Document:

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                                                                    Exhibit 10.1

                            INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (the "Agreement") is entered into as of
___________ by and between China Nepstar Chain Drugstore Ltd., a Cayman Islands
company (the "Company") and the undersigned, a [director or officer] of the
Company ("Indemnitee").

                                    RECITALS

     1. The Company recognizes that highly competent persons are becoming more
reluctant to serve corporations as directors or in other capacities unless they
are provided with adequate protection through insurance or adequate
indemnification against risks of claims and actions against them arising out of
their services to the corporation.

     2. The Board of Directors of the Company (the "Board") has determined that
the inability to attract and retain highly competent persons to serve the
Company is detrimental to the best interests of the Company and its shareholders
and that it is reasonable and necessary for the Company to provide adequate
protection to such persons against risks of claims and actions against them
arising out of their services to the corporation.

     3. The Company and Indemnitee do not regard the indemnities available under
the Company's current memorandum and articles of association (the "Articles of
Association") as adequate to protect Indemnitee against the risks associated
with his service to the Company.

     4. The Company is willing to indemnify Indemnitee to the fullest extent
permitted by applicable law, and Indemnitee is willing to serve and continue to
serve the Company on the condition that he be so indemnified.

                                    AGREEMENT

     In consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:

I. DEFINITIONS

     The following terms shall have the meanings defined below:

     Disinterested Director means a director of the Company who is not and was
not a party to the Proceeding in respect of which indemnification is sought by
Indemnitee.

     Change in Control shall be deemed to have occurred if, on or after the date
of this Agreement, (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than (a) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company acting in such capacity; (b) a corporation owned
directly or indirectly by the shareholders of the Company in substantially the
same proportions as their ownership of ordinary shares of the Company; or (c)
any current beneficial shareholder or group, as defined by Rule 13d-5 of the
Exchange Act, including the heirs, assigns and successors thereof, of beneficial
ownership, within the meaning of Rule 13d-3 of the Exchange Act, of securities
possessing more than 50% of the total combined voting power of the Company's
outstanding securities; hereafter becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly

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or indirectly, of securities of the Company representing more than 20% of the
total combined voting power represented by the Company's then outstanding
ordinary shares, (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board and any new director
whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
ordinary shares of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
ordinary shares of the surviving entity) at least 80% of the total voting power
represented by the ordinary shares of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of (in one transaction or a
series of related transactions) all or substantially all of the Company's
assets.

     Expenses shall include damages, judgments, fines, penalties, settlements
and costs, attorneys' fees and disbursements and costs of attachment or similar
bond, investigations, liabilities, losses, taxes, any expenses paid or incurred
in connection with investigating, defending, being a witness in, participating
in (including on appeal), or preparing for any of the foregoing in, any
Proceeding, and any taxes, interests, assessments or other charges imposed as a
result of the actual or deemed receipt of any payments under this Agreement.

     Indemnifiable Event means any event or occurrence that takes place either
before or after the execution of this Agreement, related to the fact that
Indemnitee is or was a director or an officer of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other entity,
including services with respect to employee benefit plans, or was a director or
officer of an entity that was a predecessor of the Company or another entity at
the request of such predecessor entity, or related to anything done or not done
by Indemnitee in any such capacity.

     Independent Counsel means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the
past five (5) years has been, retained to represent (i) the Company or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.

     Participant means a person who is a party to, or witness or participant
(including on appeal) in, a Proceeding.

     Proceeding means any threatened, pending, or completed action, suit or
proceeding, or any inquiry, hearing or investigation, whether civil, criminal,
administrative, investigative

                                        2

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or other, including any appeal thereof, in which Indemnitee may be or may have
been involved as a party or otherwise by reason of an Indemnifiable Event,
including, without limitation, any threatened, pending, or completed action,
suit or proceeding by or in the right of the Company.

     Reviewing Party means (A) the Board by a majority vote of a quorum
consisting of Disinterested Directors, or (B) if a quorum of the Board
consisting of Disinterested Directors is not obtainable or, even if obtainable,
said Disinterested Directors so direct, Independent Counsel in a written opinion
to the Board, a copy of which shall be delivered to Indemnitee.

II. AGREEMENT TO INDEMNIFY

     1. General Agreement. In the event Indemnitee was, is, or becomes a
Participant in, or is threatened to be made a Participant in, a Proceeding, the
Company shall indemnify the Indemnitee from and against any and all Expenses
which Indemnitee incurs or becomes obligated to incur in connection with such
Proceeding, to the fullest extent permitted by applicable law.

     2. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for a portion of Expenses,
but not for the total amount of Expenses, the Company shall indemnify the
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

     3. Exclusions. Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification under this Agreement:

          (a) to the extent that payment is actually made to Indemnitee under a
valid, enforceable and collectible insurance policy;

          (b) to the extent that Indemnitee is indemnified and actually paid
other than pursuant to this Agreement;

          (c) in connection with any Proceeding initiated by Indemnitee against
the Company, any director or officer of the Company or any other party, and not
by way of defense, unless (i) the Company has joined in or the Reviewing Party
(as hereinafter defined) has consented to the initiation of such Proceeding; or
(ii) the Proceeding is one to enforce indemnification rights under this
Agreement or any applicable law;

          (d) for a disgorgement of profits made from the purchase and sale by
the Indemnitee of securities pursuant to Section 16(b) of the Exchange Act or
similar provisions of any applicable U.S. state statutory law or common law;

          (e) for expenses that have been finally judicially determined to have
resulted from fraud gross negligence or willful misconduct of the Indemnitee;

                                        3

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          (f) for any judgment, fine or penalty which the Company is prohibited
by applicable law from paying as indemnity;

          (g) arising out of Indemnitee's personal tax matter; or

          (h) arising out of Indemnitee's breach of an employment agreement with
the Company (if any) or any other agreement with the Company or any of its
subsidiaries.

     4. No Employment Rights. Nothing in this Agreement is intended to create in
Indemnitee any right to continued employment with the Company.

     5. Contribution. If the indemnification provided in this Agreement is
unavailable and may not be paid to Indemnitee for any reason other than those
set forth in Section II. 3, then the Company shall contribute to the amount of
Expenses paid in settlement actually and reasonably incurred and paid or payable
by Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and by the Indemnitee on the
other hand from the transaction from which such Proceeding arose, and (ii) the
relative fault of the Company on the one hand and of the Indemnitee on the other
hand in connection with the events which resulted in such Expenses, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one hand and of the Indemnitee on the other hand shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such Expenses, judgments, fines or settlement amounts. The Company
agrees that it would not be just and equitable if contribution pursuant to this
Section II. 5 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.

III. INDEMNIFICATION PROCESS

     1. Notice and Cooperation By Indemnitee. Indemnitee shall give the Company
notice in writing as soon as practicable of any claim made against Indemnitee
for which indemnification will or could be sought under this Agreement. Notice
to the Company shall be given in accordance with Section VI.7 below. In
addition, Indemnitee shall give the Company such information and cooperation as
the Company may reasonably request.

     2. Indemnification Payment.

          (a) Advancement of Expenses. Indemnitee may submit a written request
with reasonable particulars to the Company requesting that the Company advance
to Indemnitee all Expenses that may be reasonably incurred in advance by
Indemnitee in connection with a Proceeding. The Company shall, within ten (10)
business days of receiving such a written request by Indemnitee, advance all
requested Expenses to Indemnitee. Any excess of the advanced Expenses over the
actual Expenses will be repaid to the Company.

          (b) Reimbursement of Expenses. To the extent Indemnitee has not
requested any advanced payment of Expenses from the Company, Indemnitee shall be
entitled to receive reimbursement for the Expenses incurred in connection with a
Proceeding from the Company as soon as practicable after Indemnitee makes a
written request to the Company for reimbursement.

