Document:

Unassociated Document

    

    Exhibit
10.7

    

    SECURITY
AGREEMENT

    

    1.           Identification.

    

    This
Security Agreement (the “Agreement”), dated as
of January 22, 2010, is entered into by and among China Yongxin
Pharmaceuticals, Inc., a Delaware corporation (“Parent”), and the entities
identified on Schedule
1 hereto (each a
“Guarantor” and together
with Parent, each a “Debtor” and collectively the
“Debtors”), the
Subscribers identified on Schedule 2 hereto (the “Subscribers”), who are parties
to the Subscription Agreement dated as of January 22, 2010  (the
“Subscription
Agreement”), by and among Parent, and such Subscribers, and Collateral
Agents, LLC (“Collateral
Agent”).

    

    2.           Recitals.

    

    2.1           At
or about the date hereof, each of the Subscribers is making a loan (the
“Loan”) to
Parent.  Guarantor is a direct or indirect Subsidiary (as defined in
Section 6.12 hereof) of Parent.  It is beneficial to each Debtor that
the Loan is made.  Guarantor has delivered or will deliver a
“Guaranty” of Parent’s obligations to Subscribers.

    

    2.2           The
Loan will be evidenced by one or more promissory notes (each a “Note”) issued by
Parent on or about the date of this Agreement pursuant to the
Subscription Agreement.  The Note was or will be executed by
Parent as “Borrower” or
“Debtor” for the benefit
of each Subscriber as the “Holder” or “Subscriber”
thereof.

    

    2.3           In
consideration of the Loans made and to be made by Subscribers to Parent and for
other good and valuable consideration, and as security for the performance by
Parent of its obligations under the Note, by Guarantor of its obligations under
the Guaranty, and as security for the repayment of the Loan and all other sums
due from Debtor to Subscribers arising under the Transaction Documents (as
defined in the Subscription Agreement) and any other agreement between or among
them (collectively, the “Obligations”), each Debtor,
for good and valuable consideration, receipt of which is acknowledged, has
agreed to grant to the Subscribers and to the Collateral Agent on behalf of the
Subscribers a security interest in the Collateral (as such term is hereinafter
defined), on the terms and conditions hereinafter set forth.

    

    2.4           The
following defined terms which are defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof are used herein as so
defined:  Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Proceeds.  Other capitalized
terms employed herein shall have the meanings attributed to them in the
Subscription Agreement.

    

    3.           Grant of General
Security
Interest in Collateral.

    

    3.1           As
security for the Obligations of Debtors, each Debtor hereby grants each of the
Subscribers, a security interest in the Collateral.

    

    3.2           “Collateral” shall mean all of
the following property of Debtors:

    

     (A)           All
now owned and hereafter acquired right, title and interest of Debtors in, to and
in respect of all Accounts, Goods, real or personal property, all present and
future books and records relating to the foregoing and all products and Proceeds
of the foregoing, and as set forth below:

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    (i)           Including
but not limited to the items described on Schedule 9(l) to the Subscription
Agreement, all now owned and hereafter acquired right, title and interest of
Debtors in, to and in respect of all: Accounts, interests in goods represented
by Accounts, returned, reclaimed or repossessed goods with respect thereto and
rights as an unpaid vendor; contract rights; Chattel Paper; investment property;
General Intangibles (including but not limited to, tax and duty claims and
refunds, registered and unregistered patents, trademarks, service marks,
certificates, copyrights, trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints, customer lists, licenses,
whether as licensor or licensee, choses in action and other claims, and existing
and future leasehold interests and claims in and to equipment, real estate and
fixtures); Documents; Instruments; letters of credit, bankers’ acceptances or
guaranties; cash moneys, deposits including but not limited to the deposit
accounts identified on Schedule
3; securities, bank accounts, deposit accounts, credits and other
property now or hereafter owned or held in any capacity by Debtors, as well as
agreements or property securing or relating to any of the items referred to
above;

    

    (ii)           Goods:  All
now owned and hereafter acquired right, title and interest of Debtors in, to and
in respect of goods, including, but not limited to:

    

     
(a)           All
Inventory, wherever located, whether now owned or hereafter acquired, of
whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Debtors’ business; finished goods, timber cut or to be cut, oil, gas,
hydrocarbons, and minerals extracted or to be extracted, and all names or marks
affixed to or to be affixed thereto for purposes of selling same by the seller,
manufacturer, lessor or licensor thereof and all Inventory which may be returned
to any Debtor by its customers or repossessed by any Debtor and all of Debtors’
right, title and interest in and to the foregoing (including all of a Debtor’s
rights as a seller of goods);

    

     
(b)           All
Equipment and fixtures, wherever located, whether now owned or hereafter
acquired, including, without limitation, all machinery, furniture and fixtures,
and any and all additions, substitutions, replacements (including spare parts),
and accessions thereof and thereto (including, but not limited to Debtors’
rights to acquire any of the foregoing, whether by exercise of a purchase option
or otherwise);

    

    (iii)           Property:  All
now owned and hereafter acquired right, title and interests of Debtors in, to
and in respect of any other personal property in or upon which a Debtor has or
may hereafter have a security interest, lien or right of setoff;

    

    (iv)           Books and
Records:  All present and future books and records relating to
any of the above including, without limitation, all computer programs, printed
output and computer readable data in the possession or control of the Debtors,
any computer service bureau or other third party; and

    

    (v)       
    Products and
Proceeds:  All products and Proceeds of the foregoing in
whatever form and wherever located, including, without limitation, all insurance
proceeds and all claims against third parties for loss or destruction of or
damage to any of the foregoing.

    

     (B)         All
now owned and hereafter acquired right, title and interest of Debtors in, to and
in respect of the following:

    

    (i)        
   the shares of stock of each Guarantor [excluding these
Subsidiaries organized under the laws of the People’s Republic of China (“Excluded Subsidiary”)], which
the Debtor represents, equals not less than the equity ownership and right to
receive equity of Guarantor as set forth on Schedule 1 hereto, the certificates
representing such shares together with an executed stock power, and other
rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    (ii)           all
additional shares of stock, partnership interests, member interests or other
equity interests from time to time acquired by Debtor, in any Subsidiary that is
not a Subsidiary of the Debtor on the date hereof except for an Excluded
Subsidiary (“Future
Subsidiaries”), the certificates representing such additional shares, and
other rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares, interests or equity;
and

    

    (iii)           all
security entitlements of Debtor in, and all Proceeds of any and all of the
foregoing in each case, whether now owned or hereafter acquired by Debtor and
howsoever its interest therein may arise or appear (whether by ownership,
security interest, lien, claim or otherwise).

    

    Notwithstanding
anything to the contrary set forth in Section 3.2 above, the types or items of
Collateral described in such Section shall not include any rights or interests
in any contract, lease, permit, license, charter or license agreement covering
real or personal property, as such, if under the terms of such contract, lease,
permit, license, charter or license agreement, or applicable law with respect
thereto, the valid grant of a security interest or lien therein to the
Subscribers is prohibited or would result in a breach and such prohibition or
breach has not been or is not waived or the consent of the other party to such
contract, lease, permit, license, charter or license agreement has not been or
is not otherwise obtained or under applicable law such prohibition or breach
cannot be waived. 

    

    Notwithstanding
anything to the contrary set forth in Section 3.2 above, the types or items of
Collateral described in such Section shall not include any Equipment which is,
or at the time of any Debtor’s acquisition thereof shall be, subject to a
purchase money mortgage or other purchase money lien or security interest
(including capitalized or finance leases) permitted hereunder if: (a) the valid
grant of a security interest or lien therein to the Subscribers in such
Equipment is prohibited by the terms of the agreement between such Debtor and
the holder of such purchase money mortgage or other purchase money lien or
security interest or under applicable law and such prohibition has not been or
is not waived, or the consent of the holder of the purchase money mortgage or
other purchase money lien or security interest has not been or is not otherwise
obtained, or under applicable law such prohibition cannot be waived and (b) the
purchase money mortgage or other purchase money lien or security interest on
such item of Equipment is or shall become valid and perfected.  To the
extent each of the foregoing conditions is satisfied, Subscribers shall, at the
request of Debtor and at Debtor’s expense, execute and deliver a UCC-3 Partial
Release with respect to any such Equipment subject to such a purchase money
security interest or lien, provided, that, such Partial Release shall be in form
and substance satisfactory to the Subscribers.

    

    “Equipment” shall mean all of
Debtor's now owned and hereafter acquired equipment, machinery, laboratory and
research equipment and tools, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.

    

    Notwithstanding
anything to the contrary set forth in Section 3.2 above, “Collateral” shall
exclude accounts receivable of the Debtor or and Subsidiary that have been
pledged prior to the date of this Agreement to third parties in connection with
debt financings of the Company and also exclude items which would otherwise be
Collateral but for their location or presence in the People’s Republic of China
and also excludes Excluded Subsidiaries.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    3.3           The
Subscriber and Collateral Agent are hereby specifically authorized, after the
Maturity Date (defined in the Note) accelerated or otherwise, and after the
occurrence of an Event of Default (as defined herein) and the expiration of any
applicable cure period, to transfer any Collateral into the name of the
Collateral Agent and to take any and all action deemed advisable to the
Subscriber to remove any transfer restrictions affecting the
Collateral.

    

    4.           Perfection of Security
Interest.

    

    4.1           Each
Debtor shall prepare, execute and deliver to the Subscribers UCC-1 Financing
Statements in form and substance acceptable to Subscribers.  The
Subscribers are instructed to prepare and file at each Debtor’s cost and
expense, financing statements in such United States and foreign jurisdictions
deemed advisable to Subscribers, including but not limited to Washington, D.C.,
and the States of California, Delaware and New York and the People’s Republic of
China.

