Unassociated Document


    Exhibit
10.26

    ENTRUSTMENT
AGREEMENT

       


    THIS
ENTRUSTMENT AGREEMENT (this “Agreement”) is made on May 17, 2010 by and between
Mr. LIU, Yongxin, Mr. LIU, Yongkui (collectively, “Party A”), and Changchun
Yongxin Dirui Medical Co., Ltd. (“Party B”).

    


    WHEREAS,
Party A and Party B are entering into this Agreement as a part of a
restructuring of the equity ownership of Jilin Province Yongxin Chain Drugstore
Ltd., a PRC Company (the “Company”);

    


    WHEREAS,
the plan of restructuring specifically necessitates that at least a majority of
the equity interest of the Company be held of record by PRC
nationals;

    


    WHEREAS,
Party B, previously the holder of 100% of the outstanding capital stock of the
Company, has agreed pursuant to certain Equity Transfer Agreements dated May 17,
2010 (“Equity Transfer Agreements”), to cause a reassignment and transfer to
Party A (the individuals of which are each PRC nationals) of equity interests in
the Company amounting to 51% of the outstanding share capital of the Company
(“Majority Interest”);

    


    WHEREAS,
after giving effect to the Equity Transfer Agreements, Party A will be the
holder of record of a 51% Majority Interest of the Company, and Party B will be
the holder of record of a 49% equity interest in the Company;

     

    WHEREAS,
as a condition to the transfer of equity from Party B to Party A under the
Equity Transfer Agreements, the parties are entering into this Agreement in
order to provide for assignment to Party B of all of the substantive rights held
by Party A as a holder of the Majority Interest other than record owner status,
and to entrust Party B to exercise all shareholder rights of the Company held by
Party A, at the sole discretion of Party B.

    


    NOW,
THEREFORE, in consideration of the foregoing recitals, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

    


    
      	
              1.

            	
              Entrustment,
      Appointment and Power of Attorney.  Party A hereby
      authorizes and appoints Party B as its exclusive agent and
      attorney-in-fact for the maximum period of time permitted by law and the
      Articles of Association, with respect to all of Party A’s shareholder
      rights, including but not limited to voting rights associated with the
      Majority Interest.  Accordingly, in
    addition:

            


    

    


    
      	
            	
              1.1

            	
              Party B shall exercise such
      rights in accordance with and within the parameters of the laws of the PRC
      and the Articles of Association of the Company, and Party B shall have the
      right to act at Party B’s sole discretion without any consent or
      authorization of Party A.

            


    

    


    
      	
            	
              1.2

            	
              Party B may establish and amend
      rules to govern how Party B shall exercise the powers entrusted by Party A
      herein, including, but not limited to, the number or percentage of
      directors of the Company which shall be required to authorize the exercise
      of the voting rights granted by the Party A, and Party A shall act
      strictly in accordance with such
rules.

            


    

    


    
      	
              2.

            	
              Discretionary
      Authority.  Party A hereby
      grants Party B irrevocable authorization to exercise rights otherwise held
      by Party A as the holder of a Majority Interest, to operate and manage the
      Company the term of this Agreement.  For the above
      purpose:

            


    

    


    
      	
            	
              2.1

            	
              Party B shall designate and
      appoint on behalf of Party A the Company’s directors, legal
      representative, General Manager, Chief Financial Officer, and other senior
      officers. If any member of such senior management leaves or is dismissed
      by Party B on behalf of Party A, in each instance, Party B shall have the
      right, in its sole discretion, to designate and appoint the Company’s
      successor directors, legal representative, General Manager, Chief
      Financial Officer, and other senior officers, as
      applicable.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
            	
              2.2

            	
              Party A hereby agrees to accept
      and comply with all corporate policies stipulated by Party B in connection
      with the Company’s daily operations, financial management and the
      employment and dismissal of the Company’s employees at Party B’ sole
      discretion.

            


    

    


    
      	
            	
              2.3

            	
              Without the prior written consent
      of Party B, neither Party A nor the Company shall conduct any transaction
      which may materially affect the business, assets, obligations, rights or
      operations of the Company.

            


    

    


    
      	
              3.

