MAKE GOOD AGREEMENT
 
 
THIS MAKE GOOD AGREEMENT (the “Agreement”), dated January 31, 2008, by and among
Pope Asset Management LLC, a Tennessee Registered Investment Advisor, as the
authorized agent of the Investors (as defined below) (the “Investor Agent”),
China Sky One Medical, Inc., a Nevada corporation, and its current and future
subsidiaries (collectively, the “Company”) and Liu Yan-Qing, an individual
residing in the People’s Republic of China (the “CSKI Shareholder”). This
Agreement shall become effective upon the execution thereof by all parties.

WHEREAS:

A. The Company has offered for sale (the “Offering”) certain shares (the
“Shares”) of common stock of the Company, $.001 par value per share (“Common
Stock”) and attached warrants to purchase shares of Common Stock in accordance
with that certain Securities Purchase Agreement, dated as of the date hereof
(the “Securities Purchase Agreement”), by and among the Company and the
investors signatory thereto (the “Investors”), and certain other papers,
agreements, documents, instruments and certificates necessary to carry out the
purposes thereof (collectively, the “Transaction Documents”).

B. The Company presented financial projections to the Investors, indicating that
the Company will report Earnings Per Share (EPS) of at least (i) $1.05 per share
for the fiscal year ending December 31, 2007, as adjusted, based on fully
diluted shares outstanding (an aggregate of 13,907,696 shares, including all
outstanding common shares, preferred shares, any convertible security, options,
and warrants) and (ii) $1.75 per share for the fiscal year ending December 31,
2008, as adjusted, based on fully diluted shares outstanding (an aggregate of
16,907,696 shares, including all outstanding common shares, preferred shares,
any convertible security, options, and warrants, excluding the 900,000 warrants
to be issued in this Offering), and based upon an audit conducted in conformity
with United States generally accepted accounting principles (“US GAAP”).

C. As an inducement to the Investors to enter into the Securities Purchase
Agreement, the CSKI Shareholder desires to place the Escrow Shares (as
hereinafter defined) into escrow for the benefit of the Investors in the event
that the Company fails to satisfy the FY07 Performance Threshold and/or FY08
Performance Threshold (as hereinafter defined).

D. Pursuant to the requirements of the Securities Purchase Agreement, the
Company, the CSKI Shareholders and the Investor Agent have agreed to establish
an escrow (the “Escrow”) on the terms and conditions set forth in that certain
Escrow Agreement, dated of even date herewith (the “Escrow Agreement”), by and
among Interwest Transfer Company, Inc., the transfer agent for the Company (the
“Escrow Agent”) and the parties hereto.

E. Contemporaneously with the execution and delivery of this Agreement, the
Company and the Investors are executing and delivering (i) a Registration Rights
Agreement, dated as of even date herewith (the “Registration Rights Agreement”),
pursuant to which the Company has agreed to provide certain registration rights
with respect to the Escrow Shares (as defined below), under the Securities Act
of 1933, as amended (the “Securities Act”), and the rules and regulations
promulgated thereunder, and applicable state securities laws and (ii) a Put
Agreement, dated as of even date herewith (the “Put Agreement”), pursuant to
which the Company and the Investors have agreed upon certain circumstances under
which the Investors shall have the right, but not the obligation, to require the
Company to repurchase the Shares (the “Put Right”).
 
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NOW, THEREFORE, in consideration of the covenants, promises and representations
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Establishment of Escrow.

(a) Escrow Deposit. Concurrently with the closing of the Offering, the CSKI
Shareholder shall deliver to the Escrow Agent a stock certificate evidencing
3,000,000 shares, in the aggregate, of Common Stock (as adjusted for stock
splits, stock dividends, and similar adjustments) (the “Escrow Shares”), with
stock powers executed in blank in form and substance reasonably satisfactory to
the Investor Agent.

(b) Fees and Expenses. The Company shall be responsible for any and all fees and
costs related to the services rendered by Escrow Agent hereunder and pursuant to
the Escrow Agreement.