    

    4.2           Upon
the execution of this Agreement, Parent shall deliver to Collateral Agent stock
certificates representing all of the shares of outstanding capital stock of
Guarantor (the “Securities”).  All
such certificates shall be held by or on behalf of Subscribers pursuant hereto
and shall be delivered in suitable form for transfer by delivery, and shall be
accompanied by duly executed instruments of transfer or assignment or undated
stock powers executed in blank, all in form and substance satisfactory to
Subscribers.

    

    4.3           All
other certificates and instruments constituting Collateral from time to time
required to be pledged to Subscribers pursuant to the terms hereof (the
“Additional Collateral”) shall be delivered to Collateral Agent promptly upon
receipt thereof by or on behalf of Debtors.  All such certificates and
instruments shall be held by or on behalf of Subscribers pursuant hereto and
shall be delivered in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment or undated
stock powers executed in blank, all in form and substance satisfactory to
Subscribers.  If any Collateral consists of uncertificated securities,
unless the immediately following sentence is applicable thereto, Debtors shall
cause Subscribers (or its custodian, nominee or other designee) to become the
registered holder thereof, or cause each issuer of such securities to agree that
it will comply with instructions originated by Subscribers with respect to such
securities without further consent by Debtors.  If any Collateral
consists of security entitlements, Debtors shall transfer such security
entitlements to Subscribers (or its custodian, nominee or other designee) or
cause the applicable securities intermediary to agree that it will comply with
entitlement orders by Subscribers without further consent by
Debtors.

    

    4.4           Within
five (5) business days after the receipt by a Debtor of any Additional
Collateral, a Pledge Amendment, duly executed by such Debtor, in substantially
the form of Exhibit A
hereto (a “Pledge
Amendment”), shall be delivered to Subscribers in respect of the
Additional Collateral to be pledged pursuant to this Agreement. Each Debtor
hereby authorizes Subscribers to attach each Pledge Amendment to this Agreement
and agrees that all certificates or instruments listed on any Pledge Amendment
delivered to Subscribers shall for all purposes hereunder constitute
Collateral.

    

    4.5           If
Debtor shall receive, by virtue of Debtor being or having been an owner of any
Collateral, any (i) stock certificate (including, without limitation, any
certificate representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise,
(iii) dividends payable in cash (except such dividends permitted to be retained
by Debtor pursuant to Section 5.2 hereof) or in securities or other property or
(iv) dividends or other distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, Debtor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust for
the benefit of Subscribers, shall segregate it from Debtor’s other property and
shall deliver it forthwith to Subscribers, in the exact form received, with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by Subscribers as Collateral and as further collateral security for the
Obligations.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    5.           Distribution.

    

    5.1           So
long as an Event of Default does not exist, Debtors shall be entitled to
exercise all voting power pertaining to any of the Collateral, provided such
exercise is not contrary to the interests of the Subscribers and does
not impair the Collateral.

    

    5.2.          At
any time an Event of Default exists or has occurred and is continuing, all
rights of Debtors, upon notice given by Subscribers, to exercise the voting
power and receive payments, which it would otherwise be entitled to pursuant to
Section 5.1, shall cease and all such rights shall thereupon become vested in
Subscribers, which shall thereupon have the sole right to exercise such voting
power and receive such payments.

    

    5.3           All
dividends, distributions, interest and other payments which are received by
Debtors contrary to the provisions of Section 5.2 shall be received in trust for
the benefit of Subscribers as security and Collateral for payment of the
Obligations shall be segregated from other funds of Debtors, and shall be
forthwith paid over to Subscribers as Collateral in the exact form received
with any necessary endorsement and/or appropriate stock powers duly executed in
blank, to be held by Subscribers as Collateral and as further collateral
security for the Obligations.

    

    6.           Further Action By Debtors;
Covenants and Warranties.

    

    6.1           Subscribers at
all times shall have a perfected security interest in the
Collateral.  Each Debtor represents that other than the security
interests described on Schedule
6.1, it has and will continue to have full title to the Collateral free
from any liens, leases, encumbrances, judgments or other claims, except for
“Permitted Liens” (defined below).  The Subscribers’ security
interest in the Collateral constitutes and will continue to constitute a first,
prior and indefeasible security interest in favor of Subscribers, subject only
to the security interests described on Schedule 6.1.  Each
Debtor will do all acts and things, and will execute and file all instruments
(including, but not limited to, security agreements, financing statements,
continuation statements, etc.) reasonably requested by Subscribers to establish,
maintain and continue the perfected security interest of Subscribers in the
perfected Collateral, and will promptly on demand, pay all costs and expenses of
filing and recording, including the costs of any searches reasonably deemed
necessary by Subscribers from time to time to establish and determine the
validity and the continuing priority of the security interest of Subscribers,
and also pay all other claims and charges that, in the opinion of
Subscribers are reasonably likely to materially prejudice, imperil or
otherwise affect the Collateral or Subscribers’ security interests
therein.   For purposes of this Agreement, “Permitted Liens” shall
include:

     

    
      	
               
      

            	
              (a)  

            	
              liens 
      for  the  payment  of  taxes  which 
      are  not  yet  due  and
  payable;

            

    

     

    
      	
               
      

            	
              (b)

            	
              liens 
      arising  by  statute  in  connection  with 
      worker’s compensation, unemployment insurance, old age benefits, social
      security obligations, taxes, assessments, statutory obligations or other
      similar charges (other than Liens arising under ERISA), good faith cash
      deposits in connection with tenders, contracts or leases to which the
      Debtor or any Guarantor is a party or other cash deposits required to be
      made in the ordinary course of business, provided in each case that the
      obligation is not for borrowed money and that the obligation secured is
      not overdue or, if overdue, is being contested in good faith by
      appropriate proceedings which prevent enforcement of the matter under
      contest and adequate reserves have been established
    therefor;

            

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c) 

            	
              mechanics’,
      workmen’s, materialmen’s, landlords’, carriers’ or other similar liens
      arising in the ordinary course of business with respect to obligations
      which are not due or which are being contested in good faith by
      appropriate proceedings which prevent enforcement of the matter under
      contest;

            

    

     

    
      	
               
      

            	
              (d) 

            	
              any
      interest or title of a lessor under any operating lease or capital lease;
      and

            

    

     

    
      	
               
      

            	
              (e) 

            	
              liens
      on real property of the Debtor or any Guarantor created solely for the
      purpose of securing indebtedness incurred to finance the purchase price of
      such real property;

            

    

     

    
      	
               
      

            	
              (f) 

            	
              cash
      deposits to secure performance bonds and other obligations of a like
      nature (in each case, other than for Indebtedness) incurred in the
      ordinary course of business for obligations not yet due or which are being
      contested in good faith by appropriate proceedings which prevent
      enforcement of the matter under contest and adequate reserves have been
      established therefor;

            

    

     

    
      	
               
      

            	
              (g)

            	
              easements,
      rights-of-way, zoning and similar restrictions, building codes,
      reservations,  covenants,  conditions,  waivers, 
      survey  exceptions  and  other  similar encumbrances
      or title defects and, with respect to any interests in real property held
      or leased by the Debtor or any of its subsidiaries, mortgages, deeds of
      trust and other encumbrances incurred, created, assumed or permitted to
      exist and arising by, through or under  a  landlord 
      or  owner  of  such  property  encumbering 
      solely  such  landlord’s or owner’s interest in such real
      property, with or without the consent of the
  lessee;

            

    

     

    
      	
               
      

            	
              (h) 

            	
              liens
      in existence on the date hereof;

            

    

     

    
      	
               
      

            	
              (i) 

            	
              any 
      interest  of  a  licensor  under  a 
      license  entered  into  in  the  ordinary course
      of the Debtor’s or the applicable Guarantor’s business;
  and

            

    

     

    
      	
               
      

            	
              (j)

            	
              any 
      lien  existing  on  any  part  of  any 
      business acquired by the Debtor or any Guarantor,  prior 
      to  the acquisition  thereof  by  the 
      Debtor  or  any 
Guarantor.

            

    

    

    6.2          Except
in connection with sales of Collateral, in the ordinary course of business, for
fair value and in cash, and except for Collateral which is substituted by assets
of identical or greater value (subject to the consent of the Subscribers) or
which is not material to the Debtor’s business, each Debtor will not sell,
transfer, assign or pledge those items of Collateral (or allow any such items to
be sold, transferred, assigned or pledged), without the prior written consent of
Subscribers other than a transfer of the Collateral to a wholly-owned
United States formed and located subsidiary or to another Debtor on prior notice
to Subscribers, and provided the Collateral remains subject to the security
interest herein described.  Although Proceeds of Collateral are
covered by this Agreement, this shall not be construed to mean that
Subscribers consent to any sale of the Collateral, except as provided
herein.  Sales of Collateral in the ordinary course of business as
described above shall be free of the security interest of Subscribers and
Subscribers shall promptly execute such documents (including without limitation
releases and termination statements) as may be required by Debtors to evidence
or effectuate the same.

    

    6.3          Each
Debtor will, at all reasonable times during regular business hours and upon
reasonable notice, allow Subscribers or their representatives free and
complete access to the Collateral and all of such Debtor’s records that in any
way relate to the Collateral, for such inspection and examination as Subscribers
reasonably deem necessary.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    6.4          Each
Debtor, at its sole cost and expense, will protect and defend the
Collateral against the claims and demands of all persons other than the
Subscribers.

