LEAKOUT AGREEMENT

This AGREEMENT (the “Agreement”) is made as of the ___ day of January 2010, by
the undersigned (“Holder”), in connection with his, her or its ownership of
shares of China Yongxin Pharmaceuticals, Inc., a Delaware corporation (the
“Company”).

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which consideration are hereby acknowledged, Holder agrees as follows:

1.           Background.

a.           Holder is the beneficial owner of __________ shares of the Common
Stock, $0.001 par value, of the Company (“Common Stock”).

b.           Holder acknowledges that the Company has entered into or will enter
into an equity-linked financing in a private placement with one of more
accredited investors under a subscription agreement dated on or around the date
of this Agreement, in order to raise capital for its operations (“Offering”)
involving the issuance of convertible notes (“Notes”).

c.           Holder understands that, as a condition to proceeding with the
Offering, the investors in the Offering have required, and the Company has
agreed to obtain on behalf of the investors, an agreement from the Holder to
limit certain sales of securities of the Company for as long as the Notes are
outstanding (“Restriction Period”) except as described below.

2.           Sale Restriction.

a.           Rule 144.  Holder agrees to comply at all times with the
requirements of Rule 144 promulgated under the Securities Act of 1933.

b.           Restriction on Sale.  In addition to the applicable restrictions
under Rule 144 as described in Section 2(a) above, Holder hereby agrees that
during the Restriction Period:

(i)           for every share sold at a sale price of over $0.50 per share (as
appropriately adjusted for stock splits, recapitalizations and similar events),
the Holder will not be subject to any restrictions in addition to Section 2(a);
and

(ii)          for every share sold below a sale price of $0.50 per share (as
appropriately adjusted for stock splits, recapitalizations and similar events)
during the Restriction Period, notwithstanding the foregoing the Holder shall be
subject to an aggregate maximum limit on the sale of such shares of 1.00% of the
total number of shares of outstanding Common Stock of the Company during any
ninety-day period, calculated at the commencement of such ninety day period;
this paragraph 2(b)(ii) shall not apply in connection with an offer made to all
stockholders of the Company in connection with merger, consolidation or similar
transaction involving the Company.

At the first closing of the Offering, the Company will advise the Holder of the
number of shares of Common Stock which it believes the Holder may sell under
Rule 144 and under 2(a) above, at such time.

At the first closing of the Offering, the Company will advise the Holder of the
number of shares of Common Stock which it believes the Holder may sell pursuant
to Section 2(b)(ii) during the applicable ninety-day period.  On each occasion
where the closing price for the Common Stock is below $0.50 per share, upon
written request the Company will advise the Holder of the number of shares of
Common Stock which it believes the Holder may sell pursuant to Section 2(b)(ii)
during the applicable ninety-day period.

 
1

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

 

c.           Notice of Lapse of Restrictions.  The Company agrees to provide
prompt notice to the Holder in the event that the Notes are repaid or otherwise
discharged.

d.           Loan to Holder.  Provided that the Holder executes and delivers
this Agreement to the Company, and conditioned upon the first closing of the
Offering with minimum gross proceeds of $350,000, the Company agrees to loan the
Holder the amount of $25,000, which amount shall be advanced at the time of
closing, and evidenced by receipt by the Company of an executed promissory note
in the form attached as Exhibit A.

e.           Additional Conditions.  (i) Holder’s acceptance is subject to the
Offering closing on or before January 20, 2010 in the minimum gross amount of
$350,000, and (ii) the Company shall provide at its sole expense a legal opinion
as to what date Holder’s shares are no longer restricted under Rule 144.

f.           Broker.  In connection with the sale of the Common Stock, the
Holder agrees to (a) use and maintain one (1) broker (“Broker”) for the sale of
Common Stock during the Restriction Period, (2) inform such Broker of the sale
restrictions in this Agreement, and (3) the Company at its sole expense shall
provide up to one legal opinion per ninety day period regarding the numbers of
shares of Common Stock that may be sold pursuant to this Agreement.