2. Disbursement of Escrow Shares.

(a) Performance Threshold for Fiscal 2007. The Company covenants to the
Investors and Investor Agent that Adjusted EPS (as defined below) for the fiscal
year ending December 31, 2007 (“FY07 Adjusted EPS”) of the Company will be
greater than or equal to $1.05 per share (the “FY07 Performance Threshold”), as
set forth in financial statements of the Company (the “FY07 Financial
Statements”) for the period ending December 31, 2007 prepared in accordance with
the published rules and regulations of US GAAP applied on a consistent basis
throughout the periods involved and audited in accordance with the auditing
standards of the Public Company Accounting Oversight Board (“PCAOB”) by a
nationally recognized independent accountant registered with PCAOB (the
“Independent Accountant”), with such statements fairly presenting in all
material respects the financial position of the Company and its subsidiaries, on
a consolidated basis, as of the fiscal year ending December 31, 2007 (the
“FY07”) and the FY07 Financial Statements shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. For the purpose of
this Section 2(a), “Adjusted EPS” means the net income (or loss) of the Company
and its subsidiaries for such period, determined on a consolidated basis divided
by 13,907,696 shares; provided, however, that (i) the Adjusted EPS for such
period will be increased by any cash charges related to the Offering and
non-cash charges incurred as a result of the Offering (due to non-cash
amortization on warrants charged to the Company’s results of operation, if any)
and (ii) if the Offering does not close on or before January 7, 2008 (the
“Closing Deadline”), the FY07 Performance Threshold will be decreased in an
amount equal to 2% for each 7-day period, or pro rata for any portion thereof,
following the Closing Deadline, until such time as the Offering is consummated.
 
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(b) FY07 Financial Statements. The Company shall provide the Investor Agent and
the Investors (as defined below) with its audited FY07 Financial Statements on
or before March 31, 2008. Concurrently with the release of the audited FY07
Financial Statements to the Investor Agent and the Investors, (i) the Company
shall provide to the Investor Agent and the Investors a written certification as
to the amount of the Adjusted EPS for FY07 and whether the FY07 Performance
Threshold, as adjusted, has been met and (ii) the Company shall make such FY07
Financial Statements and certification publicly available (as part of an Annual
Report on Form 10-KSB or on a Current Report on Form 8-K, or otherwise). Subject
to Section 3 below, in the event the FY07 Performance Threshold, as adjusted, is
not attained, the Company and the Investor Agent shall promptly provide a joint
written instruction to the Escrow Agent (the “Investor Joint Instructions”), to
deliver as promptly as practicable (such date, the “FY07 Released Escrow Shares
Release Date”) to the Investors that did not exercise their Put Rights pursuant
to the Put Agreement (as further discussed in Section 2(d) below) (the “Eligible
Investors”), on a Pro Rata Basis (as defined below), an aggregate amount of
Escrow Shares based from the following formula (the “FY07 Released Escrow
Shares”):

(i) If the FY07 Adjusted EPS is less than $0.80, then the number of FY07
Released Escrow Shares will be 3,000,000.

(ii) If the FY07 Adjusted EPS is $0.80 or greater, but less than $1.05, the
number of FY07 Released Escrow Shares shall be calculated as follows:

A = 2 x B x C
 
where 

A = the aggregate number of FY07 Released Escrow Shares;

B = the percentage under the FY07 Performance Threshold; and

C = 3,000,000.

(iii) If the FY07 Adjusted EPS is $1.05 or greater, then none of the Escrow
Shares will be released to the Investors.

(c) Allocation of FY07 Released Escrow Shares; Transfer of FY07 Released Escrow
Shares.