    

    6.5          Debtors
will promptly notify Subscribers of any levy, distraint or other seizure by
legal process or otherwise of any part of the Collateral, and of any threatened
or filed claims or proceedings that are reasonably likely to affect or impair
any of the rights of Subscribers under this Security Agreement in any
material respect.

    

    6.6          Each
Debtor, at its own expense, will obtain and maintain in force insurance policies
covering losses or damage to those items of Collateral which constitute physical
personal property, which insurance shall be of the types customarily insured
against by companies in the same or similar business, similarly situated, in
such amounts (with such deductible amounts) as is customary for such companies
under the same or similar circumstances, similarly situated.  Debtors
shall make the Subscribers loss payee thereon to the extent of its interest
in the Collateral. Subscribers are hereby irrevocably (until the
Obligations are indefeasibly paid in full) appointed each Debtor’s
attorney-in-fact to endorse any check or draft that may be payable to such
Debtor so that Subscribers may collect the proceeds payable for any loss
under such insurance.  The proceeds of such insurance, less any costs
and expenses incurred or paid by Subscribers in the collection thereof,
shall be applied either toward the cost of the repair or replacement of the
items damaged or destroyed, or on account of any sums secured hereby, whether or
not then due or payable.

    

    6.7          In
order to protect the Collateral and Subscribers’ interest therein,
Subscribers may, at Subscribers’ option, and without any obligation to
do so, pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Debtor upon Debtor’s
failure to do so provided Subscribers have given Debtor any written notice
otherwise required to be given as described herein in connection
therewith.  All amounts expended by Subscribers in so doing shall
become part of the Obligations secured hereby, and shall be immediately due and
payable by Debtor to Subscribers upon demand and shall bear interest at the
lesser of 15% per annum or the highest legal amount allowed from the dates of
such expenditures until paid.

    

    6.8          Upon
the request of Subscribers, Debtors will furnish to Subscribers within five
(5) business days thereafter, or to any proposed assignee of this Security
Agreement, a written statement in form reasonably satisfactory to Subscribers,
duly acknowledged, certifying the amount of the principal and interest and any
other sum then owing under the Obligations, whether to its knowledge any claims,
offsets or defenses exist against the Obligations or against this Security
Agreement, or any of the terms and provisions of any other agreement of Debtors
securing the Obligations.  In connection with any assignment by
Subscribers of this Security Agreement, each Debtor hereby agrees to cause
the insurance policies required hereby to be carried by such Debtor, if any, to
be endorsed in form satisfactory to Subscribers or to such assignee, with
loss payable clauses in favor of such assignee, and to cause such endorsements
to be delivered to Subscribers within ten (10) calendar days after request
therefor by Subscribers.

    

    6.9          Each
Debtor will, at its own expense, make, execute, endorse, acknowledge, file
and/or deliver to the Subscribers from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other reasonable assurances or instruments and take further steps relating to
the Collateral and other property or rights covered by the security interest
hereby granted, as the Subscribers may reasonably require to perfect its
security interest hereunder.

    
      
         

      

      
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    6.10           Debtors
represent and warrant that they are the true and lawful exclusive owners of the
Collateral, free and clear of any liens, encumbrances and claims other than
those listed on Schedule 6.1.

    

    6.11           Each
Debtor shall cause each Subsidiary of such Debtor in existence on the date
hereof and each future Subsidiary to execute and deliver to
Subscribers promptly and in any event within ten (10) days after the
formation, acquisition or change in status thereof (A) a guaranty guaranteeing
the Obligations and (B) if requested by Subscribers, a security and pledge
agreement substantially in the form of this Agreement together with (x)
certificates evidencing all of the capital stock of each Subsidiary of and any
entity owned by such Subsidiary, (y) undated stock powers executed in blank with
signatures guaranteed, and (z) such opinion of counsel and such approving
certificate of such Subsidiary as Subscribers may reasonably request in respect
of complying with any legend on any such certificate or any other matter
relating to such shares and (C) such other agreements, instruments, approvals,
legal opinions or other documents reasonably requested by Subscribers in order
to create, perfect, establish the first priority of or otherwise protect any
lien purported to be covered by any such pledge and security agreement or
otherwise to effect the intent that all property and assets of such Subsidiary
shall become Collateral for the Obligations.  For purposes of this
Agreement, “Subsidiary” means,
with respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity) of which more than 40% of (A) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (B) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (C) in the case of a trust, estate, association,
joint venture or other entity, the beneficial interest in such trust,
estate, association or other entity business is, at the time of determination,
owned or controlled directly or indirectly through one or more intermediaries,
by such entity.  Schedule 1 annexed hereto contains a list of all
Subsidiaries of the Debtors as of the date of this
Agreement.  This Section 6.11 shall not apply to items not
included in the definition of Collateral.

    

    6.12           Debtor
will notify Subscribers within ten days of the occurrence of any change of
Debtor’s name, domicile, address or jurisdiction of
incorporation.  The timely giving of this notice is a material
obligation of Debtor.

    

    7.           Power of
Attorney.

    

    At any
time an Event of Default has occurred, and only after the applicable cure period
as set forth in this Agreement and the other Transaction Documents, and is
continuing, each Debtor hereby irrevocably constitutes and appoints Subscribers
as the true and lawful attorney of such Debtor, with full power of substitution,
in the place and stead of such Debtor and in the name of such Debtor or
otherwise, at any time or times, in the discretion of the Subscribers, to take
any action and to execute any instrument or document which is reasonably and
prudently necessary to protect the Subscribers’ rights in the Collateral as
set forth in this Agreement.  This power of attorney is coupled with
an interest and is irrevocable until the Obligations are satisfied.

    

    8.           Performance By The
Subscribers.

    

    If a
Debtor fails to perform any material covenant, agreement, duty or obligation of
such Debtor under this Agreement, Subscribers may, after any applicable cure
period and notice required hereunder, at any time or times in its discretion,
take action to effect performance of such obligation.  All reasonable
expenses of the Subscribers incurred in connection with the foregoing
authorization shall be payable by Debtors as provided in Paragraph 12.1
hereof.  No discretionary right, remedy or power granted to the
Subscribers under any part of this Agreement shall be deemed to impose any
obligation whatsoever on the Subscribers with respect thereto, such rights,
remedies and powers being solely for the protection of the
Subscribers.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    9.           Event of
Default.

    

    An event
of default (“Event of
Default”) shall be deemed to have occurred hereunder upon the occurrence
of any event of default as defined and described in this Agreement, in the Note,
the Subscription Agreement, Transaction Documents (as defined in the
Subscription Agreement), and any other agreement to which one or more Debtors
and Subscribers are parties.   Upon and after any Event of
Default, after the applicable cure period, if any, any or all of the Obligations
shall become immediately due and payable at the option of the Subscribers, and
the Subscribers may dispose of Collateral as provided herein.  A
default by Debtor of any of its material obligations pursuant to this Agreement
and any of the Transaction Documents shall be an Event of Default hereunder and
an “Event of Default” as defined in the Note, and Subscription
Agreement.

    

    10.         Disposition of
Collateral.

    

    Upon and
after any Event of Default which is then continuing,

    

    10.1      The
Subscribers may exercise its rights with respect to each and every component of
the Collateral, without regard to the existence of any other security or source
of payment for, in order to satisfy the Obligations.  In addition to
other rights and remedies provided for herein or otherwise available to it, the
Subscribers shall have all of the rights and remedies of a secured party on
default under the Uniform Commercial Code then in effect in the State of New
York.

    

    10.2      If
any notice to Debtors of the sale or other disposition of Collateral is required
by then applicable law, five (5) business days prior written notice (which
Debtors agree is reasonable notice within the meaning of Section 9.612(a) of the
Uniform Commercial Code) shall be given to Debtors of the time and place of any
sale of Collateral which Debtors hereby agree may be by private
sale.  The rights granted in this Section are in addition to any and
all rights available to Subscribers under the Uniform Commercial
Code.

    

    10.3      The
Subscribers is authorized, at any such sale, if the Subscribers deems it
advisable to do so, in order to comply with any applicable securities laws, to
restrict the prospective bidders or purchasers to persons who will represent and
agree, among other things, that they are purchasing the Collateral for their own
account for investment, and not with a view to the distribution or resale
thereof, or otherwise to restrict such sale in such other manner as the
Subscribers deem advisable to ensure such compliance.  Sales made
subject to such restrictions shall be deemed to have been made in a commercially
reasonable manner.

    

    10.4      All
proceeds received by the Subscribers in respect of any sale, collection or other
enforcement or disposition of Collateral, shall be applied (after deduction of
any amounts payable to the Subscribers pursuant to Paragraph 12.1 hereof)
against the Obligations.   Upon payment in full of all
Obligations, Debtors shall be entitled to the return of all Collateral,
including cash, which has not been used or applied toward the payment of
Obligations or used or applied to any and all costs or expenses of the
Subscribers incurred in connection with the liquidation of the Collateral
(unless another person is legally entitled thereto).  Any assignment
of Collateral by the Subscribers to Debtors shall be without representation or
warranty of any nature whatsoever and wholly without recourse.  To the
extent allowed by law, Subscribers may purchase the Collateral and pay for such
purchase by offsetting the purchase price with sums owed to Subscribers by
Debtors arising under the Obligations or any other source.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    10.5      Without
limiting, and in addition to, any other rights, options and remedies
Subscribers have under the Transaction Documents, the UCC, at law or in
equity, or otherwise, upon the occurrence and continuation of an Event of
Default, Subscribers shall have the right to apply for and have a receiver
appointed by a court of competent jurisdiction.  Debtors expressly
agree that such a receiver will be able to manage, protect and preserve the
Collateral and continue the operation of the business of Debtors to the extent
necessary to collect all revenues and profits thereof and to apply the same to
the payment of all expenses and other charges of such receivership, including
the compensation of the receiver, until a sale or other disposition of such
Collateral shall be finally made and consummated.  Debtors waive any
right to require a bond to be posted by or on behalf of any such
receiver.

