
 
Vesting Schedule:
 
Subject to any acceleration provisions contained in the Plan or set forth below,
the Restricted Stock shall vest and the Company’s right to repurchase the
Restricted Stock shall lapse in accordance with the following schedule:
 
 [Insert Vesting Schedule Here]
 
 [PARTICIPANT MUST PURCHASE THE SHARES BEFORE THE EXPIRATION DATE OR THE
RESTRICTED STOCK AWARD WILL TERMINATE AND PARTICIPANT WILL HAVE NO FURTHER RIGHT
TO PURCHASE THE SHARES.]
 
 
 

--------------------------------------------------------------------------------

 
 
By Participant’s signature and the signature of the Company’s representative
below, Participant and the Company agree that this Award is granted under and
governed by the terms and conditions of this Award Agreement and the Plan, which
is made a part of this document.

 
PARTICIPANT
 
______________________________
 
Signature
 
 
 
______________________________
 
Print Name
CHINA YONGXIN PHARMACEUTICALS  INC.
 
__________________________________
 
By
 
 
 
__________________________________
 
Title

 
 
2

--------------------------------------------------------------------------------

 
 
APPENDIX A
 
TERMS AND CONDITIONS OF RESTRICTED STOCK GRANT
 
1.                                       [Purchase of Stock.  The Company hereby
agrees to sell to Participant and Participant hereby agrees to purchase the
number of shares (the “Shares”) of the Company’s Common Stock (the “Restricted
Stock”), at the per Share purchase price and as otherwise described in the
Notice of Grant.  The purchase price for the Restricted Stock, if any, may be
paid by delivery to the Company at the time of execution of this Award Agreement
of cash, a check, or some combination thereof, together with any applicable
withholding taxes.
 
OR
 
Grant.  The Company hereby grants to Participant under the Plan for past
services and as a separate incentive in connection with his or her services and
not in lieu of any salary or other compensation for his or her services, an
Award of Shares of Restricted Stock, subject to all of the terms and conditions
in this Award Agreement and the Plan.]
 
2.                                       Escrow of Shares.
 
 (a)           All Shares of Restricted Stock will, upon execution of this Award
Agreement, be delivered and deposited with an escrow holder designated by the
Company (the “Escrow Holder”).  The Shares of Restricted Stock will be held by
the Escrow Holder until such time as the Shares of Restricted Stock vest or the
date Participant ceases to be an employee, director or consultant of the Company
(or the parent or subsidiary employing or retaining Participant) (“Service
Provider”).
 
 (b)           The Escrow Holder will not be liable for any act it may do or
omit to do with respect to holding the Shares of Restricted Stock in escrow
while acting in good faith and in the exercise of its judgment.
 
 (c)           Upon Participant’s termination as a Service Provider for any
reason, the Escrow Holder, upon receipt of written notice of such termination,
will take all steps necessary to accomplish the transfer of the unvested Shares
of Restricted Stock to the Company.  Participant hereby appoints the Escrow
Holder with full power of substitution, as Participant’s true and lawful
attorney-in-fact with irrevocable power and authority in the name and on behalf
of Participant to take any action and execute all documents and instruments,
including, without limitation, stock powers which may be necessary to transfer
the certificate or certificates evidencing such unvested Shares of Restricted
Stock to the Company upon such termination.
 
 (d)           The Escrow Holder will take all steps necessary to accomplish the
transfer of Shares of Restricted Stock to Participant after they vest following
Participant’s request that the Escrow Holder do so.
 
 
3

--------------------------------------------------------------------------------

 
 
 (e)           Subject to the terms hereof, Participant will have all the rights
of a shareholder with respect to the Shares while they are held in escrow,
including without limitation, the right to vote the Shares and to receive any
cash dividends declared thereon.
 
 (f)            In the event of any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares, the Shares of Restricted Stock
will be increased, reduced or otherwise changed, and by virtue of any such
change Participant will in his or her capacity as owner of unvested Shares of
Restricted Stock be entitled to new or additional or different shares of stock,
cash or securities (other than rights or warrants to purchase securities); such
new or additional or different shares, cash or securities will thereupon be
considered to be unvested Shares of Restricted Stock and will be subject to all
of the conditions and restrictions which were applicable to the unvested Shares
of Restricted Stock pursuant to this Award Agreement.  If Participant receives
rights or warrants with respect to any unvested Shares of Restricted Stock, such
rights or warrants may be held or exercised by Participant, provided that until
such exercise any such rights or warrants and after such exercise any shares or
other securities acquired by the exercise of such rights or warrants will be
considered to be unvested Shares of Restricted Stock and will be subject to all
of the conditions and restrictions which were applicable to the unvested Shares
of Restricted Stock pursuant to this Award Agreement.  The Committee in its
absolute discretion at any time may accelerate the vesting of all or any portion
of such new or additional shares of stock, cash or securities, rights or
warrants to purchase securities or shares or other securities acquired by the
exercise of such rights or warrants.
 
(g)           The Company may instruct the transfer agent for its Common Stock
to place a legend on the certificates representing the Restricted Stock or
otherwise note its records as to the restrictions on transfer set forth in this
Award Agreement.
 