(i) The Eligible Investors shall be entitled to receive allocations of the FY07
Released Escrow Shares on a Pro Rata Basis. For the purpose of this Section
2(c)(i), “Pro Rata Basis” means such portion of the FY07 Released Escrow Shares
equal to the product of (i) the number of FY07 Released Escrow Shares (as
calculated in accordance with Section 2(b) above) and (ii) the quotient of
(x) the number of shares of Common Stock acquired by such Eligible Investor in
the Offering and (y) the number of shares of Common Stock acquired by all
Investors in the Offering. Any distribution of FY07 Released Escrow Shares
hereunder shall also include a distribution to such Investor of any dividends or
other distributions in the Escrow, which were issued or otherwise obtained or
deposited with respect to such FY07 Released Escrow Shares distributed to such
Investor hereunder.
 
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(ii) The Company and the Investor Agent shall cause the Investor Joint
Instructions to instruct the Escrow Agent to either (x) deliver the FY07
Released Escrow Shares allocated to each Eligible Investor by crediting such
aggregate number of shares of Common Stock to which such Eligible Investor is
entitled to such Eligible Investor’s or such Eligible Investor’s designee’s
balance account with the Depository Trust Company through the Deposit Withdrawal
Agent Commission system or (y) if the Escrow Agent is unable to distribute the
FY07 Released Escrow Shares of any Eligible Investor in accordance with the
foregoing, to deliver stock certificates evidencing the FY07 Released Escrow
Shares of such Eligible Investor registered in the name of each such Eligible
Investor or such Eligible Investor’s designee at such address as set forth in
the Securities Purchase Agreement or such other address provided to the Investor
Agent by such Eligible Investor.

(d) Termination of Rights to Escrow Shares upon Exercise of Put Right.
Notwithstanding anything to the contrary set forth herein, upon any Investor’s
exercise of its Put Right pursuant to the Put Agreement, such Investor’s right
to receive Escrow Shares on a Pro Rata Basis hereunder shall automatically and
permanently terminate. The Investor Joint Instructions delivered to the Escrow
Agent by the Company and Investor Agent pursuant to Section 2(b) hereof shall
indicate (i) which Investors, if any, have exercised their Put Rights and (ii)
the corresponding number of Escrow Shares that shall be released from escrow and
delivered back to the CSKI Shareholder (the “Returned Shares”).

(e) Performance Threshold for Fiscal 2008. The Company covenants to the
Investors and Investor Agent that Adjusted EPS (as defined below) for the fiscal
year ending December 31, 2008 (“FY08 Adjusted EPS”) of the Company will be
greater than or equal to $1.75 per share (the “FY08 Performance Threshold”), as
set forth in financial statements of the Company (the “FY08 Financial
Statements”) for the period ending December 31, 2008 prepared in accordance with
the published rules and regulations of US GAAP applied on a consistent basis
throughout the periods involved and audited in accordance with the auditing
standards of PCAOB by the Company’s Independent Accountant, with such statements
fairly presenting in all material respects the financial position of the Company
and its subsidiaries, on a consolidated basis, as of the fiscal year ending
December 31, 2008 (the “FY08”) and the FY08 Financial Statements shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. For the purpose of this Section 2(e), “Adjusted EPS” means the net
income (or loss) of the Company and its subsidiaries for such period, determined
on a consolidated basis divided by 16,907,696 shares; provided, however, that
(i) the Adjusted EPS for such period will be increased by any cash charges
related to the Offering and non-cash charges incurred as a result of the
Offering (due to non-cash amortization on warrants charged to the Company’s
results of operation, if any) and (ii) if the Offering does not close on or
before the Closing Deadline, the FY08 Performance Threshold will be decreased in
an amount equal to 2% for each 7-day period, or pro rata for any portion
thereof, following the Closing Deadline, until such time as the Offering is
consummated.
 