    

    10.6      Provided
an Event of Default or an event, which with the passage of time or the giving of
notice could become an Event of Default is not pending, then from and after the
date a Lender has exercised its conversion rights with respect to not less than
one-half of the initial principal of such Lender’s Note and the Company has
complied with its obligations with respect to all such conversions, then such
Lender’s security interest granted pursuant to this Agreement shall be
automatically released.

    

    11.         Waiver of Automatic
Stay.   Debtor acknowledges and agrees that should a
proceeding under any bankruptcy or insolvency law be commenced by or against
Debtor, or if any of the Collateral should become the subject of any bankruptcy
or insolvency proceeding, then the Subscribers should be entitled to, among
other relief to which the Subscribers may be entitled under the Note,
Subscription Agreement, Transaction Documents, and any other agreement to which
the Debtor and Subscribers are parties, (collectively “Loan Documents”) and/or
applicable law, an order from the court granting immediate relief from the
automatic stay pursuant to 11 U.S.C. Section 362 to permit the Subscribers to
exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law.  DEBTOR EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC
STAY IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE, DEBTOR EXPRESSLY
ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION
OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN
ANY WAY THE ABILITY OF THE SUBSCRIBERS TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES
UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.   Debtor
hereby consents to any motion for relief from stay which may be filed by the
Subscribers in any bankruptcy or insolvency proceeding initiated by or against
Debtor, and further agrees not to file any opposition to any motion for relief
from stay filed by the Subscribers.  Debtor represents, acknowledges
and agrees that this provision is a specific and material aspect of this
Agreement, and that the Subscribers would not agree to the terms of this
Agreement if this waiver were not a part of this Agreement.  Debtor
further represents, acknowledges and agrees that this waiver is knowingly,
intelligently and voluntarily made, that neither the Subscribers nor any person
acting on behalf of the Subscribers has made any representations to induce this
waiver, that Debtor has been represented (or has had the opportunity to be
represented) in the signing of this Agreement and in the making of this waiver
by independent legal counsel selected by Debtor and that Debtor has had the
opportunity to discuss this waiver with counsel.   Debtor further
agrees that any bankruptcy or insolvency proceeding initiated by Debtor will
only be brought in the Federal Court within the Southern District of New
York.

    

    12.         Miscellaneous.

    

    12.1      Expenses.  Debtors
shall pay to the Subscribers, on demand, the amount of any and all reasonable
expenses, including, without limitation, attorneys’ fees, legal expenses and
brokers’ fees, which the Subscribers may incur in connection with (a) sale,
collection or other enforcement or disposition of Collateral; (b) exercise or
enforcement of any the rights, remedies or powers of the Subscribers hereunder
or with respect to any or all of the Obligations upon breach or threatened
breach; or (c) failure by Debtors to perform and observe any agreements of
Debtors contained herein which are performed by Subscribers.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    12.2   
    Waivers, Amendment and
Remedies.  No course of dealing by the Subscribers and no
failure by the Subscribers to exercise, or delay by the Subscribers in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right, remedy or power of
the Subscribers.  No amendment, modification or waiver of any
provision of this Agreement and no consent to any departure by Debtors therefrom
shall, in any event, be effective unless contained in a writing signed by the
Subscribers, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. The rights,
remedies and powers of the Subscribers, not only hereunder, but also under any
instruments and agreements evidencing or securing the Obligations and under
applicable law are cumulative, and may be exercised by the Subscribers from time
to time in such order as the Subscribers may elect.

    

    12.3    
   Notices.  All
notices or other communications given or made hereunder shall be in writing and
shall be personally delivered or deemed delivered the first business day after
being faxed (provided that a copy is delivered by first class mail) to the party
to receive the same at its address set forth below or to such other address as
either party shall hereafter give to the other by notice duly made under this
Section:

     

    
      
        
          
            	
                    To
      Debtors:

                  	
                    China
      Yongxin Pharmaceuticals, Inc.

                  
	 
      	
                    927
      Canada Court

                  
	 
      	
                    City
      of Industry, CA 91748

                  
	 
      	
                    Attn:
      Yongxin Liu, CEO

                  
	 
      	
                    Fax:
      (626) 581-9138

                  
	 
      	 
      
	
                    With
      a copy by facsimile only to:

                  	 
      
	 
      	 
      
	 
      	
                    Richardson
      & Patel, LLP

                  
	 
      	
                    10900
      Wilshire Blvd., Suite 500

                  
	 
      	
                    Los
      Angeles, CA 90024

                  
	 
      	
                    Attn:
      Ryan Hong, Esq.

                  
	 
      	
                    Fax:
      (310) 208-1154

                  
	 
      	 
      
	
                    To
      Subscribers:

                  	
                    As
      specified in the Subscription Agreement

                  
	 
      	 
      
	
                    To
      Collateral Agent:

                  	
                    Collateral
      Agents, LLC

                  
	 
      	
                    111
      West 57th
      Street, Suite 1416

                  
	 
      	
                    New
      York, NY 10019

                  
	 
      	
                    Attn:
      General Counsel

                  
	 
      	
                    Fax:
      (212) 245-9101

                  
	 
      	 
      
	
                    If
      to Debtors or Subscribers,

                  	 
      
	
                    or
      Collateral Agent

                  	 
      
	
                    with
      a copy by telecopier only to:

                  	 
      
	 
      	 
      
	 
      	
                    Grushko
      & Mittman, P.C.

                  
	 
      	
                    551
      Fifth Avenue, Suite 1601

                  
	 
      	
                    New
      York, New York 10176

                  
	 
      	
                    Fax:
      (212) 697-3575

                  

          

        

      

    

    

    Any party
may change its address by written notice in accordance with this
paragraph.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    12.4          Term; Binding
Effect.  This Agreement shall (a) remain in full force and
effect until payment and satisfaction in full of all of the Obligations; (b) be
binding upon each Debtor, and its successors and permitted assigns; and (c)
inure to the benefit of the Subscribers and its successors and
assigns.

    

    12.5          Captions.  The
captions of Paragraphs, Articles and Sections in this Agreement have been
included for convenience of reference only, and shall not define or limit the
provisions of this agreement and have no legal or other significance
whatsoever.

    

    12.6          Governing Law; Venue;
Severability.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction, except to the extent that the
perfection of the security interest granted hereby in respect of any item of
Collateral may be governed by the law of another jurisdiction.  Any
legal action or proceeding against a Debtor with respect to this Agreement must
be brought only in the courts in the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, each Debtor hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts.  Each Debtor hereby irrevocably waives any objection which
they may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the aforesaid courts and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient
forum.  If any provision of this Agreement, or the application thereof
to any person or circumstance, is held invalid, such invalidity shall not affect
any other provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and effect.

    

    12.7          Entire
Agreement.  This Agreement contains the entire agreement of the
parties and supersedes all other agreements and understandings, oral or written,
with respect to the matters contained herein.

    

    12.8          Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by electronic transmission.

    

    13.          Termination;
Release.  When the Obligations have been indefeasibly paid and
performed in full or all outstanding Note have been converted to common stock
pursuant to the terms of the Note and the Subscription Agreements, this
Agreement shall terminated, and the Subscribers, at the request and sole expense
of the Debtors, will execute and deliver to the Debtors the proper instruments
(including UCC termination statements) acknowledging the termination of the
Security Agreement, and duly assign, transfer and deliver to the Debtors,
without recourse, representation or warranty of any kind whatsoever, such of the
Collateral, including, without limitation, Securities and any Additional
Collateral, as may be in the possession of the Subscribers.

    

    14.          Subscribers Powers.

    

    14.1          Subscribers
Powers.  The powers conferred on the Subscribers hereunder are
solely to protect Subscribers’ interest in the Collateral and shall not
impose any duty on it to exercise any such powers.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    14.2          Reasonable
Care.  The Subscribers is required to exercise reasonable
care in the custody and preservation of any Collateral in its possession;
provided, however, that the Subscribers shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral if it
takes such action for that purposes as any owner thereof reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Subscribers, to comply with any such
request at any time shall not in itself be deemed a failure to exercise
reasonable care.

    

    14.3          Majority in Interest.   The
rights of the Subscribers hereunder, except as otherwise set forth herein shall
be exercised upon the approval of Subscribers holding 75% of the outstanding
Obligations (“Majority in Interest”) at the time such approval is sought or
given.  Any tangible or physical Collateral shall be delivered to and
be held by the Collateral Agent pursuant to this Agreement and on behalf of all
Subscribers as to their respective rights.

    

    14.4          Authority of Collateral
Agent.  The Collateral Agent was appointed by the Subscribers
pursuant to a Collateral Agent Agreement of even date herewith.  All
of the rights and benefits granted to the Subscribers pursuant to this
Agreement, including the security interest and enforcement rights are also
granted to the Collateral Agent and will be exercised by Collateral Agent on
behalf of Subscribers pursuant to the Collateral Agent Agreement.  All
deliveries required to be made by Debtors hereunder shall be made to the
Collateral Agent.  UCC-1 and other financing statements may identify
the Collateral Agent as the secured party.

    

    [THIS
SPACE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have executed and delivered this Security Agreement, as of the date
first written above.