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          (c) Determination by the Reviewing Party. Notwithstanding the
foregoing, (i) the obligations of the Company under Section II.1 shall be
subject to the condition that the Reviewing Party shall not have determined (in
a written opinion, in any case in which the Independent Counsel referred to in
Section III.2(e) hereof is involved) that Indemnitee would not be permitted to
be indemnified under applicable law or the Company's Articles of Association,
and (ii) the obligation of the Company to make an advance payment of Expenses to
Indemnitee pursuant to Section III. 2(a) shall be subject to the condition that,
if, when and to the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under applicable law or the
Company's Articles of Association, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if Indemnitee has
commenced or thereafter commences legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be indemnified
under applicable law, any determination made by the Reviewing Party that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the Company for
any advanced Expenses until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). The Indemnitee's obligation to reimburse the Company for any advanced
Expenses shall be unsecured and no interest shall be charged thereon. If there
has not been a Change in Control, the Reviewing Party shall be selected by the
Board, and if there has been such a Change in Control (other than a Change in
Control which has been approved by a majority of the Company's Board who were
directors immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Counsel referred to in Section III.2(e) hereof.

          (d) Enforcement of Indemnification Rights. If there has been no
determination by the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified in whole or in
part under applicable law, or if Indemnitee has not otherwise been paid in full
within 30 days after a written demand has been received by the Company,
Indemnitee shall have the right to commence litigation in any court having
subject matter jurisdiction thereof and in which venue is proper to recover the
unpaid amount of the demand (an "Enforcement Proceeding") and, if successful in
whole or in part, Indemnitee shall be entitled to be paid any and all Expenses
in connection with such Enforcement Proceeding. The Company hereby consents to
service of process and to appear in any such proceeding.

          (e) Change in Control. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has been approved
by a majority of the Company's Board who were directors immediately prior to
such Change in Control) then, with respect to all matters thereafter arising
concerning the rights of Indemnitees to payments of Expenses under this
Agreement or any other agreement or under the Company's Articles of Association
as now or hereafter in effect, Independent Counsel shall be selected by the
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law, and the Company agrees to
abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.

                                        5

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     3. Assumption of Defense. In the event the Company is obligated under this
Agreement to advance or bear any Expenses for any Proceeding against Indemnitee,
the Company shall be entitled to assume the defense of such Proceeding, with
counsel approved by Indemnitee, upon delivery to Indemnitee of written notice of
its election to do so. After delivery of such notice, approval of such counsel
by Indemnitee in writing and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same Proceeding,
unless (i) the employment of counsel by Indemnitee has been previously
authorized by the Company, (ii) Indemnitee shall have reasonably concluded that,
based on written advice of counsel, there may be a conflict of interest of such
counsel retained by the Company between the Company and Indemnitee in the
conduct of any such defense, or that counsel selected by the Company may not be
adequately representing Indemnitee, or (iii) the Company ceases or terminates
the employment of such counsel with respect to the defense of such Proceeding,
in any of which events the fees and expenses of Indemnitee's counsel shall be at
the expense of the Company. At all times, Indemnitee shall have the right to
employ counsel in any Proceeding at Indemnitee's expense.

     4. Defense to Indemnification, Burden of Proof and Presumptions. It shall
be a defense to any action brought by Indemnitee against the Company to enforce
this Agreement that it is not permissible under this Agreement or applicable law
for the Company to indemnify the Indemnitee for the amount claimed. In
connection with any such action or any determination by the Reviewing Party or
otherwise as to whether Indemnitee is entitled to be indemnified under this
Agreement, the burden of proving such a defense or determination shall be on the
Company. Neither the failure of the Reviewing Party or the Company to have made
a determination prior to the commencement of such action by Indemnitee that
indemnification is proper under the circumstances because Indemnitee has met the
standard of conduct set forth in applicable law, nor an actual determination by
the Reviewing Party or the Company that Indemnitee had not met such applicable
standard of conduct shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct.

     5. No Settlement Without Consent. Neither party to this Agreement shall
settle any Proceeding in any manner that would impose any damage, loss, penalty
or limitation on Indemnitee without the other party's written consent. Neither
the Company nor Indemnitee shall unreasonably withhold its consent to any
proposed settlement.

     6. Company Participation. Subject to Section II.5, the Company shall not be
liable to indemnify the Indemnitee under this Agreement with regard to any
judicial action if the Company was not given a reasonable and timely
opportunity, at its expense, to participate in the defense, conduct and/or
settlement of such action.

IV. DIRECTOR AND OFFICER LIABILITY INSURANCE

     1. Liability Insurance. The Company shall obtain and maintain a policy or
policies of insurance with reputable insurance companies providing the officers
and directors of the Company with coverage for losses incurred in connection
with their services to the Company or to ensure the Company's performance of its
indemnification obligations under this Agreement. To the extent the Company
determines that it is no longer practicable for the Company to maintain such
insurances, it shall notify promptly its directors and officers

                                       6
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before it terminates such insurances and such termination must be approved by
the majority of the Company's directors.

     2. Coverage of Indemnitee. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for any of the
Company's directors or officers.

     3. No Obligation. Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain any director and officer insurance policy if a
majority of the Company's directors determines in good faith that such insurance
is not reasonably available in the case that (i) premium costs for such
insurance are disproportionate to the amount of coverage provided, (ii) the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or (iii) Indemnitee is covered by similar insurance
maintained by a parent or subsidiary of the Company.

V. NON-EXCLUSIVITY; FEDERAL PREEMPTION; TERM

     1. Non-Exclusivity. The indemnification provided by this Agreement shall
not be deemed exclusive of any rights to which Indemnitee may be entitled under
the Articles of Association, any vote of shareholders or directors, applicable
law or any written agreement between Indemnitee and the Company (including its
subsidiaries and affiliates). The indemnification provided under this Agreement
shall continue to be available to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though he may have ceased to serve
in any such capacity at the time of any Proceeding.

     2. Federal Preemption. Notwithstanding the foregoing, both the Company and
Indemnitee acknowledge that in certain instances, U.S. federal law or public
policy may override applicable law and prohibit the Company from indemnifying
its directors and officers under this Agreement or otherwise. Such instances
include, but are not limited to, the U.S. Securities and Exchange Commission's
prohibition on indemnification for liabilities arising under certain U.S.
federal securities laws. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the
SEC to submit the question of indemnification to a court in certain
circumstances for a determination of the Company's right under public policy to
indemnify Indemnitee.

     3. Duration of Agreement. All agreements and obligations of the Company
contained herein shall continue during the period Indemnitee is an officer
and/or a director of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding by reason of
his former or current capacity at the Company or any other enterprise, including
service with respect to employee benefit plans) at the Company's request,
whether or not he is acting or serving in any such capacity at the time any
Expense is incurred for which indemnification can be provided under this
Agreement. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer and/or a director of the Company or
any other enterprise at the Company's request.

                                        7

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VI. MISCELLANEOUS

     1. Amendment of this Agreement. No supplement, modification, or amendment
of this Agreement shall be binding unless executed in writing by the parties
hereto. No waiver of any of the provisions of this Agreement shall operate as a
waiver of any other provisions (whether or not similar), nor shall such waiver
constitute a continuing waiver. Except as specifically provided in this
Agreement, no failure to exercise or any delay in exercising any right or remedy
shall constitute a waiver.

     2. Subrogation. In the event of payment to Indemnitee by the Company under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company to
bring suit to enforce such rights.

     3. Assignment; Binding Effect. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by either party hereto without the
prior written consent of the other party; except that the Company may, without
such consent, assign all such rights and obligations to a successor in interest
to the Company which assumes all obligations of the Company under this Agreement
in a written agreement in form and substance satisfactory to Indemnitee.
Notwithstanding the foregoing, this Agreement shall be binding upon and inure to
the benefit of and be enforceable by and against the parties hereto and the
Company's successors (including any direct or indirect successor by purchase,
merger, consolidation, or otherwise to all or substantially all of the business
and/or assets of the Company) and assigns, as well as Indemnitee's spouses,
heirs, and personal and legal representatives.