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(f) FY08 Financial Statements. The Company shall provide the Investor Agent and
the Eligible Investors with its audited FY08 Financial Statements on or before
March 31, 2009. Concurrently with the release of the audited FY08 Financial
Statements to the Investor Agent and the Eligible Investors, (i) the Company
shall provide to the Investor Agent and the Eligible Investors a written
certification as to the amount of the Adjusted EPS for FY08 and whether the FY08
Performance Threshold, as adjusted, has been met and (ii) the Company shall make
such FY08 Financial Statements and certification publicly available (as part of
an Annual Report on Form 10-KSB or on a Current Report on Form 8-K, or
otherwise). Subject to Section 3 below, in the event the FY08 Performance
Threshold, as adjusted, is not attained, the Company and the Investor Agent
shall promptly provide Investor Joint Instructions, to deliver as promptly as
practicable (such date, the “FY08 Released Escrow Shares Release Date”) to the
Eligible Investors, on a Pro Rata Basis (as defined below), an aggregate amount
of Escrow Shares based from the following formula (the “FY08 Released Escrow
Shares”):

(i) If the FY08 Adjusted EPS is $0.87 or less, then the number of FY08 Released
Escrow Shares will be 3,000,000, decreased by the amount of the FY07 Released
Escrow Shares.

(ii) If the FY08 Adjusted EPS is greater than $0.87, but less than $1.50, the
number of FY08 Released Escrow Shares shall be calculated as follows:

A = 2 x B x C
 
where 

A = the aggregate number of FY08 Released Escrow Shares;

B = the percentage under the FY08 Performance Threshold; and

C = 3,000,000, decreased by the amount of the FY07 Released Escrow Shares.

(iii) If the FY08 Adjusted EPS is $1.50 or greater, but less than $1.75, the
number of FY08 Released Escrow Shares shall be calculated as follows:

A = 1 x B x C
 
where 

A = the aggregate number of FY08 Released Escrow Shares;

B = the percentage under the FY08 Performance Threshold; and
 
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C = 3,000,000, decreased by the amount of the FY07 Released Escrow Shares.

(iv) If the FY08 Adjusted EPS is $1.75 or greater, then none of the Escrow
Shares will be released to the Investors.

(g) Allocation of FY08 Released Escrow Shares; Transfer of FY08 Released Escrow
Shares.

(i) The Eligible Investors shall be entitled to receive allocations of the FY08
Released Escrow Shares on a Pro Rata Basis. For the purpose of this Section
2(g)(i), “Pro Rata Basis” means such portion of the Released Escrow Shares equal
to the product of (i) the number of FY08 Released Escrow Shares (as calculated
in accordance with Section (e) above) and (ii) the quotient of (x) the number of
shares of Common Stock acquired by such Eligible Investor in the Offering and
(y) the number of shares of Common Stock acquired by all Investors in the
Offering. Any distribution of FY08 Released Escrow Shares hereunder shall also
include a distribution to such Eligible Investor of any dividends or other
distributions in the Escrow, which were issued or otherwise obtained or
deposited with respect to such FY08 Released Escrow Shares distributed to such
Eligible Investor hereunder.

(ii) The Company and the Investor Agent shall cause the Investor Joint
Instructions to instruct the Escrow Agent to either (x) deliver the FY08
Released Escrow Shares allocated to each Eligible Investor by crediting such
aggregate number of shares of Common Stock to which such Eligible Investor is
entitled to such Eligible Investor’s or such Eligible Investor’s designee’s
balance account with the Depository Trust Company through the Deposit Withdrawal
Agent Commission system or (y) if the Escrow Agent is unable to distribute the
FY08 Released Escrow Shares of any Eligible Investor in accordance with the
foregoing, to deliver stock certificates evidencing the FY08 Released Escrow
Shares of such Eligible Investor registered in the name of each such Eligible
Investor or such Eligible Investor’s designee at such address as set forth in
the Securities Purchase Agreement or such other address provided to the Investor
Agent by such Eligible Investor.