     

    
      
        
          
            
              
                
                  
                    	
                            “DEBTOR”

                          
	 
      	 
      
	
                            CHINA
      YONGXIN PHARMACEUTICALS, INC.

                          
	
                            a
      Delaware corporation

                          
	 
      	  
      
	
                            By:

                          	  
      
	 
      	
                            Yongxin
      Liu

                          
	 
      	
                            Chief
      Executive Officer

                          
	 
      	 
      
	
                            Agreed
      and Accepted by:

                          
	 
      
	
                            COLLATERAL
      AGENT:

                          
	 
      
	
                            COLLATERAL
      AGENTS, LLC

                          
	 
      	 
      
	
                            By:

                          	  
      
	
                            Name:

                          	 
      
	
                            Title:

                          	 
      

                  

                

              

            

          

        

      

    

    

    This
Security Agreement may be signed by facsimile signature and

    delivered
by confirmed facsimile transmission.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    OMNIBUS
SUBSIDIARY SIGNATURE PAGE TO

    SECURITY
AGREEMENT

     

    The
undersigned, hereby executes and delivers the Security Agreement to which this
signature page is attached and agrees to be bound by the Security Agreement on
the date set forth on the first page of the Security Agreement. This counterpart
signature page, together with all counterparts of the Security Agreement and
signature pages of the other parties named therein, shall constitute one and the
same instrument in accordance with the terms of the Security
Agreement.

    

    
      	 	 	 	 	 
	
              [Print
      Name of Subsidiary]

            	 	 
      	 
	 	 	 	 
	 
      	 	 	 
      	 
	
              [Signature]

            	 	 
      	 
	 
      	 	 	 
      	 
	
              Name:

            	 	 	 
      	 
	
              Title:

            	 	 	 
      	 
	 
      	 	 	 
      	 
	
              Mailing
      Address:

            	 	
              Telephone No.:

            	 
	 
      	 	
              Facsimile No:

            	 
	 
      	 	
              Email Address:

            	 
	 
      	 	 
      	 
	
              (City,
      State and Zip)

            	 	 
      	 

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    OMNIBUS
SUBSCRIBER SIGNATURE PAGE TO

    SECURITY
AGREEMENT

     

    The
undersigned, in its capacity as a Subscriber, hereby executes and delivers the
Security Agreement to which this signature page is attached and agrees to be
bound by the Security Agreement on the date set forth on the first page of the
Security Agreement. This counterpart signature page, together with all
counterparts of the Security Agreement and signature pages of the other parties
named therein, shall constitute one and the same instrument in accordance with
the terms of the Security Agreement.

    
      

      
        	 	 	 	 	 
	
                [Print
      Name of Subscriber]

              	 	
                [Name
      of Co-Subscriber, if applicable]

              
	 	 	 
	 
      	 	 	 
      
	
                [Signature]

              	 	
                [Signature]

              	 
	 
      	 	 	 
      	 
	
                Name:

              	 	 	
                Name: 
      

              	 
	
                Title:

              	 	 	
                Title:

              	 
	 
      	 	 	 
      	 
	
                Mailing
      Address:

              	 	
                Telephone No.:

              	 
	 
      	 	
                Facsimile No:

              	 
	 
      	 	
                Email Address:

              	 
	 
      	 	 
      	 
	
                (City,
      State and Zip)

              	 	 
      	 

      

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    CHINA
YONGXIN PHARMACEUTICALS, INC.

    SECURITY
AGREEMENT EXHIBITS AND SCHEDULES

    

    Exhibit
A – Pledge Amendment

    

    Schedule
I – Subsidiaries/Guarantors

    

    Schedule
2 – Subscribers

    

    Schedule
3 – Deposit Accounts

    

    Schedule
6.1 – Security Interests

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    TO

     

    SECURITY
AGREEMENT

     

    PLEDGE
AMENDMENT

     

    This
Pledge Amendment, dated _________ _______, is delivered pursuant to Section 4.4
of the Security Agreement referred to below.  The undersigned hereby
agrees that this Pledge Amendment may be attached to the Security Agreement,
dated November ___, 2009, as it may heretofore have been or hereafter may be
amended, restated, supplemented or otherwise modified from time to time and that
the shares listed on this Pledge Amendment shall be hereby pledged and assigned
to Subscribers and become part of the Collateral referred to in such Security
Agreement and shall secure all of the Obligations referred to in such Security
Agreement.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                  Subsidiary

                                                	 	
                                                  Shares Issued

                                                	 	
                                                  % Owned

                                                
	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    [_________________________________________]

    

    By:           ___________________________________

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    SCHEDULE
I

    

    SUBSIDIARIES/GUARANTORS

    

    Changchun
Yongxin Dirui Medical Co., Ltd., a company organized under the laws of the
People’s Republic of China

    

    Jilin
Province Yongxin Chain Drugstore Ltd., a company organized under the laws of the
People’s Republic of China

    

    Jilin
Dingjian Natural & Health Products Co., Ltd., a company organized under the
laws of the People’s Republic of China

    

    Tianjin
Jingyongxin Chain Drugstore Ltd., a company organized under the laws of the
People’s Republic of China

    

    Baishan
Caoantang Chain Drugstore Ltd., a company organized under the laws of the
People’s Republic of China

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    SCHEDULE
2

    SUBSCRIBERS

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              SUBSCRIBER
      AND ADDRESS

                                            	 	
                                              NOTE

                                              PRINCIPAL AMOUNT

                                            	 	 	
                                              WARRANTS

                                            	 
	 	 	 	 	 	 	 	 	 
	
                                              EXCALIBUR
      SPECIAL OPPORTUNITIES LP

                                            	 	$	300,000.00	 	 	 	1,500,000	 
	 	 	 	 	 	 	 	 	 
	
                                              DANA
      KATZENMEIER

                                            	 	$	50,000.00	 	 	 	250,000	 
	 	 	 	 	 	 	 	 	 
	
                                              FOURTH
      STREET HOLDINGS, LP

                                            	 	$	100,000.00	 	 	 	500,000	 
	 	 	 	 	 	 	 	 	 
	
                                              ROBERT
      B. PRAG

                                            	 	$	100,000.00	 	 	 	500,000	 
	 	 	 	 	 	 	 	 	 
	
                                              PETER
      B. TENTLER

                                            	 	$	50,000.00	 	 	 	250,000	 
	
                                              TOTAL

                                            	 	$	600,000.00	 	 	 	3,000,000	 

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    SCHEDULE
3

    DEPOSIT
ACCOUNTS

    

    
      
        	
                Bank

              	
                Bank
      Address

              
	 
      	 
      
	
                Changchun
      Yongxin Dirui Medical Co., Ltd.

              	
                1
      Shen Zhen St., Changchun

              
	
                ICBC,
      branch of Changchun Development District

              	 
      
	 
      	 
      
	
                Jilin
      Province Yongxin Chain Drugstore Ltd.

              	
                3258
      Gui Gu Blvd., Gao Xin

              
	
                Bank
      of Jilin, branch of Gaoxin Development

              	
                District,
      Changchun

              
	
                District

              	 
      
	 
      	 
      
	
                Tianjin
      Jinyongxin Charm Drugstore Ltd.

              	
                26
      W Bing Shui Blvd., Nan

              
	
                Agricultural
      Bank of China, branch of West Bing

              	
                Kai
      District

              
	
                Shui
      Blvd.

              	 
      
	 
      	 
      
	
                Baishan
      Caoantang Chain Drugstore Ltd.

              	
                47
      Hun Jiang Blvd.,

              
	
                ICBC,
      branch of Ba Dao Jiang

              	
                Changchun

              
	 
      	 
      
	
                Jilin Dingjian Natural & Health Products Co.,
      Ltd.

              	
                1
      Shen Zhen St.,Changchun

              
	
                ICBC,
      branch of Changchun Development District

              	 
      

      

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    SCHEDULE
6.1

    SECURITY
INTERESTS

    

    There is
a judgment and lien against the Company filed in Los Angeles and Orange County
during. September
2009 in the amount of $219,000. This matter has already been disclosed in the
SEC filings as an ongoing matter that has yet to be resolved. This matter is in
relation to a legal proceeding called Wells Fargo Bank. N.A. v. Software
Education for America Inc. filed in Orange County Superior Court on or about
November 9,2004. In this action, the Cross-Complainant, Terryy Koosed, sought to
amend a $219,000 judgment he obtained to include a subsidiary of the
predecessor-in-interest of the Company, which was not named or a participant in
such lawsuit. On May 8, 2009, the Orange County Superior Court rendered a
decision to enter a judgment of $219,000 against the Company. So far, the
judgment has not been paid.

    

    Per
Section 3.2 of the Security Agreement, "Collateral" excludes items which would
otherwise be Collateral but for their location or presence in the People's
Republic of China. Nonetheless, the Company hereby discloses the following
security interest(s) in assets of certain Guarantors:

    

    Changchun
Yongxin Dirui Medical Co., Ltd. ("Yongxin") borrowed RMB 5,000,000 ("Loan") from
the Bank of Jilin, Branch of FAW ("Bank") on January 23, 2009. The Bank
requested that Yongxin provide a
guarantor for the Loan, namely Changchun Small & Medium Enterprises Credit
Guarantee Co., Ltd: ("Changchun"). Changchun asked Yongxin to provide collateral
as security for its obligations as guarantor. Yongxin pledged certain accounts
receivable for a period of 5 years to Changchun including accounts receivable
from (i) People's Hospital of Jinlin Province; (2) No.1 Hospital of Jilin
University; (3) Changchun Central Hospital; and (4) FAW General Hospital. In
addition, Liu Chang Guo and Liu Yong Xin also each mortgaged a real property to
Changchun as collateral for the Loan. Mr. Liu Yong Xin is the Chief Executive
Officer of Yongxin and Mr. Liu Chang Guo is Mr. Liu Yong Xin's father. The
relevant contracts for the Loan are
summarized as follows:

    

    1. The
Contract of Guaranty (No. 2009-010) was entered into by and between Yongxin and
Changchun on January 23, 2009. Pursuant to such contract, Changchun provided a
guaranty to the Bank for the Loan. The Loan has a term of 12 months from January
23, 2009 to January 22, 2010. Yongxin also paid a deposit of RMB 150,000 to
Changchun.