     4. Severability and Construction. Nothing in this Agreement is intended to
require or shall be construed as requiring the Company to do or fail to do any
act in violation of applicable law. The Company's inability, pursuant to a court
order, to perform its obligations under this Agreement shall not constitute a
breach of this Agreement. In addition, if any portion of this Agreement shall be
held by a court of competent jurisdiction to be invalid, void, or otherwise
unenforceable, the remaining provisions shall remain enforceable to the fullest
extent permitted by applicable law. The parties hereto acknowledge that they
each have opportunities to have their respective counsels review this Agreement.
Accordingly, this Agreement shall be deemed to be the product of both of the
parties hereto, and no ambiguity shall be construed in favor of or against
either of the parties hereto.

     5. Counterparts. This Agreement may be executed in two counterparts, both
of which taken together shall constitute one instrument.

     6. Governing Law. This agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of New York,
U.S.A., without giving effect to conflicts of law provisions thereof.

     7. Notices. All notices, demands, and other communications required or
permitted under this Agreement shall be made in writing and shall be deemed to
have been duly given if delivered by hand, against receipt, on the date of
delivery, or mailed, on the third business day after mailing, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:

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                       China Nepstar Chain Drugstore Ltd.
                    6th Floor, Tower B, Xinnengyuan Building
                     Nanhai Road, Nanshan District, Shenzhen
                            Guangdong Province 518054
                           People's Republic of China
                           Attention: Mr. Jiaxin Feng

          and to Indemnitee at:

                                     [Name]
                                    [Address]
                                    [Address]
                                    [Address]

     Notice of change of address shall be effective only when done in accordance
with this Section.

     8. Certain Relationships. The obligations and rights created under this
Agreement shall not be affected by any amendment to the Company's Articles of
Association or any other agreement or instrument to which Indemnitee is not a
party, and shall not diminish any other rights which Indemnitee now or in the
future has against the Company or any other person or entity.

     9. Acknowledgment. The Company expressly acknowledges that it has entered
into this Agreement and assumed the obligations imposed on the Company under
this Agreement in order to induce Indemnitee to serve or to continue to serve as
a director or officer and acknowledges that Indemnitee is relying on this
Agreement in serving or continuing to serve in such capacity. The Company
further agrees to stipulate in any court proceeding that the Company is bound by
all of the provisions of this Agreement.

     10. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
or Indemnitee's estate, heirs, executors, administrators or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

     11. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.

                            (Signature page follows)

                                        9

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IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the date
first written above.

COMPANY

CHINA NEPSTAR CHAIN DRUGSTORE LTD.

-------------------------------------
Name:
Title:

INDEMNITEE

-------------------------------------
Name:<PAGE>

                                                                    Exhibit 10.2

                       CHINA NEPSTAR CHAIN DRUGSTORE LTD.
                      (incorporated in the Cayman Islands)

                AMENDED AND RESTATED PRE-IPO SHARE OPTION SCHEME

1.   DEFINITIONS

1.1   In this Scheme the following expressions have the following meanings:

<TABLE>
<S>                               <C>
     "Adoption Date"              means [*], the date on which this Scheme is
                                  adopted in accordance with paragraph 3 hereof;

     "Approved Stock Exchange"    means the New York Stock Exchange, the Nasdaq
                                  Stock Market's National Market System, the
                                  Main Board of The Stock Exchange of Hong Kong
                                  Limited or any other exchange of recognized
                                  international reputation and standing duly
                                  approved by the Board, on which the Company is
                                  proposed to be listed;

     "Auditors"                   means the auditors for the time being of the
                                  Company;

     "Board"                      means the board of directors of the Company or
                                  a duly authorised committee thereof for the
                                  time being (if any), including the independent
                                  non-executive directors of the Company;

     "Business Day"               means a day (other than a Saturday or a
                                  Sunday) on which licensed banks are open for
                                  business in Hong Kong and the Approved Stock
                                  Exchange is open for the business of dealing
                                  in securities;

     "Cause"                      means, with respect to the termination by the
                                  Company of the Grantee's continuous service,
                                  that such termination is for "Cause" as such
                                  term is defined in a then-effective written
                                  agreement between the Grantee and the Company,
                                  or in the absence of such then-effective
                                  written agreement and definition, is based on,
                                  in the determination of the Board, the
                                  Grantee's: (i) refusal or failure to act in
                                  accordance with any specific, lawful direction
                                  or order of the Company; (ii) unfitness or
                                  unavailability for service or unsatisfactory
                                  performance (other than as a result of
                                  Disability); (iii) performance of any act or
                                  failure to perform any act in bad faith and to
                                  the detriment of the Company; (iv) dishonesty,
</TABLE>

<PAGE>

<TABLE>
<S>                               <C>
                                  intentional misconduct or material breach of
                                  any agreement with the Company; or (v)
                                  commission of a crime involving dishonesty,
                                  breach of trust, or physical or emotional harm
                                  to any person;

     "Company"                    means CHINA NEPSTAR CHAIN DRUGSTORE LTD. an
                                  exempted company incorporated in the Cayman
                                  Islands;

     "Control"                    means, when used with respect to any Person,
                                  the power to direct the management and
                                  policies of such Person, directly or
                                  indirectly, whether through the ownership of
                                  voting securities, by contract or otherwise,
                                  and the terms "Controlling" and "Controlled"
                                  have meanings correlative to the foregoing;

     "day"                        means calendar day;

     "electronic communication"   means a communication sent by electronic
                                  transmission in any form through any medium;

     "Fair Market Value"          means, for purposes of this Scheme, and unless
                                  otherwise determined or provided by the Board
                                  in the circumstances, means as follows:

                                  (a) If the Ordinary Shares are listed or
                                  admitted to trade on an Approved Stock
                                  Exchange, the Fair Market Value shall equal
                                  the closing price of a Share (or where Shares
                                  are represented by depositary receipts, the
                                  closing price of such depositary receipts
                                  divided by the number of Shares representing
                                  each such depositary receipt), as reported on
                                  the composite tape for securities or
                                  equivalent system for reporting such closing
                                  price on the Approved Stock Exchange for the
                                  date in question, or, if no sales of Shares
                                  (or depositary receipts representing such
                                  Shares) were made on the Approved Stock
                                  Exchange on that date, the closing price of a
                                  Share (or depositary receipt, as the case may
                                  be) as reported on said composite tape for the
                                  next preceding day on which sales of Shares
                                  (or depositary receipts, as the case may be)
                                  were made on the Approved Stock Exchange. To
                                  the extent the any of the following actions
                                  would not result in any adverse tax, legal or
                                  accounting treatment, the Board may, however,
                                  provide with respect to one or more Offers
                                  that the Fair Market Value shall equal the
                                  last closing price of a Share (or its
                                  equivalent, if
</TABLE>

                                      -2-

<PAGE>

<TABLE>
<S>                               <C>
                                  represented by depositary receipts) as
                                  reported on the composite tape for securities
                                  listed on the Approved Stock Exchange
                                  available on the date in question or the
                                  average of the high and low trading prices of
                                  a Share (or depositary receipts, as the case
                                  may be) as reported on the composite tape for
                                  securities listed on the Approved Stock
                                  Exchange for the date in question or the most
                                  recent trading day; provided that the Board
                                  shall not exercise such discretion if the
                                  exercise would cause taxes to be imposed on
                                  the Option (or the Grantee) under Section
                                  409A.

                                  (b) If the Shares are not listed or admitted
                                  to trade on an Approved Stock Exchange, the
                                  Fair Market Value shall be the value as
                                  reasonably determined by the Board for
                                  purposes of the Offer in the circumstances.