(g) Distribution of Remaining Escrow Shares. If there are any Escrow Shares
remaining in the Escrow after the distribution of the FY07 Released Escrow
Shares, the Returned Shares and/or FY08 Released Escrow Shares, or if the
Company’s FY07 Performance Threshold and/or FY08 Performance Threshold
obligation ceases in accordance with Section 3 below (the Escrow Shares held in
the Escrow at such time, the “Remaining Escrow Shares”), the Company and the
Investor Agent shall promptly thereafter provide a joint written instruction to
the Escrow Agent (the “Shareholder Joint Instructions”) to deliver the Remaining
Escrow Shares to the CSKI Shareholder. The Company and the Investor Agent shall
cause the Shareholder Joint Instructions to instruct the Escrow to promptly
deliver stock certificates evidencing the Remaining Escrow Shares registered in
the name of the CSKI Shareholder to the addresses set forth in the Escrow
Agreement. Any distribution of Remaining Escrow Shares hereunder shall also
include a distribution to the CSKI Shareholder of any dividends or other
distributions in the Escrow, which were issued or otherwise obtained or
deposited with respect to such Remaining Escrow Shares distributed to the CSKI
Shareholder hereunder.
 
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3. Force Majeure.

(a) Upon the occurrence of an event of Force Majeure (as defined below), the
obligation of the Company to meet the FY07 Performance Threshold and/or FY08
Performance Threshold shall cease and all Escrow Shares shall be immediately
deemed Remaining Shares for all purposes hereunder. For the purpose of this
Agreement, “Force Majeure” means a natural disaster (e.g., earthquakes,
typhoons, flood, fire), war, epidemic, civil disturbance, strike, major failure
of domestic transportation, act of government or public agency that directly and
substantially prevents the Company from operating a significant part of its
business, which was unforeseeable at the time of the closing and the occurrence
and consequences thereof could not reasonably be avoided or overcome.

(b) If the Company intends to claim a Force Majeure has occurred, it must
promptly inform the Investor Agent in writing within thirty (30) days from the
occurrence of such event and provide detailed evidence of the occurrence and the
duration of such occurrence.

(c) Should any controversy arise with respect to the Company’s claim that a
Force Majeure has occurred and/or with respect to the right of the Investors to
receive the Escrow Shares, the Investor Agent shall have the right to consult
counsel at the expense of the Company and/or to institute an appropriate
interpleader action to determine the rights of the parties.

4. Representations and Warranties of the CSKI Shareholder. The CSKI Shareholder
hereby represents and warrants that:

(a) Legal Capacity; Organization. The CSKI Shareholder has the legal capacity
and right to execute, deliver, enter into, consummate and perform the
transactions contemplated by hereby and in the Escrow Agreement and otherwise to
carry out its obligations hereunder and thereunder.

(b) Accredited Investor Status. The CSKI Shareholder is an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D under the Securities Act.

(c) Securities Ownership. As of the Closing Date (as defined in the Securities
Purchase Agreement), the CSKI Shareholder owns the Escrow Shares to be deposited
hereunder (i) as the sole record and beneficial owner, free from all taxes,
liens, claims, encumbrances and charges and there are no outstanding rights,
options, subscriptions or other agreements or commitments obligating the CSKI
Shareholder to sell or transfer such Escrow Shares and, except in connection
with the Offering, such Escrow Shares are not subject to any lock-up or other
restriction on their transfer or on the ability of the Investors to sell or
transfer such Escrow Shares. As of the Closing Date, the CSKI Shareholder shall
have paid any and all amounts and charges due and owing to the Company with
respect to the Escrow Shares and there shall be no unpaid amounts or charges
claimed to be due to the Company from the CSKI Shareholder with respect to the
Escrow Shares.
 
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(d) Authorization; Enforcement; Validity. This Agreement has been duly
authorized, executed and delivered by the CSKI Shareholder and constitutes a
valid and legally binding agreement of the CSKI Shareholder enforceable against
the CSKI Shareholder in accordance with its terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

(e) Consents. All government and other consents that are required to have been
obtained by the CSKI Shareholder with respect to this Agreement have been
obtained and are in full force and effect and all conditions of any such
consents have been complied with. The CSKI Shareholder has complied and will
comply with all applicable disclosure or reporting requirements in respect of
the transaction contemplated hereby.