    

    2. The
Contract of Pledged Account Receivable (No. 2009-004A) was entered into by and
between Yongxin and Changchun on January 23, 2009. Pursuant to such contract,
Yongxin pledged the accounts receivable for a period of 5 years from the
People's Hospital of Jilin Province as collateral to the Changchun to provide
guarantee for the Loan.

    

    3. The
Contract of Pledged Account Receivable (No. 2009-004B) was entered into by and
between Yongxin and Changchun on January 23, 2009. Pursuant to such contract,
Yongxin pledged the accounts receivable for a period of 5 years from the No.1
Hospital of Jilin University as collateral to the Changchun to provide guarantee
for the Loan.

    

    4. The
Contract of Pledged Account Receivable (No. 2009-004C) was entered by and
between Yongxin and Changchun on January 23, 2009. Pursuant to such contract,
Yongxin pledged the accounts receivable for a period of 5 years from the
Changchun Central Hospital as collateral to the Changchun to provide guarantee
for the Loan.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    5. The
Contract of Pledged Account Receivable (No. 2009-004D) was entered into by and
between Yongxin and Changchun on January 23, 2009. Pursuant to such contract,
Yongxin pledged the accounts receivable for a period of 5 years from the FAW
General Hospital (Debtor) as collateral to the Changchun to provide guarantee
for the Loan.

    

    6. The
Mortgage Contract (No., 2009-010A) was entered into by and between Liu Chang Guo
and Changchun on January 23, 2009. Pursuant to such contract, Liu Chang Guo
mortgaged a real property located at 198 Ren Min Blvd, C8 Building, Nan Guan
District, as collateral to the Changchun to provide guarantee for the
Loan.

    

    7. The
Mortgage Contract (No., 2009-010B) was entered into by and between Liu Yong Xin
and Changchun on January 23, 2009. Pursuant to such contract, Liu Yong Xin
mortgaged a real property located at Qing Nian Rd., Cai Yuan Jian C, Lv Yuan
District, as collateral to the Changchun to provide guarantee for the
Loan.

    
      
         

      

      
        23Exhibit
10.8

     

    STOCK PLEDGE
AGREEMENT

     

    STOCK PLEDGE AGREEMENT (this
“Agreement”),
dated January 22, 2010 by and among ________________________________________
(“Pledgor”);
the subscribers who are parties to a certain Subscription Agreement among China
Yongxin Pharmaceuticals, Inc., a Delaware corporation (“Borrower”), and such
Subscribers identified on Schedule I hereto (each a
“Pledgee”); and
Collateral Agents, LLC, a Delaware Limited Liability Company (“Collateral Agent”) on
behalf of Pledgees;

     

    WITNESSETH:

     

    WHEREAS, the Pledgee will lend
up to the amount set forth on Schedule I hereto to Borrower,
with such loan to be evidenced by one or more convertible promissory Notes (each
a “Note”);
and

     

    WHEREAS, Pledgor is a
shareholder, officer and/or director of Borrower, and it is to his benefit and
advantage that the loan is made and the Note is issued; and

     

    WHEREAS, in order to induce
Pledgee to make the loan and accept the Note, the Pledgor has agreed to secure
all of the Borrower’s obligations under the Note with the grant to the Pledgee
of a first priority security interest in Pledgor’s shares of Borrower’s $.001
par value Common Stock, which Common Stock is owned of record and beneficially
controlled by the Pledgor.

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

     

    1.           Definitions.

     

    The
following terms shall have the following meanings wherever used in this
Agreement:

     

    ·           “Event of Default”
shall have the meaning given thereto in the Note.

     

    ·           “Loan” means the
advance of funds under the Note.

     

    ·           “Obligations” shall
mean all principal and interest and other payments which may be due and payable
under the Note, whether upon stated maturity, by acceleration, or otherwise,
outstanding at any time and under this Agreement, and pursuant to the
“Transaction Documents” as defined in the “Subscription Agreement” pursuant to
which the Note is being issued.

     

    ·           “Pledged Stock” shall
mean in the aggregate, _____________ shares of $0.001 par value Common Stock of
Borrower.

     

    ·           “Satisfaction Date”
shall mean that date on which all of the Obligations have been indefeasibly paid
or otherwise satisfied in full.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    ·           All
other capitalized terms shall have the meanings ascribed to them in the
Transaction Documents.

     

    2.           Pledge of the Pledged
Stock/Additional Deposits.

     

    (a)           As
security for the due and timely payment and performance of all of the
Obligations, the Pledgor pledges to the Pledgee, and grants to the Pledgee a
first priority lien and security interest in, all of the Pledged Stock (as same
are constituted from time to time), together with all cash dividends, stock
dividends, interest, profits, premiums, redemptions, warrants, subscription
rights, options, substitutions, exchanges and other distributions now or
hereafter made on the Pledged Stock and all cash and non-cash proceeds thereof,
until the Satisfaction Date.  The Pledged Stock and all property at
any time pledged to the Pledgee hereunder or in which the Pledgee is granted a
security interest (whether described herein or not) and all income therefrom and
proceeds thereof are herein included in the definition of Pledged
Stock.  The Pledged Stock includes all Pledged Stock in which Pledgor
has a direct or indirect interest or beneficial interest regardless of the
manner in which title is held or the name of the holder of the Pledged Stock on
the books and records of Borrower or its transfer agent.

     

    (b)           In
furtherance of the pledge hereunder, the Pledgor is, concurrently herewith,
delivering to the Pledgee, the certificates representing all of the Pledged
Stock, each of which now remains in the name of the Pledgor and accompanied by
appropriate undated stock powers duly endorsed in blank by the Pledgor bearing
“medallion” signature guarantees.

     

    (c)           If,
while this Agreement is in effect, the Pledgor becomes entitled to receive or
receives any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
conversion, reclassification, increase or reduction of capital or issued in
connection with any reorganization), option or rights, whether as an addition
to, in substitution of, or in exchange for, any Pledged Stock or otherwise, the
Pledgor agrees to accept the same as agent for the Pledgee, to hold the same in
trust on behalf of and for the benefit of the Pledgee, and to deliver the same
forthwith to the Pledgee in the exact form received, with the endorsement of the
Pledgor when necessary and/or appropriate undated “medallion” stock or other
powers duly executed in blank, to be held by the Pledgee, subject to the terms
hereof, as additional collateral security for the Obligations.  Any
sums paid on or in respect of the Pledged Stock on the liquidation or
dissolution of the Pledgor shall be paid over to the Pledgee, to be held by the
Pledgee, subject to the terms and conditions hereof, as additional collateral
security for the Obligations.

    

    3.           Retention of the Pledged
Stock.

     

    (a)           Except
as otherwise provided herein, the Pledgee shall have no obligation with respect
to the Pledged Stock, except to use reasonable care in the custody and
preservation thereof, to the extent required by law.

     

    (b)           The
Pledgee shall hold the Pledged Stock in the form in which same are delivered
herewith, unless and until there shall occur an Event of Default.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    4.           Rights of the
Pledgor.  Throughout the term of this Agreement, so long as an
Event of Default has not occurred and is continuing, the Pledgor shall have the
right to vote the Pledged Stock in all matters presented to the stockholders of
the Borrower for vote thereon, except in a manner inconsistent with the terms of
this Agreement or detrimental to the interests of the Pledgee.

     

    5.           Event of Default; Rights of
Pledgee; Power of Attorney.

     

    (a)           Upon
the occurrence and during the continuance of any Event of Default, the Pledgee
shall have the right to: (i) exercise all voting and corporate rights of, and
all rights of conversion, exchange, subscription or any other rights, privileges
or options pertaining to, any Pledged Stock as if the Pledgee were the absolute
owner thereof, including (without limitation) in connection with the merger,
consolidation, reorganization, recapitalization or other readjustment of the
Borrower or Pledgor or upon the exercise by the Pledgor or the Pledgee of any
right, privilege or option pertaining to any of the Pledged Stock and, in
connection therewith, to deposit and deliver any and all of the Pledged Stock
with any committee, depository, transfer agent, registrar or other designated
agency on such terms and conditions as the Pledgee may determine, all without
liability except to account for property actually received by it; (ii) apply any
funds or other property received in respect of the Pledged Stock to the
Obligations, and receive in its own name any and all further distributions which
may be paid in respect of the Pledged Stock, all of which shall, upon receipt by
the Pledgee, be applied to the Obligations; (iii) transfer all or any portion of
the Pledged Stock (as determined by the Pledgee in its discretion) on the books
of the Pledgor to and in the name of the Pledgee or such other person or persons
as the Pledgee may designate; (iv) effect any commercially reasonable sale,
transfer or disposition of all or any portion of the Pledged Stock and in
furtherance thereof, take possession of and endorse any and all checks, drafts,
bills of exchange, money orders or other documents and instruments received on
account of the Pledged Stock; (v) collect, sue for and give acquittance for any
money due on account of any of the foregoing; and (vi) take any and all other
action contemplated by this Agreement, or as otherwise permitted by law, or as
the Pledgee may reasonably deem necessary or appropriate, in order to accomplish
the purposes of this Agreement.