                                  The Board also may adopt a different
                                  methodology for determining Fair Market Value
                                  with respect to one or more Offers if a
                                  different methodology is necessary or
                                  advisable to secure any intended favorable
                                  tax, legal or other treatment for the
                                  particular Offer(s) (for example, and without
                                  limitation, the Board may provide that Fair
                                  Market Value for purposes of one or more
                                  Offers will be based on an average of closing
                                  prices (or the average of high and low daily
                                  trading prices) for a specified period
                                  preceding the relevant date); provided that
                                  the Board shall not exercise such discretion
                                  if the exercise would cause taxes to be
                                  imposed on the Option (or the Grantee) under
                                  Section 409A. Any determination as to Fair
                                  Market Value made pursuant to this Scheme
                                  shall be determined without regard to any
                                  restriction other than a restriction which, by
                                  its terms, will never lapse, and shall be
                                  conclusive and binding on all persons with
                                  respect to Options granted under this Scheme;

     "Grantee"                    means any Participant who accepts an Offer in
                                  accordance with the terms of this Scheme or
                                  (where the context so permits) the legal
                                  personal representative(s) entitled to any
                                  such Option in consequence of the death of the
                                  original Grantee;

     "Group"                      means the Company and its subsidiaries from
                                  time to time;

     "Hong Kong"                  means the Hong Kong Special Administrative
</TABLE>

                                      -3-

<PAGE>

<TABLE>
<S>                               <C>
                                  Region of the People's Republic of China;

     "Listing Date"               means the date on which dealings in the Shares
                                  (or depositary receipts representing Shares)
                                  first commence on the Approved Stock Exchange;

     "month"                      means calendar month;

     "Offer"                      means the offer of the grant of an Option made
                                  by the Board in accordance with paragraph 5;

     "Option"                     means a right to subscribe for Shares granted
                                  pursuant to the terms of this Scheme and the
                                  term "Options" shall be construed accordingly;

     "Option Period"              means in respect of any particular Option
                                  granted, the period during which such Option
                                  may be exercised as determined by the Board at
                                  its absolute discretion and notified by the
                                  Board to the Grantee of such Option, provided
                                  that such period shall not commence before the
                                  Listing Date nor be longer than 5 years from
                                  the Listing Date;

     "Participant"                means any employee, director or consultant who
                                  renders or has rendered bona fide services
                                  (other than services in connection with the
                                  offering or sale of securities of the Company
                                  or any other member of the Group, as
                                  applicable, in a capital raising transaction
                                  or as a market maker or promoter of that
                                  entity's securities) to the Company or any
                                  other member of the Group as the Board may at
                                  its absolute discretion determine according to
                                  sub-paragraph 2(b) below.; provided that a
                                  consultant may be selected as a "Participant"
                                  only if such consultant's participation in
                                  this Scheme would not adversely affect (i) the
                                  Company's eligibility to rely on the Rule 701
                                  exemption from registration under the
                                  Securities Act of 1933, as amended, for the
                                  offering of Shares issuable under this Scheme
                                  by the Company, or (ii) the Company's
                                  compliance with any other applicable law;

     "Person"                     means any natural person, limited liability
                                  company, joint stock company, joint venture,
                                  partnership, enterprise, trust, unincorporated
                                  organization or any other entity or
                                  organization;

     "Qualified IPO"              means a firm-commitment underwritten initial
                                  public offering of the Company's Common Shares
                                  on the
</TABLE>

                                      -4-

<PAGE>

<TABLE>
<S>                               <C>
                                  Approved Stock Exchange that values the
                                  Company at no less than US$250,000,000
                                  immediately prior to the IPO and that results
                                  in aggregate proceeds to the Company of
                                  US$50,000,000, net of Selling Expenses.

     "Scheme"                     means this share option scheme in its present
                                  or any amended form;

     "Section 409A"               means Section 409A of the United States
                                  Internal Revenue Code of 1986, as amended.

     "Selling Expenses"           means, with respect to the issue or sale of
                                  any securities, any expenses payable directly
                                  or indirectly by the Company and any
                                  underwriting, brokerage or similar
                                  commissions, compensation, discounts or
                                  concessions paid or allowed by the Company in
                                  connection with such issue or sale.

     "Shares"                     means Common Shares of US$0.0001 each in the
                                  capital of the Company (or of such other
                                  nominal amount as shall result from a
                                  sub-division, consolidation, reclassification
                                  or reconstruction of the share capital of the
                                  Company from time to time);

     "Subscription Price"         means the price per Share at which a Grantee
                                  may subscribe for Shares on the exercise of an
                                  Option, initially US$0.075 per Share with
                                  respect to Options to be granted in the year
                                  2005 to subscribe for up to an aggregate
                                  1,000,000 Shares (subject to adjustment as
                                  provided herein) and in any event thereafter
                                  at no less than Fair Market Value at the time
                                  of the grant of the Option;

     "subsidiary"                 means, with respect to any given Person, any
                                  other Person that is not a natural person and
                                  that is Controlled by such given Person;

      "$"                         means Hong Kong dollars, the lawful currency
                                  of Hong Kong;

     "US$"                        means US dollars, the lawful currency of the
                                  United States of America; and

     "%"                          means per cent.
</TABLE>

1.2   Unless otherwise defined, terms defined in the Articles of Association and
      Memorandum of Association and Articles of Association of the Company shall
      have the same meanings when used herein. Paragraph headings are inserted
      for convenience

                                      -5-

<PAGE>

     of reference only and shall be ignored in the interpretation of this
     Scheme. Unless the context otherwise requires, references to paragraphs or
     sub-paragraphs are to paragraphs or sub-paragraphs of this Scheme, words
     importing the singular include the plural and vice versa, words importing
     gender include every gender and references to persons includes corporations
     and unincorporated organization.

2.   PURPOSE OF THIS SCHEME AND BASIS OF ELIGIBILITY OF THE PARTICIPANTS

     (a)  The purpose of this Scheme is to promote the success of the Company
          and the interests of its shareholders by providing a means through
          which the Company may grant options to subscribe for its Shares to
          attract, motivate, retain and reward the certain officers, employees,
          directors and other eligible persons and to link the interests of
          Participants with those of the Company's shareholders.

     (b)  In determining the basis of eligibility of each Participant, the Board
          shall take into account a basis of allocation as set out in Appendix I
          (which may be amended by the Board from time to time) or such other
          factors as the Board may at its discretion consider appropriate.

3.   CONDITIONS

     This Scheme shall become effective upon (a) the affirmative vote of Members
     representing a majority of the issued and outstanding Shares of the
     Company, or resolution in writing by all Members, and (b) the affirmative
     vote of Members holding more than fifty percent (50%) in voting power of
     the issued and outstanding Series A Preferred Shares, or resolution in
     writing by all Members, adopting this Scheme and authorising the Board to
     make Offers to grant Options hereunder, and allot and issue Shares pursuant
     to the exercise of Options. The exercise of any Option granted hereunder is
     conditional upon:

     (a)  the Approved Stock Exchange granting approval of the listing of, and
          permission to deal in, all the Shares of the Company, including any
          Shares to be issued pursuant to the exercise of Options granted under
          this Scheme;

     (b)  the closing of a Qualified IPO; and

     (c)  the commencement of dealings in the Shares on the Approved Stock
          Exchange.

4.   DURATION AND ADMINISTRATION

4.1  Subject to the fulfillment of the conditions in paragraph 3 and the
     termination provisions in paragraph 14, this Scheme shall be valid and
     effective for a period commencing on the Adoption Date and ending on the
     day immediately prior to the Listing Date (both days inclusive), after
     which period no further Options will be offered or granted, as the right to
     do so will end upon the listing of the Shares on the Approved Stock
     Exchange, but in respect of Options which have been granted prior to the
     end of such period, the provisions of this Scheme shall remain in full
     force and effect.

4.2  This Scheme shall be subject to the administration of the Board whose
     decision (save as

                                      -6-

<PAGE>

     otherwise provided herein) shall be final and binding on all parties.