            	
              Negative
      Covenants.  Party A agrees that
      in its capacity as record holder of a Majority Interest in the Company, it
      shall not and shall not cause the Company to, take any action or agree on
      behalf of the Company to take any action to do any of the following,
      without the express written direction and consent of Party
      B:

            


    

    


    
      	
            	
              3.1

            	
              issue new shares, equity
      interests, registered capital, ownership interests, or equity-linked
      securities, or any options or warrants that are directly convertible into,
      or exercisable or exchangeable for, shares, equity, registered capital,
      ownership interest, or equity-linked securities of the Company, other
      similar equivalent
arrangements;

            


    

    


    
      	
            	
              3.2

            	
              alter the shareholding structure
      of the Company;

            


    

    


    
      	
            	
              3.3

            	
              cancel, redeem, forefeit or
      otherwise alter the shares of the Company that Party A
      holds;

            


    

    


    
      	
            	
              3.4

            	
              amend the register of members or
      the memorandum and Articles of Association of the
      Company;

            


    

    


    
      	
            	
              3.5

            	
              liquidate or wind up the
      Company;

            


    

    


    
      	
            	
              3.6

            	
              act or omit to act in such a way
      that would affect the Majority Interest held by Party
      A;

            


    

    


    
      	
            	
              3.7

            	
              transfer or dispose of any assets
      or liabilities of the
Company;

            


    

    


    
      	
            	
              3.8

            	
              incur any obligations whatsoever,
      including any financial obligations, or borrow any money or assets from
      any bank or third party;

            


    

    


    
      	
            	
              3.9

            	
              appoint or remove any officer or
      manager of the Company;

            


    

    


    
      	
            	
              3.10

            	
              acquire property from any
      person;

            


    

    


    
      	
            	
              3.11

            	
              enter into any contract with any
      third party;

            


    

    


    
      	
            	
              3.12

            	
              invest funds or assets held by
      the Company; or

            


    

    


    
      	
            	
              3.13

            	
              take any action that would
      circumvent, oppose or interfere with the exercise of Party B’s
      discretionary rights under this
  Agreement.

            


    

    


    
      	
              4.

            	
              Additional
      Covenants.  During the term of
      this agreement, Party A hereby further
  agrees:

            


    

    


    
      	
            	
              4.1

            	
              to refrain from exercising,
      asserting, or claiming any of the rights by virtue of its status as a
      shareholder of the Company and a record holder of the Majority
      Interest;

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
            	
              4.2

            	
              that such rights have been
      irrevocably granted to and vested in Party B under this Agreement, and
      acknowledges the same;

            


    

    


    
      	
            	
              4.3

            	
              to execute and deliver to any
      party any document, agreement, instrument, notice, letter or other item as
      requested by Party B in connection with Party B’s exercise of discretion
      and its rights hereunder;

            


    

    


    
      	
            	
              4.4

            	
              to strictly comply with Party B’s
      instructions in order for Party B to exercise its rights hereunder;
      and

            


    

    


    
      	
            	
              4.5

            	
              to take any action as reasonably
      necessary, whether or not directed by Party B, in order to realize the
      intent of the Parties under this
  Agreement.

            


    

     

    
      	
              5.

            	
              Assignment
      of Economic Rights.  All rights to
      profits, income, distributions, dividends, compensation, payments, assets
      property, or other economic benefits held by Party A as a record holder of
      the Majority Interest, now held or received or entitled to be received in
      the future, are in their entirety hereby irrevocably, absolutely,
      continuously and unconditionally transferred and assigned to Party
      B.  Party A hereby agrees to, immediately upon receipt of any
      such profits, income, distributions, dividends, compensation, payments,
      assets property, or economic benefit received from the Company by virtue
      of it being a shareholder, cause the immediate transfer and assignment
      thereof to Party B.

            


    

    


    
      	
              6.

            	
              Pledge.  Party A hereby
      pledges the Majority Interest to Party B as
  follows:

            


    

    


    
      	
            	
              6.1

            	
              Party A hereby pledges the
      Majority Interest to Party B in order to secure performance of and
      compliance by Party A with this Agreement (the
      “Pledge”).  Pursuant thereto, Party B shall have priority in
      receiving payments or the proceeds from the auction or sale of the
      Majority Interest. The Majority Interest is also referred to in this
      Agreement as the “Pledged
Collateral”.

            


    

    


    
      	
            	
              6.2

            	
              The Pledge shall take effect
      immediately upon execution and delivery of this Agreement, and shall be in
      effect until the later of the date that this Agreement is terminated, or
      the date that Party A is no longer the record holder of any equity
      interest in the Company.