3.                                       Vesting Schedule/Period of
Restriction.  Except as provided in Section 4, and subject to Section 5, the
Shares of Restricted Stock awarded by this Award Agreement will vest in
accordance with the vesting provisions set forth in the Notice of Grant.  Shares
of Restricted Stock scheduled to vest on a certain date or upon the occurrence
of a certain condition will not vest in Participant in accordance with any of
the provisions of this Award Agreement, unless Participant will have been
continuously an employee, director, consultant or advisor from the date of grant
until the date such vesting occurs.
 
4.                                       Committee Discretion.  The Committee,
in its discretion, may accelerate the vesting of the balance, or some lesser
portion of the balance, of the unvested Restricted Stock at any time, subject to
the terms of the Plan.  If so accelerated, such Restricted Stock will be
considered as having vested as of the date specified by the Committee.
 
 
4

--------------------------------------------------------------------------------

 
 
5.                                       Forfeiture.  Notwithstanding any
contrary provision of this Award Agreement, the balance of the Shares of
Restricted Stock that have not vested at the time of Participant’s termination
as an employee, director, consultant or advisor for any reason will be forfeited
and automatically transferred to and reacquired by the Company at no cost to the
Company upon the date of such termination.  Participant will not be entitled to
a refund of the price paid for the Shares of Restricted Stock, if any, returned
to the Company pursuant to this Section 5.  Participant hereby appoints the
Escrow Agent with full power of substitution, as Participant’s true and lawful
attorney-in-fact with irrevocable power and authority in the name and on behalf
of Participant to take any action and execute all documents and instruments,
including, without limitation, stock powers which may be necessary to transfer
the certificate or certificates evidencing such unvested Shares to the Company
upon such termination of service.
 
6.                                       Death of Participant.  Any distribution
or delivery to be made to Participant under this Award Agreement will, if
Participant is then deceased, be made to the administrator or executor of
Participant’s estate.  Any such administrator or executor must furnish the
Company with (a) written notice of his or her status as transferee, and (b)
evidence satisfactory to the Company to establish the validity of the transfer
and compliance with any applicable laws pertaining to said transfer.
 
7.                                       Withholding of Taxes.  Notwithstanding
any contrary provision of this Award Agreement, no certificate representing the
Shares of Restricted Stock may be released from the escrow established pursuant
to Section 2, unless and until satisfactory arrangements (as determined by the
Committee) will have been made by Participant with respect to the payment of
income and employment taxes which the Company determines must be withheld with
respect to such Shares.  The Committee, in its sole discretion and pursuant to
such procedures as it may specify from time to time, may permit Participant to
satisfy such tax withholding obligation, in whole or in part (without
limitation) by (a) paying cash, (b) electing to have the Company withhold
otherwise deliverable Shares having a Fair Market Value (as defined below) equal
to the minimum amount required to be withheld, (c) delivering to the Company
already vested and owned Shares having a Fair Market Value (as defined below)
equal to the amount required to be withheld, or (d) selling a sufficient number
of such Shares otherwise deliverable to Participant through such means as the
Company may determine in its sole discretion (whether through a broker or
otherwise) equal to the amount required to be withheld.  To the extent
determined appropriate by the Company in its discretion, it shall have the right
(but not the obligation) to satisfy any tax withholding obligations by reducing
the number of Shares otherwise deliverable to Participant.  If Participant fails
to make satisfactory arrangements for the payment of any required tax
withholding obligations hereunder at the time any applicable Shares otherwise
are scheduled to vest pursuant to Sections 3 or 4, Participant will permanently
forfeit such Shares and the Shares will be returned to the Company at no cost to
the Company. “Fair Market Value” means, as of any date, the value of Common
Stock as the Committee may determine in good faith by reference to the price of
such stock on any established stock exchange or a national market system on the
day of determination if the Common Stock is so listed on any established stock
exchange or a national market system.  If the Common Stock is not listed on any
established stock exchange or a national market system, the value of the Common
Stock will be determined by the Committee in good faith.
 
 
5

--------------------------------------------------------------------------------

 
 
8.                                       Rights as Stockholder.  Neither
Participant nor any person claiming under or through Participant will have any
of the rights or privileges of a stockholder of the Company in respect of any
Shares deliverable hereunder unless and until certificates representing such
Shares will have been issued, recorded on the records of the Company or its
transfer agents or registrars, and delivered to Participant or the Escrow
Agent.  Except as provided in Section 2(f), after such issuance, recordation and
delivery, Participant will have all the rights of a stockholder of the Company
with respect to voting such Shares and receipt of dividends and distributions on
such Shares.
 
9.                                       No Guarantee of Continued
Service.  PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES OF
RESTRICTED STOCK PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS AN EMPLOYEE, DIRECTOR, CONSULTANT OR ADVISOR AT THE WILL OF THE
COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS RESTRICTED STOCK OR ACQUIRING
SHARES HEREUNDER.  PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE, DIRECTOR, CONSULTANT OR ADVISOR FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH
PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY
EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS
AN EMPLOYEE, DIRECTOR, CONSULTANT OR ADVISOR AT ANY TIME, WITH OR WITHOUT CAUSE.
 