4.3  Subject to compliance with applicable rules and regulations of the
     Approved Stock Exchange and the provisions of this Scheme, the Board shall
     have the right (i) to interpret and construe the provisions of this Scheme;
     (ii) to determine the persons who will be awarded Options under this Scheme
     and the number of Shares to be issued under the Option; (iii) to make such
     appropriate and equitable adjustments to the terms of Options granted under
     this Scheme as it deems necessary; and (iv) to make such other decisions,
     determinations or regulations as it shall deem appropriate in the
     administration of this Scheme.

5.   GRANT OF OPTION

5.1   On and subject to the terms of this Scheme, the Board shall be entitled,
     at any time on or after the Adoption Date but prior to the Listing Date, to
     make an Offer to any Participant as the Board determines to be eligible to
     receive an Option to subscribe for such number of Shares as the Board may
     determine, subject to paragraphs 8 and 9 hereof, at the Subscription Price.

5.2  An Offer shall be made to a Participant by a letter or agreement in such
     form as the Board may from time to time determine (the "OPTION AGREEMENT")
     specifying the number of Shares under the Option and the Option Period and
     requiring the Participant to undertake to hold the Option on the terms on
     which it is to be granted and to be bound by the provisions of this Scheme.
     An Offer shall remain open for acceptance by the Participant to whom an
     Offer is made until such date as the Board may specify in the Option
     Agreement ("ACCEPTANCE PERIOD"), provided that no such Offer shall be open
     for acceptance after the earlier of (i) the end of the effective period of
     this Scheme as stated in sub-paragraph 4.1, or (ii) the tenth business day
     after the date on which the Offer was made.

5.3  An Offer shall be deemed accepted by the Grantee and the Option to which
     the Offer relates shall be deemed to have been granted and to have taken
     effect on the date on which the Offer was made; provided that the duplicate
     of the Option Agreement comprising acceptance of the Offer duly signed by
     the Grantee together with a remittance in favour of the Company of $1.00 by
     way of consideration for the granting thereof is received by the Company
     within the Acceptance Period. Such remittance shall in no circumstances be
     refundable or be considered as part of the Subscription Price.

5.4  Any Offer may be accepted in respect of less than the number of Shares for
     which it is offered provided that the number of Shares in respect of which
     the Offer is accepted is clearly stated in the duplicate of the Option
     Agreement received by the Company as mentioned in sub-paragraph 5.3. To the
     extent that the Offer is not accepted within the Acceptance Period and in
     the manner stipulated in sub-paragraph 5.3, it will be deemed to have been
     irrevocably declined and shall lapse.

5.5  Subject to the provisions of this Scheme and applicable rules and
     regulations of the Approved Stock Exchange, the Board may when making the
     Offer impose any conditions, restrictions or limitations in relation to the
     Option (including, without

                                      -7-

<PAGE>

     limitation, a moratorium on the disposal of the Shares to be issued upon
     exercise of the Option) as it may at its absolute discretion think fit.

6.   EXERCISE OF OPTIONS

6.1  Subject to Section 15.1 hereof and unless otherwise determined by the
     Board and specified in the Option Agreement, an Option shall be personal to
     the Grantee and shall not be assignable or transferable. No Grantee shall
     in any way sell, transfer, charge, mortgage, encumber or create any
     interests (whether legal or beneficial) in favour of any third party over
     or in relation to any Option or enter into any agreement to do so. Any
     breach of the foregoing of a Grantee shall render all outstanding Option of
     such Grantee be automatically cancelled in accordance with sub-paragraph
     7(g). Notwithstanding anything to the contrary herein, an Option that
     becomes or remains exercisable after the death of a Grantee may be
     exercised by the legatees, personal representatives or distributees of the
     Grantee.

6.2  Unless otherwise determined by the Board and specified in the Option
     Agreement at the time of the Offer, there are neither any performance
     targets that need to be achieved by the Grantee before an Option can be
     exercised nor any minimum period for which an Option must be held before
     the Option can be exercised. An Option can only be exercised in whole in
     the manner as set out in the Option Agreement, this sub-paragraph and
     sub-paragraph 6.3 by the Grantee (or his personal representative(s)) giving
     notice in writing to the Company stating that the Option is thereby
     exercised. Each such notice must be accompanied by a remittance for the
     full amount of the total Subscription Price for the Shares in respect of
     which the notice is given or any other payment method to be determined and
     notified by the Board from time to time. Subject to paragraph 11, within 28
     days after receipt of the notice and the final and full settlement of the
     Subscription Price, the Company shall allot the relevant Shares to the
     Grantee (or his personal representative(s)) credited as fully paid and
     issue to the Grantee (or his personal representative(s)) a share
     certificate in respect of the Shares so allotted.

6.3  Subject to paragraph 3 and as hereinafter provided and subject to the
     terms and conditions upon which such Option was granted:

     (a)  in the event that on or before the Listing Date, the Grantee ceases to
          be employed by a member of the Group for any reason including but not
          limited to the termination of employment or directorship as a result
          of the death or total and permanent disability of the Grantee as
          referred to in sub-paragraphs 6.3(b) and (c) below, the Option granted
          to such Grantee shall lapse on the date of cessation and will not be
          exercisable, unless the Board otherwise determines that the Option
          will remain exercisable for an additional period of time following the
          date the Grantee ceases to be employed, provided that such additional
          period shall not extend beyond the expiration of the original Option
          Period. In the event the Board provides that the Option will remain
          exercisable for such an additional period of time, the Grantee may
          exercise the Option in accordance with the provisions of paragraph 6.2
          within such period of extension and up to a maximum entitlement
          directed at the discretion of the Board on the date of grant of
          extension and subject to other terms and conditions decided at

                                      -8-

<PAGE>

          the discretion of the Board;

     (b)  in the event that after the Listing Date, the Grantee ceases to be
          employed by a member of the Group, by reason of the termination of his
          employment or directorship on any ground other than for Cause on which
          any employer or any engaging party would be entitled to terminate his
          employment or directorship at common law or pursuant to any applicable
          laws or under the Grantee's employment contract or service contract
          with the Company or the relevant subsidiary (as the case may be) but
          before the Option is exercised and none of the events which would be a
          ground for termination of the Grantee's employment, directorship,
          office or appointment under sub-paragraph 7(e)(ii) arises, the Grantee
          shall, within a period of one month from the date of termination or
          such longer period as the Board may determine, be entitled to exercise
          the Option to the extent vested and exercisable as at the date of
          termination or, if appropriate, make an election pursuant to
          sub-paragraph 6.3(d), (e) or (f), and the Option (to the extent
          exercisable pursuant to this provision and not exercised) shall
          terminate upon the expiry of the one-month period. In the event of
          termination of the Grantee's continuous service for Cause, the
          Grantee's right to exercise the Option shall, except as otherwise
          determined by the Board, terminate concurrently with the termination
          of the Grantee's continuous service;

     (c)  in the event that after the Listing Date, the Grantee ceases to be
          employed by a member of the Group by reason of his or her death or
          total and permanent disability, the Grantee (or his or her personal
          representative) shall have until the date that is six months after
          such cessation of employment to exercise the Option to the extent that
          it was vested and exercisable on such cessation date or, if
          appropriate, make an election pursuant to sub-paragraph 6.3(d), (e) or
          (f), and the Option (to the extent exercisable pursuant to this
          provision and not exercised) shall terminate upon the expiry of the
          six-month period;

     (d)  if a general offer by way of take-over (other than by way of scheme of
          arrangement pursuant to sub-paragraph 6.3(e)) is made to all holders
          of Shares (or all such holders other than the offeror and/or any
          person controlled by the offeror and/or any person acting in
          association or concert with the offeror (the "DISSENTING
          SHAREHOLDERS")) and if such offer becomes or is declared unconditional
          and the offeror is entitled to and does give notice pursuant to the
          Companies Law of the Cayman Islands to acquire Shares held by the
          Dissenting Shareholders prior to the expiry of the relevant Option
          Period, the Grantee (or his personal representative(s)) may by notice
          in writing to the Company within 21 days of the notice of the offeror
          exercise the Option (in the event that it has become exercisable on
          the date of the notice of the offeror and has not already been
          exercised) to its full extent;