            


    

    


    
      	
            	
              6.3

            	
              During the term of this
      Agreement, Party B shall be entitled to collect any and all profits,
      income, distributions, dividends, compensation, payments, assets property,
      or economic benefit received from the Company in connection with the
      Pledged Collateral.

            


    

    


    
      	
            	
              6.4

            	
              The Pledge shall be recorded in
      the Company’s Register of Shareholders, and shall, upon the request of
      Party B, be registered and amended from time to time (if necessary) in
      accordance with applicable law with the Administration for Industry and
      Commerce, which recording shall remain continuously effective for the
      maximum period of time permitted by
law.

            


    

    


    
      	
            	
              6.5

            	
              Party A agrees that Party B’s
      right to the Pledge pursuant to this Agreement shall not be suspended or
      inhibited by any legal proceedings initiated by Party A, jointly or
      separately, or by any successor of or any person authorized by Party
      A.

            


    

    


    
      	
            	
              6.6

            	
              Party A represents, warrants and
      agree that in order to protect and perfect the Pledge, Party A shall
      execute in good faith and cause other parties who have interests in the
      Pledged Collateral to execute any and all title certificates, contracts,
      and perform actions and cause other parties who have interests to take
      action, as required by Party B upon Party B’s
    request.

            


    

    


    
      	
            	
              6.7

            	
              The occurrence of any one of the
      following events shall be regarded as an “Event of
      Default”:

            


    

    


    
      	
               
      

            	
              6.7.1

            	
              This Agreement or any material
      provision is deemed illegal, invalid or unenforceable by a governing
      authority in the PRC;

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
               
      

            	
              6.7.2

            	
              Party A materially breaches any
      of its obligations under this
Agreement;

            


    

    


    
      	
               
      

            	
              6.7.3

            	
              Party A attempts to transfer,
      pledge, hypothecate or sell the Majority Interest or any part thereof;
      or

            


    

    


    
      	
               
      

            	
              6.7.4

            	
              A change in PRC law occurs which,
      in the opinion of Party B and its counsel, no longer requires a majority
      interest of the Company to be held by a PRC
    national.

            


    

    


    
      	
            	
              6.8

            	
              Upon an Event of Default, or
      during the occurrence of an Event of Default, Party B may exercise the
      following rights:

            


    

    


    
      	
               
      

            	
              6.8.1

            	
              Seize control and possession (as
      applicable) of the Pledged Collateral and/or its
      proceeds;

            


    

    


    
      	
               
      

            	
              6.8.2

            	
              Cause the Pledged Collateral to
      be transferred to an appointed
nominee;

            


    

    


    
      	
               
      

            	
              6.8.3

            	
              Take action to enforce the
      Agreement or any provision thereof against Party
  A;

            


    

    


    
      	
               
      

            	
              6.8.4

            	
              Foreclose or otherwise enforce
      Party B’s rights as a secured party under this Agreement, in any manner
      provided by law;

            


    

    


    
      	
               
      

            	
              6.8.5

            	
              Terminate this
      Agreement;

            


    

    


    
      	
               
      

            	
              6.8.6

            	
              Exercise any all rights as a
      beneficial and legal owner of the Pledged Collateral, including, without
      limitation, the transfer and exercise of voting and any other rights to
      the Pledged Collateral; or

            


    

    


    
      	
               
      

            	
              6.8.7

            	
              Exercise any and all rights and
      remedies of a secured party under applicable
  laws.

            


    

     

    
      	
              7.

            	
              Option
      Grant.  Party B hereby
      collectively and irrevocably grants to Party B or a designee of Party B
      (the “Designee”) an option to purchase at any time, to the extent
      permitted under PRC Law, all or a portion of the Majority Interest in
      accordance with such procedures as determined by Party B, at a price equal
      to the paid-in price paid by Party A in connection with Party A’s
      acquisition of the Majority Interest (the “Option”).   Except as
      provided in this paragraph, no other option or similar right shall be
      granted to any party other than to Party B and/or a Designee of Party
      B.   As used herein, designee may be an individual person, a
      corporation, a joint venture, a partnership, an enterprise, a trust or an
      unincorporated organization. According with the requirements of applicable
      PRC laws and regulations, Party B and/or its Designee may exercise the
      Option at any time by issuing a written notice (the “Notice”) to Party A
      specifying the amount of the Majority Interest to be purchased from Party
      A and the manner of purchase.  Upon each exercise of the Option
      under this Agreement: (a) Party A shall hold or cause to be held a meeting
      of shareholders of the Company, or take any such action by written consent
      (or otherwise), as necessary in order to adopt such resolutions required
      to approve the transfer of the relevant Majority Interest or portion
      thereof (such Majority Interest hereinafter the “Purchased Equity
      Interest”) to Party B and/or its Designee, (b) the relevant Parties shall
      execute, free of any security interest, all other requisite contracts,
      agreements or documents, obtain all requisite approval and consent of the
      government, conduct all necessary actions, transfer the valid ownership of
      the Purchased Equity Interest to Party B and/or its Designee, and cause
      Party B and/or its Designee to be the registered owner of the Purchased
      Equity Interest.  As used herein, “security interest” means any
      mortgage, pledge, the right or interest of the third party, any purchase
      right of equity interest, right of acquisition, right of first refusal,
      right of set-off, ownership detainment or other security arrangements;
      however, such term shall not include the security interest created
      hereunder.

