Unassociated Document


    Exhibit
10.20

    ENTRUSTMENT
AGREEMENT

    


    


    THIS
ENTRUSTMENT AGREEMENT (this “Agreement”) is made on May 17, 2010 by and between
Mr. LIU, Yongxin (P.R.C. ID No. 000000000000000000),
Mr. LIU, Yongkui (P.R.C. ID No. 000000000000000000)
(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

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	
                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;

              


      

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	
                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.

              


      

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      
        	
                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.

              


      

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	
                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.

              


      

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      
        	
                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.

              


      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      
        	
                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.

              


      

    

    


    


    


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        7

        
          

        

      

      
        
        

      

    

     

    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

    __________________________________

    


    


    


    
      
        
        

      

      
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