     (e)  if a general offer by way of scheme of arrangement is made to all the
          holders of Shares and has been approved by the necessary majority of
          holders of Shares at the requisite meetings, the Grantee (or his
          personal representative(s)) may thereafter (but only until such time
          as shall be notified by the Company, after which it shall lapse)
          exercise the Option (in the event that it has become

                                      -9-

<PAGE>

          exercisable and has not already been exercised) to its full extent;

     (f)  other than a general offer or a scheme of arrangement contemplated in
          sub-paragraphs 6.3(d) and (e), if a compromise or arrangement between
          the Company and its members or creditors is proposed for the purposes
          of or in connection with a scheme for the reconstruction of the
          Company or its amalgamation with any other company or companies, the
          Company shall give notice thereof to the Grantee on the same date as
          it dispatches the notice which is sent to each member or creditor of
          the Company summoning the meeting to consider such a compromise or
          arrangement, and thereupon the Grantee (or his personal
          representative(s)) may forthwith and until the expiry of the period
          commencing with such date and ending with the earlier of two months
          thereafter and the date on which such compromise or arrangement is
          sanctioned by the court of competent jurisdiction, exercise any of his
          Options (in the event that it has become exercisable and has not
          already been exercised) to itsfull extent, but the exercise of an
          Option as aforesaid shall be conditional upon such compromise or
          arrangement being sanctioned by the court of competent jurisdiction
          and becoming effective. Upon such compromise or arrangement becoming
          effective, all Options shall lapse except insofar as previously
          exercised under this Scheme. The Company may require the Grantee (or
          his personal representative(s)) to transfer or otherwise deal with the
          Shares issued as a result of the exercise of Options in these
          circumstances so as to place the Grantee in the same position as
          nearly as would have been the case had such Shares been subject to
          such compromise or arrangement; and

     (g)  in the event that a notice is given by the Company to its members to
          convene a general meeting for the purposes of considering, and if
          thought fit, approving a resolution to voluntarily wind-up the
          Company, other than for the purposes of a reconstruction, amalgamation
          or scheme of arrangement, the Company shall on the same date as or
          soon after it dispatches such notice to convene the general meeting,
          give notice thereof to all Grantees and thereupon, the Grantees (or
          their respective personal representative(s)) may, subject to the
          provisions of all applicable laws, by notice in writing to the Company
          (such notice to be received by the Company not later than two Business
          Days prior to the proposed general meeting of the Company) exercise
          the Option (in the event that it has become exercisable and has not
          already been exercised) to its full extent, such notice to be
          accompanied by a payment for the full amount of the aggregate
          Subscription Price for the Shares in respect of which the notice is
          given, whereupon the Company shall as soon as possible and, in any
          event, no later than the Business Day immediately prior to the date of
          the proposed general meeting referred to above, allot the relevant
          Shares to the Grantee credited as fully paid.

6.4  The Shares to be allotted upon the exercise of an Option will be subject
     to all the provisions of the memorandum and articles of association of the
     Company for the time being in force and will rank pari passu in all
     respects with the fully paid Shares in issue on the date of their allotment
     and issue, and accordingly will entitle the holders to participate in all
     dividends or other distributions paid or made on or after the date of
     allotment and issue, subject to paragraph 15.3.

                                      -10-

<PAGE>

7.   LAPSE OF OPTION

     An Option shall lapse automatically and not be exercisable (in the event
     that it has not already been exercised) on the earliest of:

     (a)  the expiry of the Option Period;

     (b)  the expiry of the periods referred to in sub-paragraph 6.3(b), (c) or
          (d) where applicable;

     (c)  subject to the scheme of arrangement as referred to in sub-paragraph
          6.3(e) becoming effective, the expiry of the period referred to in
          sub-paragraph 6.3(e);

     (d)  subject to the compromise or arrangement referred to in sub-paragraph
          6.3(f) becoming effective, the expiry of the period referred to in
          sub-paragraph 6.3(f);

     (e)  (i) subject to the expiry of the period of extension (if any) referred
          to in sub-paragraph 6.3(b) and (c), the date on which the Grantee
          ceases to be a Participant for any reason (including but not limited
          to the termination of the employment or directorship of the
          Participant by the Company or his death or permanent disability);

          (ii) the date on which the Grantee ceases to be a Participant by
               reason of the termination of his employment or directorship on
               the grounds that he has been guilty of misconduct, or has been in
               breach of material term of the relevant employment contract or
               service contract, or has stopped payment to creditors generally
               or been unable to pay his debts within the meaning of any
               applicable legislation relating to bankruptcy or insolvency, or
               has become bankrupt or insolvent, or has been served with a
               petition for bankruptcy, or has made any arrangements or
               composition with his creditors generally, or has been convicted
               of any criminal offence involving his integrity or honesty. A
               resolution of the Board or the board of directors or governing
               body of the relevant subsidiary (as the case may be) to the
               effect that the employment or directorship of a Grantee has or
               has not been terminated on one or more of the grounds specified
               in this sub-paragraph 7(e)(ii) shall be conclusive and binding on
               the Grantee.

     (f)  the close of two Business Days prior to the general meeting of the
          Company held for the purpose of approving the voluntary winding-up of
          the Company or the date of the commencement of the winding-up of the
          Company;

     (g)  the date on which the Grantee commits a breach of sub-paragraph 6.1;
          or

     (h)  the date on which the Option is cancelled by the Board as provided in
          paragraph 13.

     The Company shall owe no liability to any Grantee for the lapse of any
     Option under this paragraph 7.

                                      -11-

<PAGE>

8.   MAXIMUM NUMBER OF SHARES AVAILABLE FOR GRANT

     The total number of Shares which may be issued upon exercise of all Options
     granted under this Scheme shall not in aggregate exceed 8,680,000 Shares,
     representing 5% of the fully-diluted share capital of the Company; provided
     that such limit may be increased to a numerical limit representing the
     fully-diluted share capital of the Company from time to time with the
     approval of the holders of not less than fifty percent (50%) of the Series
     A Preferred Shares then issued and outstanding; provided further that no
     increase in the number of Shares that are reserved for issuance under this
     Scheme may be made on or after the Listing Date, without prior approval of
     the holders of the Shares of the Company, and no increase in the number of
     Shares shall be permitted if such increase would be in violation or in
     contradiction of any applicable law, including without limitation any rule
     or requirement of an Approved Stock Exchange.

9.   REORGANISATION OF CAPITAL STRUCTURE

     In the event of any alteration in the capital structure of the Company at
     any time after the Listing Date whilst any Option remains exercisable,
     whether by way of capitalization issue, rights issue, subdivision,
     consolidation, or reduction of the share capital of the Company or
     otherwise howsoever in accordance with the applicable legal requirements
     and requirements of the Approved Stock Exchange (excluding any alteration
     in the capital structure of the Company as a result of an issue of Shares
     as consideration in respect of a transaction to which the Company is a
     party), the Board shall, in such manner, to such extent (if any) and at
     such time as it deems appropriate and equitable in the circumstances make
     corresponding alterations (if any) to:

     (i)  the number or nominal amount of Shares subject to the Option so far as
          unexercised; and/or

     (ii) the Subscription Price; and/or

     (iii) the method of exercise of the Option (if applicable),

     or make provision for a settlement by a cash payment or for the assumption,
     substitution or exchange of any or all outstanding Options (or the cash,
     securities or other property deliverable to the holder(s) of any or all
     outstanding Options) based upon the distribution or consideration payable
     to holders of the Options upon or in respect of such event.

     The Board may adopt such valuation methodologies for outstanding Options as
     it deems reasonable in the event of a cash, securities or other property
     settlement. Without limitation on other methodologies, the Board may base
     such settlement solely upon the excess (if any) of the amount payable upon
     or in respect of such event over the exercise price of the Option to the
     extent of the then vested and exercisable Shares subject to the Option.