     

    (b)           In
furtherance of the foregoing powers of the Pledgee, the Pledgor hereby
authorizes and appoints the Pledgee, effective upon the occurrence and during
the continuation of an Event of Default, with full powers of substitution, as
the true and lawful attorney-in-fact of the Pledgor, in his name, place and
stead, to take any and all such action as the Pledgee, in its sole discretion,
may deem necessary or appropriate in furtherance of the exercise of the
aforesaid powers.  Such power of attorney shall be coupled with an
interest, and shall be irrevocable until the Satisfaction Date. Without
limitation of the foregoing, such power of attorney shall not in any manner be
affected or impaired by reason of any act of the Pledgor or by operation of
law.  Nothing herein contained, however, shall be deemed to require or
impose any duty upon the Pledgee to exercise any of the rights or powers granted
herein.

     

    (c)           The
foregoing rights and powers granted to the Pledgee, and the foregoing power of
attorney, shall be fully binding upon any person who may acquire any beneficial
interest in any of the Pledged Stock or any other property held or received by
the Pledgee hereunder.

     

    6.           Foreclosure; Sale of Pledged
Stock.

     

    (a)           Without
limitation of paragraph 5 above, in the event that the Pledgee shall make any
sale or other disposition of any or all of the Pledged Stock following an Event
of Default, the Pledgee may also:

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (i)           offer
and sell, in a commercially reasonable manner, all or any portion of the Pledged
Stock publicly through a registered broker-dealer, or by means of a private
placement restricting the offer or sale to a limited number of prospective
purchasers who meet such suitability standards as the Pledgee and its counsel
may deem appropriate, and who may be required to represent that they are
purchasing Pledged Stock for investment and not with a view to
distribution;

     

    (ii)          sell
any or all of the Pledged Stock upon credit or for future delivery, in a
commercially reasonable manner, without being in any way liable for failure of
the purchaser to pay for the subject Pledged Stock; and

     

    (iii)         receive
and collect the net proceeds of any sale or other disposition of any Pledged
Stock, and apply same in such order and to such of the Obligations (including
the customary costs and expenses of the sale or disposition of the Pledged
Stock) as the Pledgee may, in its absolute discretion, deem
appropriate.

     

    (b)           Upon
any sale of any of the Pledged Stock in accordance with this Agreement, the
Pledgee shall have the right to assign, transfer and deliver the subject Pledged
Stock to the purchaser(s) thereof, and each such purchaser shall be entitled to
hold such Pledged Stock absolutely free from any right or claim of the Pledgor
and/or any other person claiming any beneficial interest in the Pledged Stock,
including any equity of redemption (which right and all other such rights are
hereby waived by the Pledgor to the fullest extent permitted by
law).

     

    (c)           Following
the occurrence and during the existence of an Event of Default, Pledgor will
cooperate and provide such certificate, resolutions, representations, legal
opinions and all other matters necessary to facilitate a transfer or sale of any
part of the Pledged Stock.

    

    (d)           Nothing
herein contained shall be deemed to require the Pledgee to effect any sale or
disposition of any Pledged Stock at any time, or to consummate any proposed
public or private sale at the time and place at which same was initially
called.  It is the intention of the parties hereto that the Pledgee
shall, subject to any further conditions imposed by this Agreement, upon the
occurrence and during the continuation of an Event of Default, have the right to
use or deal with the Pledged Stock as if the Pledgee were the outright owner
thereof, and to exercise any and all rights and remedies, as a secured party in
possession of collateral or otherwise, under any and all provisions of
law.

    

    (e)           The
Pledgee may exercise its rights with respect to each and every component of the
Pledged Stock, without regard to the existence of any other security or source
of payment for, in order to satisfy the Obligations.  In addition to
other rights and remedies provided for herein or otherwise available to
it, the Pledgee shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code then in effect in the State of New
York.

    

    (f)           Pledgee
is authorized, at any such sale, if the Pledgee deems it advisable to do so, in
order to comply with any applicable securities laws, to restrict the prospective
bidders or purchasers to persons who will represent and agree, among other
things, that they are purchasing the Pledged Stock for their own account for
investment, and not with a view to the distribution or resale thereof, or
otherwise to restrict such sale in such other manner as the Pledgee deems
advisable to ensure such compliance.  Sales made to the highest bidder
in pursuant to such restricted sale shall be deemed to have been made in a
commercially reasonable manner.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (g)           All
proceeds received by Pledgees in respect of any sale, collection or other
enforcement or disposition of Pledged Stock, shall be applied (after deduction
of any amounts payable to Pledgees pursuant to Paragraph 10 hereof) against the
Obligations.   Upon payment in full of all Obligations, Pledgor
shall be entitled to the return of all Pledged Stock, including cash, which has
not been used or applied toward the payment of Obligations or used or applied to
any and all costs or expenses of the Pledgees incurred in connection with the
liquidation of the Pledged Stock (unless another person is legally entitled
thereto).  Any assignment of Pledged Stock by the Pledgees to Pledgor
shall be without representation or warranty of any nature whatsoever and wholly
without recourse.  To the extent allowed by law, each Pledgee may
purchase the Pledged Stock and may pay for such purchase by offsetting the
purchase price with such Pledgees proportionate share of the Obligations owed to
such Pledgee by Borrower arising under the Obligations or any other source;
provided however, that if any Pledgee shall purchase Pledged Stock, the per
share purchase price therefor shall be no less than 100% of the average closing
bid price of the Common Stock as reported by Bloomberg L.P. for the Principal
Market for the five (5) trading days immediately preceding the Event of Default
giving rise to the right of Pledgees to dispose of the Pledged Stock under this
Agreement.

    

    (h)           Without
limiting, and in addition to, any other rights, options and remedies Pledgee has
under the Transaction Documents, the UCC, at law or in equity, or otherwise,
upon the occurrence and continuation of an Event of Default, Pledgee shall have
the right to apply for and have a receiver appointed by a court of competent
jurisdiction.  Pledgor expressly agrees that such a receiver will be
able to manage, protect and preserve the Pledged Stock and until a sale or other
disposition of the Pledged Stock shall be finally made and
consummated.  Pledgor waives any right to require a bond to be posted
by or on behalf of any such receiver.

    

    7.           Covenants, Representations
and Warranties.

     

    In
connection with the transactions contemplated by this Agreement, and knowing
that the Pledgee is and shall be relying hereon, the Pledgor hereby covenants,
represents and warrants that:

     

    (a)           the
Pledged Stock has been and will be duly and validly issued, is and will be fully
paid and non-assessable, and is and will be owned by the Pledgor free and clear
of any and all restrictions, pledges, liens, encumbrances or other security
interests of any kind, save and except for the pledge to the Pledgee pursuant to
this Agreement;

     

    (b)           there
are and will be no options, warrants or other rights in respect of the sale,
transfer or other disposition of any of the Pledged Stock by the Pledgor, and
the Pledgor has the absolute right to pledge the Pledged Stock hereunder without
the necessity of any consent of any Person;

    

    (c)           neither
the execution or delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, nor the compliance with or performance of this
Agreement by the Pledgor, conflicts with or will result in the breach or
violation of or a default under the terms, conditions or provisions of (i) any
mortgage, security agreement, indenture, evidence of indebtedness, loan or
financing agreement, or other agreement or instrument to which the Pledgor is a
party or by which the Pledgor is bound, or (ii) any provision of law, any order
of any court or administrative agency, or any rule or regulation applicable to
the Pledgor or Borrower;

     

    (d)           this
Agreement has been duly executed and delivered by the Pledgor, and constitutes
the legal, valid and binding obligation of the Pledgor, enforceable against the
Pledgor in accordance with its terms;

     

    (e)           there
are no actions, suits or proceedings pending or threatened against or affecting
the Pledgor that involve or relate to the Pledged Stock; and

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (f)           upon
execution of this Agreement by Pledgor, the Pledgee shall have the senior
security interest in the Pledged Stock.

    

    8.           UCC
Filings.   Pledgor hereby grants to Pledgee the right and
authority at Pledgee’s expense, to file UCC Financing Statements in Washington,
D.C., Delaware, New York and any other jurisdiction in the sole discretion of
Pledgee to memorialize the security interest herein granted.

    

    9.           Return of the Pledged
Stock.  To the extent that the Pledgee shall not previously
have taken, acquired, sold, transferred, disposed of or otherwise realized value
on the Pledged Stock in accordance with this Agreement, at the Satisfaction
Date, any security interest in the Pledged Stock shall automatically terminate,
cease to exist and be released, and the Pledgee shall forthwith return the
Pledged Stock to and in the name of the Pledgor, and file, at Pledgor’s
reasonable expenses, releases of Pledgee’s security interest in the Pledged
Stock.

    

    10.         Expenses of the
Pledgee.   All reasonable expenses incurred by the Pledgee
(including but not limited to reasonable attorneys’ fees) in connection with any
actual or attempted sale or other disposition of Pledged Stock hereunder shall
be reimbursed to the Pledgee by the Pledgor on demand, or, at the Pledgee’s
option, such expenses may be added to the Obligations and shall be payable on
demand.

    

    11.         Further
Assurances.  From time to time hereafter, each party shall take
any and all such further action, and shall execute and deliver any and all such
further documents and/or instruments, as any other party may reasonably request
in order to accomplish the purposes of and fulfill the parties’ obligations
under this Agreement, and in order to enable the Pledgee to exercise any of its
rights hereunder.