(f) No Conflicts. The execution and delivery by the CSKI Shareholder of this
Agreement, the sale and delivery of the Escrow Shares and the performance by the
CSKI Shareholder of its obligations under this Agreement do not and will not
violate or conflict with (i) any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market (as defined in the Warrants)), or
(ii) any order or judgment of any court or other agency of government or any of
the CSKI Shareholder’s assets or any contractual restriction binding on or
affecting the CSKI Shareholder or any of the CSKI Shareholder’s assets.

(g) Independent Decision. The CSKI Shareholder is acting solely for his own
account, and has made his own independent decision to enter into this Agreement
and as to whether this Agreement is appropriate or proper for the CSKI
Shareholder based upon his own judgment and upon advice of such advisors as the
CSKI Shareholder deems necessary. The CSKI Shareholder acknowledges and agrees
that he is not relying, and has not relied, upon any communication (written or
oral) of any Investor or any affiliate, employee or agent of any Investor with
respect to the legal, accounting, tax or other implications of this Agreement
and that he has conducted his own analyses of the legal, accounting, tax and
other implications hereof and thereof; it being understood that information and
explanations related to the terms and conditions of this Agreement shall not be
considered investment advice or a recommendation to enter into this Agreement.
The CSKI Shareholder acknowledges that no Investor nor any affiliate, employee
or agent of any Investor is acting as a fiduciary for or an advisor to the CSKI
Shareholder in respect of this Agreement.

(h) Brokerage Fees. Other than amounts payable to the Investor Agent or its
affiliates, the CSKI Shareholder has taken no action that would give rise to any
claim by any person for brokerage commissions, finder’s fees or similar payments
relating to this Agreement or the transactions contemplated hereby.
 
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(i) Litigation. There is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency or self
regulatory organization or body pending or, to the knowledge of the CSKI
Shareholder, threatened against or affecting the CSKI Shareholder that could
reasonably be expected to have a material adverse affect on his ability to
perform its obligations hereunder.

5. Registration Rights. The Company acknowledges that the FY07 Released Escrow
Shares and FY08 Released Escrow Shares are Registrable Securities (as defined in
the Registration Rights Agreement) and the Investors shall have such
registration rights set forth in the Registration Rights Agreement related
thereto.

6. Termination. This Agreement shall terminate at such time as all of the Escrow
Shares shall have been released by the Escrow Agent from the Escrow in
accordance with Section 2 hereof; provided however, that Sections 1(b), 5, 6, 7
and 8 shall survive any such termination.

7. Indemnity. The Investor Agent will be indemnified and held harmless, jointly
and severally, by the Company and the CSKI Shareholder from and against any
expenses, including reasonable attorneys’ fees and disbursements, damages or
losses suffered by Investor Agent in connection with any claim or demand, which,
in any way, directly or indirectly, arises out of or relates to this Agreement
or the services of Investor Agent hereunder or under the Escrow Agreement;
except, that if Investor Agent is guilty of willful misconduct, fraud or gross
negligence under this Agreement then Investor Agent will bear all losses,
damages and expenses arising as a result of such willful misconduct, fraud or
gross negligence. Promptly after the receipt by Investor Agent of notice of any
such demand or claim or the commencement of any action, suit or proceeding
relating to such demand or claim, Investor Agent will notify the other parties
hereto in writing. For the purposes hereof, the terms “expense” and “loss” will
include all amounts paid or payable to satisfy any such claim or demand, or in
settlement of any such claim, demand, action, suit and all costs and expenses,
including, but not limited to, reasonable attorneys’ fees and disbursements,
paid or incurred in investigating or defending against any such claim, demand,
action, suit or proceeding.