                                      -12-

<PAGE>

     In any of such events, the Board may take such action prior to such event
     to the extent that the Board deems the action necessary to permit the
     Grantee to realize the benefits intended to be conveyed with respect to the
     underlying Shares in the same manner as is or will be available to
     shareholders generally.

     Any adjustment by the Board pursuant to this paragraph 9 shall be final,
     binding, and conclusive. Unless otherwise expressly provided by the Board,
     in no event a conversion of one or more outstanding Shares of the Company's
     Preferred Shares or any new issuance of securities by the Company for
     consideration other than those as contemplated under this paragraph 9 shall
     be deemed, in and of itself, to require an adjustment pursuant to this
     paragraph 9.

     The Company shall give notice of any such alteration(s) to the Grantees
     after determination by the Board.

10.  SHARE CAPITAL

     The exercise of any Option shall be subject to the shareholders of the
     Company in a general meeting approving any necessary increase in the
     authorised share capital of the Company. Subject thereto, the Board shall
     make available sufficient authorised but unissued share capital of the
     Company to issue Shares on the exercise of Options.

11.  DISPUTES

     Any dispute arising in connection with this Scheme (whether as to the
     number of Shares the subject of an Option, the amount of the Subscription
     Price or otherwise) shall be referred to the decision of the Auditors or an
     independent financial adviser appointed by the Company who shall act as
     experts and not as arbitrators and whose decision (evidenced by a signed
     certificate) shall be final and binding.

12.  AMENDMENT OF THIS SCHEME

12.1  The provisions of this Scheme may be amended or altered in any respect by
      resolution of the Board, provided that such resolution includes the
      affirmative votes of at least one of the two members of the Board
      appointed by the holders of the Series A Preferred Shares pursuant to
      Article 12 of the Company's Articles of Association, or by resolution in
      writing by all members of the Board, except that the provisions of this
      Scheme as to:

     (a)  the definitions of "Grantee", "Option Period" and "Participant" in
          sub-paragraph 1.1;

     (b)  the provisions of paragraphs and sub-paragraphs 4.1, 5.1, 5.2, 5.3, 6,
          7, 8, 9 and this paragraph 12; and

     (c)  all such other matters as may be required under applicable laws and
          regulations

     shall not be altered to the advantage of the Participants except with the
     prior approval of

                                      -13-

<PAGE>

     the shareholders of the Company in general meeting, provided that such
     approval includes the affirmative votes of Members holding more than fifty
     percent (50%) in voting power of the issued and outstanding Series A
     Preferred Shares, or by resolution in writing by all Members.

12.2 Any change to the authority of the directors of the Company or scheme
     administrators in relation to any alteration to the terms of this Scheme
     must be approved by the shareholders of the Company in general meeting,
     provided that such approval includes the affirmative votes of Members
     holding more than fifty percent (50%) in voting power of the issued and
     outstanding Series A Preferred Shares, or by resolution in writing by all
     Members.

13.  CANCELLATION OF OPTION; WAIVER AND AMENDMENT

     The Board may, with the consent of the relevant Grantee, at any time at its
     absolute discretion cancel any Option granted but not exercised. Without
     limiting any other express authority of the Board under (but subject to)
     the express limits of this Scheme, the Board by agreement or resolution may
     waive conditions of or limitations on Options to Grantees that the Board in
     the prior exercise of its discretion has imposed, without the consent of a
     Grantee, and (subject as expressly provided otherwise in this Scheme) make
     other changes to the terms and conditions of Options.

14.  TERMINATION OF THIS SCHEME

     The Company by resolution in general meeting or the Board may at any time
     terminate the operation of this Scheme and in such event no further Options
     will be offered but in all other respects the provisions of this Scheme
     shall remain in full force and effect.

15.  MISCELLANEOUS

15.1 Limit On Exercise and Transfer. Unless otherwise expressly provided in (or
     pursuant to) this paragraph 15.1, by applicable law and by the applicable
     Option Agreement, as the same may be amended:

     (a)  all Options are non-transferable and will not be subject in any manner
          to sale, transfer, anticipation, alienation, assignment, pledge,
          encumbrance or charge;

     (b)  Options will be exercised only by the Grantee; and

     (c)  amounts payable or Shares issuable pursuant to an Option will be
          delivered only to (or for the account of) and registered in the name
          of the Grantee.

     In addition, the Shares to be granted upon exercise of an Option shall be
     subject to the restrictions set forth herein and in the applicable Option
     Agreement.

     Notwithstanding the foregoing, no provision herein shall prevent or forbid
     transfers by will, by the laws of descent and distribution, to a trust that
     has been approved by the Board and that was established solely for tax
     planning purposes and not for purposes of profit or commercial activity or,
     with Board approval, to one or more "family

                                      -14-

<PAGE>

     members" (as such term is defined in SEC Rule 701 promulgated under the
     Securities Act of 1933, as amended) by gift or pursuant to a qualified
     domestic relations order.

15.2 Tax Withholding. Upon any exercise, vesting, or payment of any Option, the
     Company or any of its subsidiaries shall have the right at its option to:

     (a)  require the Grantee (or the Grantee's personal representative or
          beneficiary, as the case may be) to pay or provide for payment of at
          least the minimum amount of any taxes which the Company or subsidiary
          may be required to withhold with respect to such event;

     (b)  deduct from any amount otherwise payable (in respect of an Option or
          otherwise) in cash to the Grantee (or the Grantee's personal
          representative or beneficiary, as the case may be) the minimum amount
          of any taxes which the Company or subsidiary may be required to
          withhold with respect to such event; or

     (c)  reduce the number of Shares to be delivered by (or otherwise reacquire
          Shares held by the Grantee) the appropriate number of Shares, valued
          at their then Fair Market Value, to satisfy the minimum withholding
          obligation.

     In any case where a tax is required to be withheld in connection with the
     delivery of Shares under this Scheme, the Board may in its sole discretion
     grant (either at the time of the Offer or thereafter) to the Grantee the
     right to elect, pursuant to such rules and subject to such conditions as
     the Board may establish, to have the Company reduce the number of shares to
     be delivered by (or otherwise reacquire) the appropriate number of shares,
     valued in a consistent manner at their Fair Market Value or at the sales
     price in accordance with authorized procedures for cashless exercises,
     necessary to satisfy the minimum applicable withholding obligation on
     exercise, vesting or payment. In no event shall the shares withheld exceed
     the minimum whole number of shares required for tax withholding under
     applicable law. The Company may, with the Board's approval, accept one or
     more promissory notes from any eligible person in connection with taxes
     required to be withheld upon the exercise, vesting or payment of any award
     under this Scheme; provided that any such note shall be subject to terms
     and conditions established by the Board and the requirements of applicable
     law.

15.3 Privileges of Share Ownership. Except as otherwise expressly authorized by
     the Board or this Scheme or in the Option Agreement, a Grantee will not be
     entitled to any privilege of share ownership as to any Shares not actually
     delivered to and held of record by the Grantee. No adjustment will be made
     for dividends or other rights as a shareholder for which a record date is
     prior to such date of delivery.

15.4 Share Legends. All certificates evidencing Shares issued or delivered
     under this Scheme shall bear the following legends and/or any other
     appropriate or required legends under applicable laws:

     "OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE
     AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON
     TRANSFER UNDER APPLICABLE LAW

                                      -15-

<PAGE>

     AND UNDER AGREEMENTS WITH THE COMPANY, INCLUDING RESTRICTIONS ON SALE,
     ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION."

     "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN
     REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER
     OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER
     THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN
     ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF COUNSEL TO THE
     COMPANY, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH
     TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."

15.6 This Scheme shall not form part of any contract of employment or
     directorship, service contract or engagement contract between the relevant
     member(s) of the Group and any Participant and the rights and obligations
     of any Participant under the terms of his employment, directorship,
     appointment or engagement shall not be affected by his participation in
     this Scheme or any right which he may have to participate in it and this
     Scheme shall afford such a Participant no additional rights to compensation
     or damages in consequence of the termination of such employment,
     directorship, appointment or engagement for any reason.