g.           Sale Information.  Holder agrees to cause its Broker to provide a
copy of each sale ticket evidencing each sale of Common Stock made during the
Restriction Period to the Company and to the collateral agent appointed by the
investors, within five days of such sale, to the following contacts:

(1) 
Collateral Agents, LLC

111 West 57th Street, Suite 1416
New York, NY 10019
Attn: General Counsel
Facsimile: (212) 245-9101

(2) 
China Yongxin Pharmaceuticals, Inc.

927 Canada Court
City of Industry, CA 91748
Attn: Yongxin Liu, CEO
Facsimile: (626) 581-9138

Holder hereby authorizes the Company and Collateral Agent to obtain such sales
information from the Holder’s Broker at any time or from time to time during the
Restriction Period, as well as any related information, and agrees to inform its
Broker of such consent, which may not be revoked during the Restriction Period.

h.           Stop Orders.  Holder further agrees that the Company is authorized
to and the Company agrees to place “stop orders” on its books to prevent any
transfer of shares of Common Stock or other securities of the Company, limited
to the following instances:

(1)  the Holder proposes or attempts to sell a number of shares of Common Stock
in excess of the number of shares permitted pursuant to Section 2(a) as
indicated by the Company pursuant to Section 2(b); or

 
2

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

 

(2) the Holder proposes or attempts to sell a number of shares of Common Stock
in excess of the number of shares permitted pursuant to Section 2(b)(ii) as
indicated by the Company pursuant to Section 2(b).

The Company agrees not to allow to occur any transaction inconsistent with this
Agreement.

i.           Subsequent Issuances.  Any subsequent issuance to and/or
acquisition by Holder of Common Stock or options or instruments convertible into
Common Stock will be subject to the provisions of this Agreement.

3.           Miscellaneous.

a.           At any time, and from time to time, after the signing of this
Agreement Holder will execute such additional instruments and take such action
as may be reasonably requested by the Subscribers to carry out the intent and
purposes of this Agreement, subject to review and approval by Holder’s legal
counsel

b.           This Agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to principles of
conflicts of laws.  Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of California or in the federal courts located in the state
of California.  The prevailing party shall be entitled to recover from the other
party its reasonable attorney's fees and costs.  In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.

c.           All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company, to: China Yongxin
Pharmaceuticals, Inc., 927 Canada Court, City of Industry, CA 91748, Attn:
Yongxin Liu, CEO, facsimile: (626) 581-9138, with a copy to: Richardson & Patel,
LLP, 10900 Wilshire Blvd., Suite 500, Los Angeles, CA 90024, Attn: Nimish Patel,
Esq., facsimile: (310) 208-1154, (ii) if to the Holder, to: the addresses and
fax numbers indicated on the signature page hereto.

d.           The restrictions on transfer described in this Agreement are in
addition to and cumulative with any other restrictions on transfer otherwise
agreed to by the Holder in writing or to which the Holder is subject to by
applicable law.

e.           This Agreement shall be binding upon Holder, its legal
representatives, successors and assigns.

 
3

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

 

f.           This Agreement may be signed and delivered by facsimile,
electronically and such facsimile or electronically signed and delivered
Agreement shall be enforceable.

g.           The Company agrees not to take any action or allow any act to be
taken which would be inconsistent with this Agreement.

[Signature Page Follows]

 
4

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

 

IN WITNESS WHEREOF, and intending to be legally bound hereby, Holder has
executed this Agreement as of the day and year first above written.

 
HOLDER:
         
(Print Name of Holder)
         
(Signature of Holder)
     
Title:
 

 
Address for notices:
                     
Fax:
(
 
)
 

 
COMPANY:
     
CHINA YONGXIN PHARMACEUTICALS, INC.
     
By:
     
Yongxin Liu, CEO

 
5

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