            


    

    


    
      	
              8.

            	
              Non-Circumvention.  Both Parties agree
      not to circumvent the relationship and transaction contemplated under this
      Agreement.  Both Party A and Party B intend that this
      arrangement shall cause all control and ownership interests associated
      with the Majority Interest to be permanently vested in Party
      B.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	
              Transfers
      Void Ab Initio.  Any attempted
      transfer of the Majority Interest or any portion thereof by Party A in
      violation of the terms of this Agreement shall be void ab
      initio.

            


    

    


    
      	
              10.

            	
              Severability.  If any term or other
      provision of this Agreement is declared invalid or otherwise, illegal or
      incapable of being enforced by any rule of law or public policy, all other
      conditions and provisions of this Agreement shall nevertheless remain in
      full force and effect so long as the economic or legal substance of the
      transactions contemplated hereby is not affected in any manner materially
      adverse to any party. Upon such determination that any such term or other
      provision shall expire, be declared invalid, or otherwise be held or
      declared illegal or incapable of being enforced, the parties hereto shall
      corporate in good faith to modify or renew this Agreement, or enter into a
      new agreement or arrangement so as to effect the original intent of the
      parties as closely as possible in an acceptable manner to the end that the
      transactions, rights and responsibilities contemplated hereby are
      fulfilled.

            


    

    


    
      	
              11.

            	
              Term
      and Termination.  This Agreement shall
      take effect on the date of its execution by Parties and shall remain in
      full force until and unless terminated by both Parties in
      writing.

            


    

    


    
      	
              12.

            	
              Governing
      Law; Disputes.  The execution,
      validity, interpretation and performance of this Agreement and the
      resolution of disputes under this Agreement shall be governed by the laws
      of the PRC.  The parties shall strive to settle any dispute
      arising from the interpretation or performance in connection with this
      Agreement through friendly consultation.  In case no settlement
      can be reached through consultation after such dispute is raised, either
      party may submit such matter to a court with appropriate
      jurisdiction.

            


    

    


    
      	
              13.

            	
              Assignment.  Neither Party shall
      assign its rights and obligations under this Agreement to any third party
      without the prior written consent of Party
  B.

            


    

    


    
      	
              14.

            	
              Entire
      Agreement.  The Parties agree
      that this Agreement constitutes the entire agreement of the Parties upon
      its effectiveness and supersedes all prior oral and/or written agreements
      and understandings relating to this
  Agreement.

            


    

    


    
      	
              15.

            	
              Counterparts.  This Agreement shall
      be executed in two counterparts and each party will hold one. This
      agreement takes into effect after the execution of each
      party.

            


    

    


    [SIGNATURE
PAGE FOLLOWS]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF this Agreement is duly executed by each Party.

    


    
      
        
          	
                  Party A:

                
	 
      


        

      

    

    
      
        
          	 
      	      
                  /s/
      Yongxin Liu

                
	 
      	
                  Name:
      LIU, Yongxin

                
	 
      	
                  (P.R.C.
      ID No.
22010219680412265X)

                


        

      

    

     

    
      
      

    

    
      
        
          
            	 
      	      
                    /s/
      Yongkui Liu

                  
	 
      	
                    Name:
      LIU, Yongkui

                  
	 
      	
                    (P.R.C.
      ID No.
220102197004182616)

                  


          

        

      

    

    


    
      
        
          
            
              	
                      Party B:

                    
	 
      
	
                      Changchun
      Yongxin Dirui Medical Co., Ltd.

                    
	 
      
	
                      /s/
      Yongxin Liu