8. Miscellaneous.

(a) Notices. Any communication, notice or document required or permitted to be
given under this Agreement shall be given in writing and shall be deemed
received (i) when personally delivered to the relevant party at such party’s
address as set forth below, (ii) if sent by mail (which must be certified or
registered mail, postage prepaid) or overnight courier, when received or
rejected by the relevant party at such party’s address indicated below, or
(iii) if sent by facsimile, when confirmation of delivery is received by the
sending party:

If to the Investor Agent, to:

Pope Asset Management LLC
5100 Poplar Avenue, Suite 805
Memphis, TN 38137
Attn.: Bill Wells, President
tel.: (901) 763-4001
fax.: (901) 763-4229
e-mail: billwells@popeasset.com
 
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with a copy to (for informational purposes only):

Wells, Moore, Simmons & Hubbard, PLLC
4450 Old Canton Road, Suite 200
P.O. Box 1970
Jackson, MS 39215
Attn.: Nash Neyland, Esq.
tel.: (601) 354-5400
fax: (601) 355-5850
e-mail: neyland@wellsmoore.com

If to the Company, to:

China Sky One Medical, Inc.
Room 1706, No. 30 Di Wang Building, Gan Shui Road,
Nandang District, Harbin, People’s Republic of China 150001
Attn.: Liu Yan-Qing, Chairman
tel.: + 86-451-53994073
fax.: + 86-451-8700-9121
e-mail: cntiandiren@yahoo.com.cn

or such other address as indicated by the Company as its primary business
address in its SEC filings.

with a copy to:

Hodgson Russ, LLP
1540 Broadway, 24th Floor
New York, NY 10036
Attn.: Jeffrey A. Rinde, Esq.
tel.: (212) 751-4300
fax.: (212) 751-0928
e-mail: jrinde@hodgsonruss.com

If to the CSKI Shareholder, to:

Liu Yan-Qing
c/o China Sky One Medical, Inc.
Room 1706, No. 30 Di Wang Building, Gan Shui Road,
Nandang District, Harbin, People’s Republic of China 150001
tel.: + 86-451-53994073
fax.: + 86-451-8700-9121
e-mail: cntiandiren@yahoo.com.cn
 
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If to the Escrow Agent:

Interwest Transfer Company, Inc.
1981 East Murray Holladay Road, Suite 100
P.O. Box 17136
Salt Lake City, UT 84117
Attn.: Kurt Hughes, Vice President
tel.: (801) 272-9294
fax.: (801) 277-3147
e-mail: kh@interwesttc.com

(b) Appointment of Agent for Service of Process. The CSKI Shareholder and the
Company (the “Foreign Parties”) hereby irrevocably appoints
______________________, of ________________________, U.S.A. (“[_____]”) as its
agent for the receipt of service of process in the United States. Each Foreign
Party agrees that any document may be effectively served on it in connection
with any action, suit or proceeding in the United States by service on its
agents. The Investor Agent consents and agrees that each Foreign Party may, in
its reasonable discretion, irrevocably appoint a substitute agent for the
receipt of service of process located within the Untied States, and that upon
such appointment, the appointment of [_____] may be revoked.

Any document shall be deemed to have been duly served if marked for the
attention of the agent at its address as set forth in this Section 8(b) or such
other address in the United States as may be notified to the party wishing to
serve the document and (a) left at the specified address if its receipt is
acknowledged in writing; or (b) sent to the specified address by post,
registered mail return receipt requested. In the case of (a), the document will
be deemed to have been duly served when it is left and signed for. In the case
of (b), the document shall be deemed to have been duly served when received and
acknowledged.

If any Foreign Party’s agent at any time ceases for any reason to act as such,
such Foreign Party shall appoint a replacement agent having an address for
service in the United States and shall notify the Investor Agent of the name and
address of the replacement agent. Failing such appointment and notification, the
holders of a majority of the Shares (as defined in the Securities Purchase
Agreement) shall be entitled by notice to such Foreign Party to appoint a
replacement agent to act on such Foreign Party’s behalf. The provisions of this
Section 8(b) applying to service on an agent apply equally to service on a
replacement agent.

(c) Currency. As used herein, “Dollar,” “US Dollar” and “$” each mean the lawful
money of the United States.