 10.                                 Address for Notices.  Any notice to be
given to the Company under the terms of this Award Agreement will be addressed
to the Company at China Yongxin Pharmaceuticals Inc., 927 Canada Court, City of
Industry, California  91748, or at such other address as the Company may
hereafter designate in writing.
 
 11.                                 Grant is Not Transferable.  Except to the
limited extent provided in Section 6 above, the unvested Shares subject to this
grant and the rights and privileges conferred hereby will not be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and will not be subject to sale under execution, attachment or
similar process.  Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of any unvested Shares of Restricted Stock subject to this
grant, or any right or privilege conferred hereby, or upon any attempted sale
under any execution, attachment or similar process, this grant and the rights
and privileges conferred hereby immediately will become null and void.
 
 12.                                 Binding Agreement.  Subject to the
limitation on the transferability of this grant contained herein, this Award
Agreement will be binding upon and inure to the benefit of the heirs, legatees,
legal representatives, successors and assigns of the parties hereto.
 
 13.                                 Additional Conditions to Release from
Escrow.  The Company will not be required to issue any certificate or
certificates for Shares hereunder or release such Shares from the escrow
established pursuant to Section 2 prior to fulfillment of all the following
conditions: (a) the admission of such Shares to listing on all stock exchanges
on which such class of stock is then listed; (b) the completion of any
registration or other qualification of such Shares under any state or federal
law or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, which the Committee will,
in its absolute discretion, deem necessary or advisable; (c) the obtaining of
any approval or other clearance from any state or federal governmental agency,
which the Committee will, in its absolute discretion, determine to be necessary
or advisable; and (d) the lapse of such reasonable period of time following the
date of grant of the Restricted Stock as the Committee may establish from time
to time for reasons of administrative convenience.
 
 
6

--------------------------------------------------------------------------------

 
 
 14.                                 Plan Governs.  This Award Agreement is
subject to all terms and provisions of the Plan.  In the event of a conflict
between one or more provisions of this Award Agreement and one or more
provisions of the Plan, the provisions of the Plan will govern.  Capitalized
terms used and not defined in this Award Agreement will have the meaning set
forth in the Plan.
 
 15.                                 Committee Authority.  The Committee will
have the power to interpret the Plan and this Award Agreement and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules (including, but
not limited to, the determination of whether or not any Shares of Restricted
Stock have vested).  All actions taken and all interpretations and
determinations made by the
 
The Committee in good faith will be final and binding upon Participant, the
Company and all other interested persons.  No individual serving as a member of
the Committee (either serving alone or with other individuals) will be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or this Award Agreement.
 
 16.                                 Electronic Delivery.  The Company may, in
its sole discretion, decide to deliver any documents related to Restricted Stock
awarded under the Plan or future Restricted Stock that may be awarded under the
Plan by electronic means or request Participant’s consent to participate in the
Plan by electronic means.  Participant hereby consents to receive such documents
by electronic delivery and agrees to participate in the Plan through any on-line
or electronic system established and maintained by the Company or another third
party designated by the Company.
 
 17.                                 Captions.  Captions provided herein are for
convenience only and are not to serve as a basis for interpretation or
construction of this Award Agreement.
 
 18.                                 Agreement Severable.  In the event that any
provision in this Award Agreement will be held invalid or unenforceable, such
provision will be severable from, and such invalidity or unenforceability will
not be construed to have any effect on, the remaining provisions of this Award
Agreement.
 
 19.                                 Modifications to the Award Agreement.  This
Award Agreement constitutes the entire understanding of the parties on the
subjects covered.  Participant expressly warrants that he or she is not
accepting this Award Agreement in reliance on any promises, representations, or
inducements other than those contained herein.  Modifications to this Award
Agreement or the Plan can be made only in an express written contract executed
by a duly authorized officer of the Company.  Notwithstanding anything to the
contrary in the Plan or this Award Agreement, the Company reserves the right to
revise this Award Agreement as it deems necessary or advisable, in its sole
discretion and without the consent of Participant, to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) or to otherwise
avoid imposition of any additional tax or income recognition under Section 409A
of the Code in connection to this Award of Restricted Stock.
 
 
7

--------------------------------------------------------------------------------

 
 
 20.                                 Amendment, Suspension or Termination of the
Plan.  By accepting this Award, Participant expressly warrants that he or she
has received a Restricted Stock Award under the Plan, and has received, read and
understood a description of the Plan.  Participant understands that the Plan is
discretionary in nature and may be amended, suspended or terminated by the
Company at any time.
 
 Notice of Governing Law.  This Restricted Stock Award will be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflict of laws.  For purposes of litigating any dispute that
arises under this Award of Restricted Stock or this Award Agreement, the parties
hereby submit to and consent to the jurisdiction of the State of Delaware, and
agree that such litigation shall be conducted in the courts of the State of
Delaware, or the federal courts for the District of Delaware, and no other
courts, where this Award of Restricted Stock is made and/or to be performed.
 
 
8

--------------------------------------------------------------------------------