15.7 This Scheme shall not confer on any person any legal or equitable rights
     (other than those constituting the Options themselves) against the Company
     directly or indirectly or give rise to any cause of action at law or in
     equity against the Company.

15.8 The Company shall bear the costs of establishing and administering this
     Scheme.

15.9 Any notice or other communication between the Company and a Grantee may be
     given, in the case of notices and communications to the Company, by sending
     the same by prepaid post or by personal delivery to its principal place of
     business or such other address as notified to the Grantees from time to
     time and, in the case of notices and communications to the Grantee (i) by
     sending the same by prepaid post or by personal delivery to his
     correspondence address as notified to the Company from time to time or (ii)
     to the extent permitted by and in accordance with any applicable laws and
     regulations, by electronic communication including by transmitting the same
     to any electronic number, address or web site as notified to the Company
     from time to time or by placing the same on the Company's web site and/or
     the web site of the Approved Stock Exchange (if any).

15.10 Any notice or other communication served by post:

     (a)  by the Company shall be deemed to have been served on the Grantee 24
          hours after the same is posted; and

     (b)  by the Grantee shall not be deemed to have been served on the Company
          until the same shall actually have been received by the Company.

                                      -16-

<PAGE>

15.11 Any notice or other communication served by electronic communication by
     the Company shall be deemed to have been served on the Grantee:

     (a)  in the case of placing on the Company's web site and/or the web site
          of the Approved Stock Exchange (if any), on the day on which the same
          is published on such web site; and

     (b)  in any other case, on the day on which the same is transmitted to the
          Grantee if no notification has been received by the Company within 24
          hours after the transmission that the electronic communication has not
          reached the Grantee,

      or at such later time as may be prescribed by any applicable laws and
      regulations. Any failure in transmission of the electronic communication
      which is beyond the Company's control shall not invalidate the
      effectiveness of the notice or communication being served.

15.12 All allotments and issues of Shares shall be subject to any necessary
      consents under any relevant enactment or regulations in force from time to
      time in the Cayman Islands or elsewhere, and a Grantee shall be
      responsible for obtaining any governmental or other official consent or
      approval that may be required by any country or jurisdiction in order to
      permit the grant or exercise of the Option. The Company shall not be
      responsible for any failure by a Grantee to obtain any such consent or
      approval or for any tax or other liability to which a Grantee may become
      subject as a result of his participation in this Scheme.

15.13 This Scheme or an Offer or an Option or any other document hereunder may
      be available in the Chinese language or other languages. In the event of
      any inconsistency between the English version of this Scheme or an Offer
      or an Option or any other document hereunder, and the non-English version,
      the English version shall prevail.

15.14 This Scheme and all Options granted hereunder shall be governed by and
      construed in accordance with the laws of Hong Kong in force from time to
      time.

                                      -17-

<PAGE>

                                   APPENDIX I

GENERAL RULES ON OPTION ALLOCATION AND EXERCISE FOR 2005-2006

A. Allocation

1. Officers who joined the company before March 31, 2005 may participate in the
option allocation plan for 2005-2006;

     Officers who joined the company after March 31, 2005 may be granted options
based on his/her position or performance up to the number of options reserved by
the company.

2. The option allocation for 2005-2006 will apply the basic rule that the number
of options to be granted shall be based on the position and performance
assessment and the consideration to retain key officers for the company's
long-term development. To diminish the influence of option cost to the profit of
the company, the subscription price will be determined by the Board of Directors
based on the fair value of share preliminarily estimated for different issuance
time.

3. 80% of the number of options to be allocated will be used as incentive for
key officers of the company ("Key Officer Options"), while the other 20% as
incentive for common officers.

B. Exercise

1. The officers may exercise 25% of his/her options after the options are
granted and the Company has completed an initial public offering, while the
other 75% shall rest - in seven equal installments (every six months in the
following 42 months). All options shall be excised in 5 years after the
completion of the company's initial public offering.. The non-excised options
shall expire 5 years after the completion of the company's initial public
offering.

2. Relevant rules concerning dismissal

     a. For those option holders who quit from the company before the company's
initial public offering, all of his/her options shall become invalid and
un-exercisable;

     b. For holders who resign voluntarily, the options which have not vested
shall become invalid and may be not exercised any more.;

     c. For holders who are dismissed involuntarily, except that those convicted
to be in violation of law or infringe interest of the company (as ascertained by
the Board of Directors) may not exercise his/her options, all options that have
been exercised will be permitted to be sold.

     d. For those who are disabled or die because of disease or any other
reason, all unvested options shall become immediately vested exercisable and all
options that have been exercised will be permitted to be sold.

                                      -18-

<PAGE>

PRINCIPLE ON OPTION ALLOCATION RULES FOR 2005-2006

     (1)  80% of the options shall be allocated to key officers of the company
          (the "Key Officer Option") (for major officers of the company), while
          20% are Common Officer Option (for common officers and a few
          outstanding employees);

     (2)  Allocation Rules for Key Officer Options for 2005-2006:

     All key officers will be divided into five ranks based on position in the
company and contributions to the company's performance of various regions.

     Rank one includes the president and directors of the company. The number of
options to be allocated will be determined by the Board of Directors separately;

     Rank two includes vice-presidents of the company;

     Rank three includes senior controllers and top 3 branch general managers in
terms of performance;

     Rank four includes controllers and top 4-8 branch general managers in terms
of performance;

     Rank five includes division managers of the company's headquarter and other
branch general managers as well as important regional vice general manager.

     Qualification of participants:

          -    the major officers participating allocation of Key Officer
               Options shall have continually served in the company for over 1
               year (or specially approved by the Board of Directors); and

          -    have not got any written warning or any other more serious
               penalty from the company during the period from January 1, 2005
               to the date when this allocation plan is issued.

          Method of performance ranking and assessment:

     Performance ranking means ranking of integrate figures of income and profit
as proportion of corresponding aggregate figures of the company.

     The major officers participating in share option plan are divided into two
categories: one includes major officers of the company's headquarter, for whom
the option number available to subscribe will be determined based on the general
performance of the company and assessment by their supervisors; the other
includes leaders of major regional branches for whom the allocation rank will be
adjusted according to operational results, the calculation formula to be basic
allocation coefficient * performance figures achieved / proposed task figures.

     Proposed task figures are determined based on the goals of the President's
Office to each company before end of January every year, including income figure
and profit figure which are weighted 50% to 50% respectively.

     The number of options granted to every officer in each year will be kept
private and will be registered and managed by the office of the Board of
Directors after execution of relevant

                                      -19-

<PAGE>

agreement.

     (3) Allocation Rules on Common Officer Options for 2005-2006:

     20% of such options will be allocated to certain outstanding store
supervisors and outstanding pharmacists of the year selected among the whole
company.

     The remaining 80% options will be allocated among key officers and key
employees by each branch general manager.

     Participators of Common Officer Options include key employees of the
company's headquarters, key employees of regional branches and store supervisors
and employees with outstanding contribution.

     Qualification of participants:

          -    have continually served in the company for over one year; and

          -    have not got any written warning or any other more serious
               penalty from the company during the period from January 1, 2005
               to the date when this allocation plan is issued.

     Scope of participants:

          -    headquarter vice mangers, directors, branch divisional mangers
               appointed in or before year 2005;

          -    directors of core business divisions (regional store mangers,
               sourcing managers, directors of product division) appointed in or
               before year 2005;

          -    key store managers or pharmacists appointed in or before year
               2005, for whom written materials will be required to state the
               outstanding operation result of his/her store.

          -    those specially recommended by branch general managers for whom
               detailed written materials will be required to explain the
               reasons of special recommendation.

     The minimum number of options allocated to each individual shall not be
less than 1,000 shares.

                                      -20-

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