(d) Assignment; Amendment. This Agreement and the rights and obligations
hereunder of any of the parties hereto may not be assigned without the prior
written consent of the other parties hereto. Subject to the foregoing, this
Agreement will be binding upon and insure to the benefit of each of the parties
hereto and their respective successors and permitted assigns. No portion of the
Escrow Shares shall be subject to interference or control by any creditor to any
party hereto, or be subject to being taken or reached by any legal or equitable
process in satisfaction of any debt or other liability of any such party hereto
prior to the disbursement thereof to such party hereto in accordance with the
provisions of this Agreement. This Agreement may be changed or modified only in
writing signed by all of the parties hereto. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought. A waiver or amendment of any term or provision of this
Agreement shall not be construed as a waiver or amendment of any other term or
provision of this Agreement or any other Transaction Document.
 
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(e) Entire Agreement. This Agreement, together with the Escrow Agreement and the
other Transaction Documents, contains the entire understanding and agreement
between the parties hereto with respect to the subject matter of this Agreement,
and all prior writings and discussions are hereby merged into this Agreement.

(f) Counterparts. This Agreement may be executed by facsimile signatures and in
multiple counterparts, each of which shall be deemed an original. It shall not
be necessary that each party executes each counterpart, or that any one
counterpart be executed by more than one party so long as each party executes at
least one counterpart.

(g) Headings. The headings contained in this Agreement are for convenience or
reference only and shall not affect the construction of this Agreement.

(h) Governing Law; Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The parties hereby agree that
all actions or proceedings arising directly or indirectly from or in connection
with this Agreement shall be litigated only in the Supreme Court of the State of
New York or the United States District Court for the Southern District of New
York located in New York County, New York. The parties consent to the
jurisdiction and venue of the foregoing courts and consent that any process or
notice of motion or other application to any of said courts or a judge thereof
may be served inside or outside the State of New York or the Southern District
of New York by registered mail, return receipt requested, directed to the party
being served at its address set forth on the signature ages to this Agreement
(and service so made shall be deemed complete three (3) days after the same has
been posted as aforesaid) or by personal service or in such other manner as may
be permissible under the rules of said courts. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit,
action, or proceeding brought in such a court and any claim that suit, action,
or proceeding has been brought in an inconvenient forum. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
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(i) Third-Party Beneficiaries. The Investors shall be intended third party
beneficiaries of this Agreement to the same extent as if they were parties
hereto, and shall be entitled to enforce the provisions hereof.

(j) Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of this
Agreement is not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the terms of
this Agreement remain as originally contemplated to the fullest extent possible.

(k) Dispute Resolution. In the case of a dispute as to the determination of the
number of FY07 Released Escrow Shares, FY08 Released Escrow Shares, Remaining
Escrow Shares or other arithmetic calculation hereunder, the Company shall
submit the disputed determinations or arithmetic calculations via facsimile
within one (1) Business Day (as defined in the Securities Purchase Agreement) of
receipt, or deemed receipt, of the event giving rise to such dispute, as the
case may be, to the Investor Agent. If the Investor Agent and the Company are
unable to agree upon such determination or calculation within one (1) Business
Day of such disputed determination or arithmetic calculation being submitted to
the Investor Agent, then the Company shall, within one Business Day submit via
facsimile the disputed determination or (the disputed arithmetic calculation to
the Independent Accountant. The Company at the Company’s expense, shall cause
the Independent Accountant to perform the determinations or calculations and
notify the Company and the Investor Agent of the results no later than five (5)
Business Days from the time it receives the disputed determinations or
calculations. The Independent Accountant’s determination or calculation, as the
case may be, shall be binding upon all parties absent demonstrable error.

 
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement by
the authorized officer named below.

 
INVESTOR AGENT:
 
POPE ASSET MANAGEMENT LLC
 

By: ____________________________
Name: __________________________
Its: ____________________________
Dated: __________________________
 
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement by
the authorized officer named below.

 
THE COMPANY:
 
CHINA SKY ONE MEDICAL, INC.
 

By: ____________________________
Name: __________________________
Its: ____________________________
Dated: __________________________

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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement by
the authorized officer named below.

 
THE CSKI SHAREHOLDER:
 

____________________________
Name: ___________________________      
Dated: ___________________________  
 
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