    

    12.         Miscellaneous.

    

    (a)           All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:

    

    
      	 
      	
              To
      Pledgor:

            	
              c/o
      China Yongxin Pharmaceuticals, Inc.

            
	 
      	 
      	
              927
      Canada Court

            
	 
      	 
      	
              City
      of Industry, CA 91748

            
	 
      	 
      	
              Attn:
      Yongxin Liu, CEO

            
	 
      	 
      	
              Fax:
      (626) 581-9138

            

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	 
      	
                                                With
      a copy by facsimile only to:

                                              	 
      
	 
      	 
      	 
      
	 
      	 
      	
                                                Richardson
      & Patel, LLP

                                              
	 
      	 
      	
                                                10900
      Wilshire Blvd., Suite 500

                                              
	 
      	 
      	
                                                Los
      Angeles, CA 90024

                                              
	 
      	 
      	
                                                Attn:
      Ryan Hong, Esq.

                                              
	 
      	 
      	
                                                Fax:
      (310)
208-1154

                                              

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      

      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                To
      Pledgees:

                              	
                                As
      identified on Schedule I hereto

                              
	 
      	 
      	 
      
	 
      	
                                To
      Collateral Agent:

                              	
                                Collateral
      Agents, LLC

                              
	 
      	 
      	
                                111
      West 57th
      Street, Suite 1416

                              
	 
      	 
      	
                                New
      York, NY 10019

                              
	 
      	 
      	
                                Attn:
      General Counsel

                              
	 
      	 
      	
                                Fax:
      (212) 245-9101

                              
	 
      	 
      	 
      
	 
      	 
      	
                                If
      to Pledgor, Pledgees,

                              
	 
      	 
      	
                                or
      Collateral Agent

                              
	 
      	 
      	
                                with
      a copy by telecopier only to:

                              
	 
      	 
      	 
      
	 
      	 
      	
                                Grushko
      & Mittman, P.C.

                              
	 
      	 
      	
                                551
      Fifth Avenue, Suite 1601

                              
	 
      	 
      	
                                New
      York, New York 10176

                              
	 
      	 
      	
                                Fax:
      (212)
697-3575

                              

                      

                    

                  

                

              

            

          

        

      

       

    

    (b)           If
any notice to Pledgor of the sale or other disposition of Pledged Stock is
required by then applicable law, five (5) business days prior written notice
(which Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code) to Pledgor of the time and place of any
sale of Pledged Stock which Pledgor agrees may be by private
sale.  The rights granted in this Section are in addition to any and
all rights available to Pledgee under the Uniform Commercial Code.

    

     (c)           The
laws of the State of New York including but not limited to Article 9 of the
Uniform Commercial Code as in effect from time to time, shall govern the
construction and enforcement of this Agreement and the rights and remedies of
the parties hereto.  The parties hereby consent to the exclusive
jurisdiction of all courts sitting in the State and County of New York, in
connection with any action or proceeding under or relating to this Agreement,
and waive trial by jury in any such action or proceeding.

     

    (d)           This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.  The Pledgor shall
not, however, assign any of its or his rights or obligations hereunder without
the prior written consent of the Pledgee, and the Pledgee shall not assign its
rights hereunder without simultaneously assigning its obligations hereunder to
the subject assignee.  Except as otherwise referred to herein, this
Agreement, and the documents executed and delivered pursuant hereto, constitute
the entire agreement between the parties relating to the specific subject matter
hereof.

     

    (e)           Neither
any course of dealing between the Pledgor and the Pledgee nor any failure to
exercise, or any delay in exercising, on the part of the Pledgee, any right,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege operate as a waiver
of any other exercise of such right, power or privilege or any other right,
power or privilege.

     

    (f)           The
rights of the Pledgees hereunder, except as otherwise set forth herein shall be
exercised upon the approval of Pledgees holding 75% of the outstanding
Obligations (“Majority in Interest”) at the time such approval is sought or
given.  Any tangible or physical Pledged Stock shall be delivered to
and be held by the Collateral Agent pursuant to this Agreement and on behalf of
all Pledgees as to their respective rights.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (g)           The
Collateral Agent was appointed by the Pledgees pursuant to a Collateral Agent
Agreement of even date herewith.  All of the rights and benefits
granted to the Pledgees pursuant to this Agreement, including the security
interest and enforcement rights are also granted to the Collateral Agent and
will be exercised by Collateral Agent on behalf of Pledgees pursuant to the
Collateral Agent Agreement.  All deliveries required to be made by
Pledgors hereunder shall be made to the Collateral Agent.

     

    (h)           The
Pledgee’s rights and remedies, whether hereunder or pursuant to any other
agreements or by law or in equity, shall be cumulative and may be exercised
singly or concurrently and by the Escrow Agent on Pledgee’s behalf or pursuant
to the Escrow Agreement.

     

    (i)           No
change, amendment, modification, waiver, assignment of rights or obligations,
cancellation or discharge hereof, or of any part hereof, shall be valid unless
the Pledgee shall have consented thereto in writing.

     

    (j)           The
captions and paragraph headings in this Agreement are for convenience of
reference only, and shall not in any way define, limit or describe the
construction, terms or provisions of this Agreement.

     

    (k)           If
any provision of this Agreement is held invalid or unenforceable, either in its
entirety or by virtue of its scope or application to given circumstances, such
provision shall thereupon be deemed modified only to the extent necessary to
render same valid, or not applicable to given circumstances, or excised from
this Agreement, as the situation may require, and this Agreement shall be
construed and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein, as the case
may be.

     

    (l)           This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.

     

    [THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    CHINA
YONGXIN PHARMACEUTICALS, INC., a Delaware corporation, acknowledges the
execution of the foregoing Stock Pledge Agreement and agrees to cooperate with
the Pledgees and Collateral Agent and further agrees not to take any action or
suffer inaction inconsistent with the Pledgees’ and Collateral Agent’s lawful
rights under the Stock Pledge Agreement.

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Stock Pledge Agreement on and as of the date
first set forth above.

     

    
      
        
          	
                  CHINA
      YONGXIN PHARMACEUTICALS, INC.

                	 
      
	
                  a
      Delaware corporation

                	 
      
	 
      	 
      
	
                  By:

                	 
      	 
      
	 
      	
                  Name:

                	 
      
	 
      	
                  Title:

                	 
      
	 
      	 
      
	
                  PLEDGOR:

                	 
      
	 
      	 
      
	 
      	 
      

        

      

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    OMNIBUS
PLEDGEE SIGNATURE PAGE TO

    STOCK
PLEDGE AGREEMENT

     

    The
undersigned, in its capacity as a Pledgee, hereby executes and delivers the
Stock Pledge Agreement to which this signature page is attached and agrees to be
bound by the Stock Pledge Agreement on the date set forth on the first page of
the Stock Pledge Agreement. This counterpart signature page, together with all
counterparts of the Stock Pledge Agreement and signature pages of the other
parties named therein, shall constitute one and the same instrument in
accordance with the terms of the Stock Pledge Agreement.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	 
      	 
      
	
                                            [Print
      Name of Pledgee]

                                          	 
      	
                                            [Name
      of Co-Pledgee, if applicable]

                                          
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                            [Signature]

                                          	 
      	
                                            [Signature]

                                          
	 
      	 
      	 
      
	
                                            Name:

                                          	 
      	 
      	
                                            Name:

                                          	 
      
	
                                            Title:

                                          	 
      	 
      	
                                            Title:

                                          	 
      
	 
      	 
      	 
      
	
                                            Mailing
      Address:

                                          	 
      	
                                            Telephone
      No.:_____________________________

                                          
	 
      	 
      	
                                            Facsimile
      No:_______________________________

                                          
	 
      	 
      	
                                            Email
      Address:______________________________

                                          
	 
      	 
      	 
      
	
                                            (City,
      State and Zip)

                                          	 
      	 
      

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      

        
          
             

          

          
            10

            
              

            

          

          
             

          

        

      

    

     

    COLLATERAL
AGENT SIGNATURE PAGE TO

    STOCK
PLEDGE AGREEMENT

     

    The
undersigned, in its capacity as a Collateral Agent, hereby executes and delivers
the Stock Pledge Agreement to which this signature page is attached and agrees
to be bound by the Stock Pledge Agreement on the date set forth on the first
page of the Stock Pledge Agreement.  This counterpart signature page,
together with all counterparts of the Stock Pledge Agreement and signature pages
of the other parties named therein, shall constitute one and the same instrument
in accordance with the terms of the Stock Pledge Agreement.

    

    
      
        	
                COLLATERAL
      AGENT:

              	 
      
	 
      	 
      
	
                COLLATERAL
      AGENTS, LLC

              	 
      
	 
      	 
      
	
                By:

              	 
      	 
      
	
                Name:

              	 
      
	
                Title:

              	 
      

      

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Schedule
I

    

    
      
        
          
            
              
                
                  
                    
                      	
                              SUBSCRIBER

                            	 	
                              AMOUNT

                            	 
	
                              EXCALIBUR
      SPECIAL OPPORTUNITIES LP

                            	 	$	300,000.00	 
	 
      	 	 	 	 
	
                              DANA
      KATZENMEIER

                            	 	$	50,000.00	 
	 
      	 	 	 	 
	
                              FOURTH
      STREET HOLDINGS, LP

                            	 	$	100,000.00	 
	 
      	 	 	 	 
	
                              ROBERT
      B. PRAG

                            	 	$	100,000.00	 
	 
      	 	 	 	 
	
                              PETER
      B. TENTLER

                            	 	$	50,000.00	 
	 
      	 	 	 	 
	
                              TOTAL

                            	 	$	600,000.00	 

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        12

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